8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT: August 12, 2011

(Date of earliest event reported)

Forbes Energy Services Ltd.

(Exact Name of Registrant as Specified in Its Charter)

Texas*	333-150853-04	98-0581100
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)
3000 South Business Highway 281 Alice, Texas		78332
(Address of Principal Executive Offices)		(Zip Code)

(361) 664-0549

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

* As of August 12, 2011, the registrant changed its jurisdiction of organization from Bermuda to Texas, by discontinuing from Bermuda and converting into a Texas corporation.

Item 3.03 – Material Modification to Rights of Security Holders.

Effective August 12, 2011, Forbes Energy Services Ltd., or the Company, completed a four-to-one consolidation of its common stock, whereby each four shares of common stock, of par value $0.01 each, were consolidated into a single share of common stock of par value $0.04, or the Share Consolidation. Immediately after the Share Consolidation, the Company changed its jurisdiction of organization from Bermuda to Texas, by discontinuing its existence in Bermuda and converting into a Texas corporation, or the Texas Conversion. The Share Consolidation was effected under Bermuda law by resolution of the Company’s board of directors pursuant to the Company’s bye-laws in effect at such time. The Texas Conversion was effected by the filing a notice of discontinuance and related documents in Bermuda and by filing a certificate of formation, certificate of conversion and plan of conversion with the Texas Secretary of State. For convenience, the Company in its capacity as a Bermuda exempt company prior to the Texas Conversion shall be referred to herein as “Forbes Bermuda” and the Company in its capacity as a Texas corporation after the Texas Conversion shall be referred to herein as “Forbes Texas.”

A copy of the press release announcing the completion of the Share Consolidation and Texas Conversion is attached hereto as Exhibit 99.1.

The Texas Conversion will not be deemed to create a new legal entity. Rather the Company’s prior corporate existence will be deemed to continue into Texas. Further, the Texas Conversion will not directly result in any change to the Company’s business, assets and liabilities, management, employees, principal business locations and fiscal year.

With respect to the Company’s common stock, a new CUSIP number of 345143101 will replace the old CUSIP number of G38007103, to distinguish between the Company’s common stock before and after the Share Consolidation and Texas Conversion. Notwithstanding the effective date of the Share Consolidation and Texas Conversion of August 12, 2011, in accordance with standard procedures of the Toronto Stock Exchange, or the TSX, the Company’s common stock continued to trade on the TSX on a pre-consolidation, pre-conversion basis, under the old CUSIP, through Monday, August 15, 2011. At market open on Tuesday, August 16, 2011, trading began on the TSX on a post-consolidation post-conversion basis under the new CUSIP number listed above. Both before and after the Share Consolidation and Texas Conversion, the Company’s common stock traded on the TSX under the symbol FRB. Further, beginning on Tuesday, August 16, 2011, our common stock began trading on a post-consolidation, post-conversion basis on the NASDAQ Global Market, or NASDAQ, under the symbol FES.

A copy of the press release announcing the timing of the trading of our common stock on a post-consolidated, post-conversion basis on the TSX and NASDAQ is attached hereto as Exhibit 99.2.

Letters of transmittal were mailed to shareholders on August 12, 2011, requesting them to forward their certificates representing their common stock before the Share Consolidation and Texas Conversion to American Stock Transfer and Trust Company, LLC, who will be acting as the Company’s exchange agent, or CIBC Mellon Trust Company, who will be acting as the Company’s forwarding agent in Canada, to be exchanged for share certificates representing the appropriate number of shares of common stock of the Company, on a post-Share Consolidation and post-Texas Conversion basis. A specimen copy of the new certificate for the common stock of the Company is attached hereto as Exhibit 4.1. No fractional shares will be issued as a result of these transactions. Holders who would otherwise be entitled to receive a fractional share as a result of the Share Consolidation will receive cash in lieu of such issuance.

The rights of the holders of the Company’s common stock are now governed by the Company’s Texas certificate of formation, the new Texas bylaws and Texas corporate law, each of which are described below in the section entitled “Description of Capital Stock.” The Texas certificate of formation and bylaws are filed as Exhibits 3.1 and 3.2 to this Current Report on 8-K, respectively, and are hereby incorporated by reference into this Item 3.03. The description of the certificate of formation and bylaws referenced below is a summary and does not purport to be a complete description of those documents, and is qualified in its entirety by reference to the copies of those documents filed as exhibits hereto.

DESCRIPTION OF CAPITAL STOCK

The following is a description of the capital stock (both common and preferred) of Forbes Texas after the Share Consolidation and Texas Conversion and a comparison of that capital stock to the equivalent capital stock of Forbes Bermuda prior to the Share Consolidation and Texas Conversion.

General

Prior to the Texas Conversion, Forbes Bermuda was an exempted company organized under the laws of Bermuda. We were incorporated on April 9, 2008 under the name Forbes Energy Services Ltd. and were registered with the Registrar of Companies in Bermuda under registration number 41727. As a result of the Texas Conversion, we discontinued our existence in Bermuda and became a Texas corporation under the name Forbes Energy Services Ltd.

Authorized Share Capital

Prior to the Share Consolidation and Texas Conversion, Forbes Bermuda’s authorized share capital was $500,000, divided into 450,000,000 common shares of par value $0.01 each, 40,000,000 Class B shares of par value $0.01 each and 10,000,000 preference shares of par value $0.01 each (of which 600,000 shares have been designated as Series A Junior Participating Preferred Shares, or Series A Preferred Shares, and 825,000 shares have been designated as Series B Senior Convertible Preference Shares, or Series B Preferred Shares). After the Share Consolidation, the number of common shares issued or available for issuance was reduced from 450,000,000 to 112,500,000.

Prior to Texas Conversion, the Company did not exist under Texas law and did not have any Texas share capital. After the Texas Conversion, Forbes Texas’ authorized share capital consists of 112,500,000 shares of common stock, par value $0.04 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share. Of the shares of preferred stock of Forbes Texas authorized, 600,000 shares are designated as Series A Junior Participating Preferred Stock, or Series A Preferred Stock, and 825,000 shares are designated as Series B Senior Convertible Preferred Stock, or Series B Preferred Stock. The authorized share capital of Forbes Texas after the Texas Conversion is the same as that of Forbes Bermuda immediately prior to the Texas Conversion, except that Forbes Texas does not have any Class B shares, none of which were outstanding at the time of the Texas Conversion.

Common Stock

Immediately prior to the Share Consolidation, we had 83,673,700 common shares, par value $0.01 each, issued and outstanding. Upon effectiveness of the Share Consolidation, each four common shares of par value $0.01 each were consolidated into one common share of par value $0.04. Further, as a result of the Share Consolidation, the total number of authorized common shares was reduced from 450,000,000 to 112,500,000. Upon effectiveness of the Texas Conversion, which occurred after the Share Consolidation, each common share of Forbes Bermuda then outstanding was automatically converted by operation of law into a share of common stock of Forbes Texas, par value $0.04 per share. Simultaneously with the reduction of the authorized common shares by a factor of four as a result of the Share Consolidation the par value of the common shares was increased by a factor of four. As a result of this, the authorized share capital, which is defined as the number of authorized common shares multiplied by the par value of such shares remained the same before and after the Share Consolidation, as required by Bermuda law and the bye-laws of Forbes Bermuda in effect at the time of the Share Consolidation.

Prior to the Share Consolidation and Texas Conversion, Forbes Bermuda had reserved 11,910,000 common shares for issuance under its Incentive Plan. Pursuant to the terms of the Incentive Plan, that after the Share Consolidation was effected, the options outstanding and the shares reserved under the Incentive Plan would be proportionately reduced. After taking into account the Share Consolidation, Forbes Texas had 2,977,500 shares of its common stock currently reserved for issuance under the Incentive Plan.

The Company has common shares reserved for issuance upon the exchange of rights associated with its Series A Preferred Shares and the conversion of its Series B Preferred Shares. Under the Rights Agreement dated May 19, 2008, between the Company and CIBC Mellon Trust Company, the Company is required to maintain sufficient authorized common shares to effect the exchange of each right to

purchase one one-hundredth of one Series A Preferred Share, or Rights, for one common share. Each common share outstanding prior to the Share Consolidation had one Right associated therewith. While the Share Consolidation reduced the number of outstanding shares, it did not reduce the number of Rights outstanding. Nevertheless, if an exchange of Rights for common equity is ever effected, the exchange ratio will be adjusted at that time to take into account the Share Consolidation. Prior to the Share Consolidation and Texas Conversion, Forbes Bermuda had reserved a number of common shares equal to the number of common shares at that time outstanding for issuance upon the exchange of Rights for common shares. After the Share Consolidation and Texas Conversion, Forbes Texas continues to reserve a number of shares of its common stock equal to the number of shares of common stock outstanding for issuance upon the exchange of Rights for common shares. For more information see “Description of Capital Stock— Shareholder Rights Plan” below.

Prior to the Texas Conversion, Forbes Bermuda was required, under the certificate of designation of its Series B Preferred Shares, to reserve for issuance the number of its duly authorized common shares as was, from time to time, sufficient to effect the conversion of all outstanding Series B Preferred Shares. Immediately prior to the Share Consolidation and Texas Conversion, Forbes Bermuda reserved 21,170,124 common shares for issuance on the conversion of the Series B Preferred Shares. Upon the Share Consolidation, the ratio by which the Series B Preferred Shares convert into common shares automatically adjusted. After taking into account the Share Consolidation, Forbes Texas currently reserves 5,292,531 shares of common stock for issuance upon the conversion of its Series B Preferred Stock.

In the event that the common stock of Forbes Texas is issued either upon the exchange of rights associated with our Series A Preferred Shares or the conversion of our Series B Preferred Shares, the shareholders of Forbes Texas may experience substantial dilution.

The rights, terms and preferences of the Series A Preferred Stock and the Series B Preferred Stock are discussed in further detail below under “—Preferred Stock—Series A Junior Participating Preferred Stock” and “—Preferred Stock—Series B Senior Convertible Preferred Stock.” For a full description of the Series A Preferred Stock and the Series B Preferred Stock, or Preferred Stock, of Forbes Texas, please see the certificates of designation attached to the certificate of formation, attached hereto as Exhibit 3.1.

Forbes Texas’s common stock carries the following rights:

• Voting. Holders of the common stock of Forbes Texas are entitled to one vote per share of common stock owned as of the relevant record date on all matters submitted to a vote of shareholders. Except as otherwise required by Texas law, holders of common stock of Forbes Texas (as well as holders of any preferred stock of Forbes Texas entitled to vote with such common shareholders) vote together as a single class on all matters presented to the shareholders for their vote or approval, including the election of directors. Texas law and the new certificate of formation of Forbes Texas do not provide for cumulative voting with respect to the election of directors or any other matters.

• Dividends and distributions. Subject to certain restrictions set forth in Texas law and the certificates of designation of the Company’s series of preferred stock, the holders of the common stock of Forbes Texas have the right to receive dividends and distributions, whether payable in cash or otherwise, as they may be declared from time to time by its board of directors.

• Liquidation, dissolution or winding up. In the event of the liquidation, dissolution or winding-up of Forbes Texas, holders of its common stock will be entitled to share equally and ratably in the Company’s assets, if any, that remain after the payment of all of its debts and liabilities, subject to any liquidation preference on any issued and outstanding Preferred Stock.

• Restrictions on transfer. The common stock of Forbes Teas is not subject to restrictions on transfer as a result of the certificate of formation or bylaws of Forbes Texas. Nevertheless, there may be restrictions imposed by applicable securities laws or by the terms of other agreements. The bylaws of Forbes Texas permit the Company to place restrictive legends on its share certificates in order to ensure compliance with these restrictions.

• Other rights. Holders of the common stock of Forbes Texas have no preemptive, redemption, conversion or sinking fund rights.

The rights, preferences, and privileges of the holders of the common stock of Forbes Texas are subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock of Forbes Texas.

Preferred Stock

We currently have no shares of Series A Preferred Stock and 588,059 shares of Series B Preferred Stock outstanding. The Share Consolidation did not impact the number of outstanding Series B Preferred Shares; however, it did impact the rate by which such preferred shares convert into common shares, reducing such rate by a factor of 4. Upon the completion of the Texas Conversion, the Series A Preferred Shares and Series B Preferred Shares of Forbes Bermuda automatically converted by operation of law into an equal number of shares of Series A Preferred Stock and Series B Preferred Stock of Forbes Texas of equivalent par value per share. Under the new Forbes Texas certificate of formation, our board of directors is authorized to provide, by a vote of at least seventy-five percent of the directors then in office, for the issuance of Preferred Stock in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the terms, including designation, powers, references, rights, qualifications, limitations and restrictions of the shares of each such series. Both before and after the completion of the Conversion, our board of directors could, without shareholders approval, issue preference shares or preferred stock, respectively, with rights that could adversely affect the holders of its common stock (including their voting ability) and which could have certain antitakeover effects.

Series A Junior Participating Preferred Stock

The designation, preferences, terms, qualifications, limitations, restrictions and relative rights, including voting rights, of the Series A Preferred Stock are set forth in the certificate of designation of Series A Junior Participating Preferred Stock of Forbes Texas, which is attached as Appendix A to the certificate of formation of Forbes Texas attached hereto as Exhibit 3.1. This certificate of designation is identical in all material respects to the previous certificate of designation of Series A Junior Participating Preferred Shares of Forbes Bermuda.

The Series A Preferred Stock is not redeemable. Each share of Series A Preferred Stock is entitled to receive, when, as and if declared, a minimum preferential quarterly dividend payment of $1.00 per share or, at the most, an aggregate dividend of 100 times the dividend declared per share of common stock. In the event of liquidation, the holders of the Series A Preferred Stock will be entitled to a minimum preferential liquidation payment of $100.00 per share (plus any accrued but unpaid dividends) and will be entitled to an aggregate payment of 100 times the payment made per share of common stock. Each share of Series A Preferred Stock has 100 votes, voting together with the common stock. Finally, in the event of any merger, consolidation or other transaction in which shares of common stock are converted or exchanged, each share of Series A Preferred Stock will be entitled to receive 100 times the amount received per share of common stock. These rights are subject to adjustment and protected by customary antidilution provisions, including a proportional adjustment as a result of the Share Consolidation.

The Series A Preferred Stock is associated with the shareholder rights plan of Forbes Texas, which is discussed below.

Series B Senior Convertible Preferred Stock

The designation, preferences, terms, qualifications, limitations, restrictions and relative rights, including voting rights, of the Series B Preferred Stock are set forth in the certificate of designation of Series B Senior Convertible Preferred Stock of Forbes Texas, which is attached as Appendix B to the new certificate of formation attached hereto Exhibit 3.1. This certificate of designation is identical in all material respects to the previous certificate of designation of Series B Senior Convertible Preferred Shares, or Series B Preferred Shares, of Forbes Bermuda.

The Series B Preferred Stock is convertible into the common stock of Forbes Texas, at an initial rate of 36 shares of common stock per share of Series B Preferred Stock, which rate was proportionally adjusted pursuant to the Share Consolidation. The rate is subject to further adjustment in the case of any other subdivision, or consolidation of the common stock, any dividend to holders of common stock in shares of common stock in which the holders of Series B Preferred Stock do not otherwise receive an equivalent distribution, any dividend to holders of common stock payable in cash that is greater in value than five percent (5%), calculated on an annual basis, of the then current common stock fair market value, or certain reorganizations, recapitalizations, reclassification, consolidations or mergers. If all such shares of Series B Preferred Stock are converted, at the initial conversion rate adjusted for the Share Consolidation, 5,292,531 shares of common stock will be issued to the holders of the Series B Preferred Stock. Nevertheless, no holder of the Series B Preferred Stock is entitled to effect a conversion of Series B Preferred Stock if such conversion would result in the holder (and affiliates) beneficially owning 20% or more of the common stock of Forbes Texas. Other terms of the Series B Preferred Stock are summarized below:

• Rank. The Series B Preferred Stock rank senior in right of payment to the common stock and any class or series of capital stock that is junior to the Series B Preferred Stock, and pari passu with any series of the preferred stock of Forbes Texas that by its terms ranks pari passu in right of payment as to dividends and liquidation with the Series B Preferred Stock.

• Dividends. The Series B Preferred Stock are entitled to receive preferential dividends equal to five percent (5%) per annum of the original issue price per share, payable quarterly in February, May, August and November of each year. Such dividends may be paid by Forbes Texas in cash and in kind (in the form of additional Series B Preferred Stock). In the event that the payment in cash or in kind of any such dividend would cause Forbes Texas to violate a covenant under its debt agreements, the obligation to pay, in cash or in kind, will be suspended until the earlier to occur of (i) and only to the extent any restrictions under the debt agreements lapse or are no longer applicable or (ii) February 16, 2015. During any such suspension period, the preferential dividends shall continue to accrue and accumulate.

• Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Forbes Texas, no distribution shall be made (i) to the holders of shares ranking junior to the Series B Preferred Stock unless the holders of Series B Preferred Stock shall have received, subject to adjustment as provided above, an amount equal to the original issue price per share of the Series B Preferred Stock plus an amount equal to accumulated and unpaid dividends and distributions thereon to the date of such payment, and (ii) to the holders of shares ranking on a parity with the Series B Preferred Stock, unless simultaneously therewith distributions are made ratably on the Series B Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of Series B Preferred Stock are entitled.

• Voting Rights. The holders of Series B Preferred Stock are not entitled to any voting rights except as provided under the Texas Business Organizations Code, or the TBOC, provided that, if the preferential dividends on the Series B Preferred Stock have not been declared and paid in full in cash or in kind for eight or more quarterly dividend periods (whether or not consecutive), the holders of the Series B Preferred Stock shall be entitled to vote at any meeting of shareholders with the holders of common stock and to cast the number of votes equal to the number of whole shares of common stock into which the Series B Preferred Stock held by such holders are then convertible.

• Optional Redemption. The Series B Preferred Stock may be redeemed by Forbes Texas at any time after the third anniversary of the issue date provided that at such time the fair market value of a share of common stock is greater than 120% of the issue price of the Series B Preferred Stock per share divided by the number of shares of common stock then issuable upon conversion of the Series B Preferred Stock. The redemption price, payable in cash, will be the original issue price per share of Series B Preferred Stock plus the related accumulated but unpaid dividends through the redemption date (the “Redemption Price”).

• Mandatory Redemption. On the seventh anniversary of the date of issuance of the Series B Preferred Stock, Forbes Texas shall redeem any Series B Preferred Stock then outstanding at

the then applicable Redemption Price. Such Redemption Price for mandatory redemption may, at the election of Forbes Texas, be paid in cash or in common stock valued for such purpose at 95% of the then fair market value of the common stock.

The initial issuance of Series B Preferred Shares was made by Forbes Bermuda on May 28, 2010, prior to Forbes Bermuda’s recent Conversion. The private placement pursuant to which the Series B Preferred Shares was issued, and the listing of the common stock issuable upon conversion of the initially issued Series B Preferred Shares, was approved by the Toronto Stock Exchange, or the TSX, which reviewed the certificate of designation of the Series B Preferred Shares prior to granting such approval. On August 28, 2010, Forbes Bermuda issued 7,259 shares of Series B Preferred Shares as an in-kind dividend in satisfaction of its obligations under the certificate of designation of the Series B Preferred Shares, and the TSX has conditionally approved the listing of the common stock issuable upon conversion of these Series B Preferred Shares, subject to compliance with the listing requirements of the TSX. However, the TSX informed Forbes Bermuda that the approval by the TSX of all issuances of Series B Preferred Shares issued in payment of in-kind dividends will be subject to certain restrictions imposed by the rules of the TSX upon the issuance of listed stock at a discount. Under these rules, the payment of in-kind dividends may contravene the rules of the TSX if the effective conversion price of the common stock underlying such Series B Preferred Shares represents a discount to the market price of the common stock at the time of payment of such dividend exceeding the maximum discount permissible under the rules of the TSX, unless the Forbes Bermuda receives shareholder approval for such an issuance. Due to this requirement, Forbes Bermuda sought and received shareholder approval at its annual meeting on June 27, 2011 for a pool of shares of Series B Preferred Shares equal to the maximum number of such shares which may be issued as in-kind dividends for outstanding and future quarterly dividend periods. As of the date hereof, Forbes Bermuda had paid all accrued dividends for completed quarterly dividend periods.

On January 18, 2011, prior to the Conversion, the holders of the Series B Preferred Shares approved an amendment to the certificate of designation of the Series B Preferred Shares designed to allow Forbes Bermuda to pay cash in lieu of issuing fractional shares created as a result of the recent Share Consolidation. On January 20, 2011, this amendment was approved by Forbes Bermuda’s board of directors and became effective. As the Company has not paid dividends on the Series B Preferred Shares through the most recent quarterly payment date due to the issues described above, the Company is subject to certain restrictions in the certificate of designation of the Series B Preferred Shares, including a prohibition on purchasing or otherwise acquiring for consideration any shares junior to the Series B Preferred Shares. The amendment adopted by the holders of the Series B Preferred Shares created an exception for the purchase by the Company of, or the payment of cash in lieu of the issuance of, fractional shares of any of the Company’s capital stock arising out of any bonus issue of shares, share consolidations or subdivisions, stock dividends, splits or combinations or business combinations. This change is reflected in Forbes Texas’s current certificate of designation of the Series B Preferred Stock.

Certain of the redemption features are outside of the Company’s control, and as a result, the Series B Preferred Stock have been reflected in the consolidated balance sheet as temporary equity.

Anti-Takeover Provisions in Texas Law and the New Forbes Texas Certificate of Formation and Bylaws

As with the organizational documents of Forbes Bermuda, the certificate of formation and bylaws of Forbes Texas contain provisions that may discourage or prevent a change of control, even if such transaction would be beneficial to our shareholders.

Both the bye-laws of Forbes Bermuda and the bylaws of Forbes Texas contain restrictions on the time period in which directors may be nominated. Under the bye-laws of Forbes Bermuda director nominations for consideration at an annual meeting, other than nominations made by the board of directors or holders of the Class B shares, had to be made not less than 20 and no more 60 days before the anniversary of the last annual meeting (with certain limited exceptions). In order to better conform with U.S. securities laws, the bylaws of Forbes Texas are slightly different from the bye-laws for Forbes Bermuda in that they provide that shareholder nominations for the board of directors must be received by the Company not less than 90 and no more than 150 days before the anniversary of our last annual meeting in order to be considered at the following annual meeting.

Both the organizational documents of Forbes Bermuda and Forbes Texas give our board of directors the authority, provided that they act by a vote of at least 75% of the directors then in office, to fix the designation, preferences, terms, qualifications, limitations, restrictions and relative rights of the preferred stock of Forbes Texas and to issue such shares without a shareholder vote. Notwithstanding the foregoing, while shares of Series B Preferred Stock are outstanding, we will not be permitted to issue any series of Preferred Stock with rights and privileges senior to or greater than those of the Series B Preferred Stock.

Under bye-laws of Forbes Bermuda in effect prior to the Texas Conversion, a business combination with certain interested shareholders had to be approved by the board of directors and by a vote of 66 2/3% of the shareholders. The organizational documents of Forbes Texas do not contain a similar provision, however, Forbes Texas is subject to Section 21 of the TBOC. Section 21 prohibits Forbes Texas from engaging in certain business combination (including mergers, share exchanges and conversions) with a shareholder beneficially owning 20% or more of our voting stock for a period of three years subsequent to the date on which the shareholder became an affiliated shareholder unless:

• the business combination or acquisition of shares by the affiliate shareholder is approved prior to the time that the person becomes an affiliated shareholder; or

• the business combination is approved by the affirmative vote of two-thirds of the outstanding voting stock that is not owned by the affiliated shareholders.

These provisions may have the effect of discouraging or slowing any attempt to acquire Forbes Texas even if such acquisition may be favorable to the interests of Forbes Texas’s shareholders. Further, as discussed below, our shareholder rights plan continued in effect after the Texas Conversion. For information on the anti-takeover effects of this plan see “Description of Capital Stock— Shareholder Rights Plan” below.

Board of Directors

Similar to the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion, the bylaws for Forbes Texas provide that the board of directors shall consist of not less than five and not more than seven directors or such greater or lesser number as may be determined by a unanimous vote of the board of directors or the vote of the holders of at least 66 2/3% of the voting stock represented in person or by proxy at a meeting at which a quorum is present. Forbes Texas’s board of directors has six members.

Additionally, similar to the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion, the bylaws of Forbes Texas provide that any shareholder wishing to propose for election as a director someone who is not an existing director and not proposed by the board of directors must give notice of the intention to propose such person for election. Under the bye-laws of Forbes Bermuda, this notice had to be given not less than 20 and no more than 60 days before the anniversary of the last annual meeting, however, under the new bylaws for Forbes Texas, this notice must generally be given not less than 90 and no more than 150 days before the anniversary of the last annual meeting. Under both the bye-laws for Forbes Bermuda and the bylaws for Forbes Texas, where the number of persons validly proposed for election (or re-election) as a director is greater than the number of directors to be elected, the persons receiving the most votes shall be elected. An absolute majority of the votes cast is not a prerequisite to the election of directors. Under both documents, a director may be removed by shareholders owning a majority of the common stock voted at a shareholders’ meeting, provided notice of the shareholder meeting convened to remove the director is properly given to the director. The notice must contain a statement of the intention to remove the director and a summary of the basis for the proposed removal and must be served on the director not less than 30 days before the meeting. The director is entitled to attend the meeting and to be heard on the motion for his or her removal.

Shareholder Rights Plan

Forbes Bermuda adopted a shareholder rights plan prior to our initial Canadian public offering and simultaneous U.S. private placement. In connection with the adoption of our shareholder rights plan, the board of directors of Forbes Bermuda declared a dividend of one Right for each outstanding common

share to shareholders of record on May 19, 2008. One Right also attaches to each share issued after such implementation. The Rights will become exercisable, and transferable apart from the common shares, 10 business days following a public announcement that a person or group has acquired beneficial ownership of, or has commenced a tender or exchange offer for, a specified percentage or more of the common shares.

The Share Consolidation did not impact the number of Rights outstanding (therefore, immediately after the Share Consolidation, there were four rights attaching to each common share); however, it did impact the ratio whereby such Rights may be exchanged for common shares. Additionally, the Share Consolidation caused the voting, dividend and other rights of the Series A Preferred Shares to be proportionally adjusted. After the Texas Conversion, our current shareholder rights plan continued as the shareholder rights plan. Therefore, four Rights will attach to each share of common stock issued by Forbes Texas while the rights plan is effective. While no material changes in the provisions of the rights plan resulted from the Texas Conversion, the Company will consider whether to amend the plan to conform the plan to the current state of the Company’s capital stock after the Share Consolidation and Texas Conversion.

Each Right of Forbes Texas initially entitles the holder to purchase one one-hundredth of one share of Series A Junior Participating Preference Stock at a price of $42.00, subject to adjustment. If a person becomes an “acquiring person” as defined below, each holder of a Right who is not an acquiring person will have the right to receive, upon exercise of each Right and payment of the purchase price, that number of shares of common stock (or, in certain circumstances, cash, property, or other securities) having a then current market price equal to twice the exercise price for one one-hundredth of one share of Series A Preference Stock. Similarly, if after an event triggering the exercise of the Rights, Forbes Texas is acquired in a merger or other business combination, or 50% or more of its assets or earning power are sold or transferred, each holder of a Right (other than holders whose Rights have been voided) will have the right to receive, upon exercise of the Right and payment of the purchase price, that number of shares of common stock of the acquiror having a then current market price equal to twice the exercise price for one one-hundredth of a share of Series A Preference Stock.

Under the shareholder rights plan, an acquiring person is a person or group that has acquired or has announced an offer to acquire 15% or more of the common stock then outstanding. The following are excluded from the definition of acquiring person:

• Forbes Texas;

• any subsidiary of Forbes Texas;

• any employee benefit plan or employee stock plan of Forbes Texas, any subsidiary of Forbes Texas, or any person appointed under or holding common stock pursuant to the terms of any such plan; and

• any person whose ownership of 15% or more of the common stock then outstanding results solely from being a beneficial owner of 15% or more of the common stock at the effective date of the shareholder rights plan, results from any transaction approved by at least 80% of the members of the board of directors, or results from a reduction in the number of issued and outstanding common stock pursuant to a transaction approved by the board of directors.

A person excluded for these reasons will become an acquiring person if it acquires any additional common stock, unless such additional acquisition does not result in the person owning 15% or more of the common stock, does not increase its percentage ownership of common stock, or is approved in the same manner.

Forbes Texas may redeem the Rights in whole, but not in part, at a redemption price of $.001 per Right at any time before the Rights become exercisable. The Rights will expire ten years after the implementation of the rights plan. Pursuant to the rights plan, all of the Series A Preference Stock is reserved for issuance upon exercise of the Rights.

The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group who attempts to acquire Forbes Texas without the approval of the Board of Directors. As a result, the overall effect of the Rights may be to render more difficult or discourage any attempt to acquire Forbes Texas even if such acquisition may be favorable to the interests of Forbes Texas’s shareholders. Because the Board of Directors can redeem the Rights or approve certain offers, the Rights should not interfere with any merger or other business combination approved by the board of directors.

The description and terms of the Rights are set forth in a rights agreement between the Company and CIBC Mellon Trust Company.

Differences between the Governing Corporate Law and Organizational Documents for Forbes Bermuda and Forbes Texas

Prior to the Texas Conversion, the rights of current shareholders were governed by the laws of Bermuda and the memorandum of association and bye-laws of Forbes Bermuda in effect prior to the Texas Conversion. Upon the completion of the Texas Conversion, we were incorporated in Texas and became subject to Texas corporate law. Further, we discontinued our existence in Bermuda and ceased to be subject to Bermuda law. Therefore, the rights, preferences and privileges of shareholders of Forbes Texas are governed by the certificate of formation and bylaws of Forbes Texas and Texas corporate law.

As a result of the Texas Conversion, some of your rights as a shareholder of Forbes Texas differ from the rights you possessed as a shareholder of Forbes Bermuda. The following description summarizes the principal differences between the rights our shareholders possessed prior to the Texas Conversion under Bermuda law and the Forbes Bermuda memorandum of association and bye-laws, as compared with the rights our shareholders now possess under Texas law and the new Forbes Texas certificate of formation and bylaws.

Class B Shares

The bye-laws of Forbes Bermuda in effect prior to the Texas Conversion authorized 40,000,000 Class B shares, par value $0.01 per share. Holders of Class B shares had all of the rights of holders of common shares, except for the differences described in this section. The Class B shares were convertible, at any time, at the discretion of each holder into common shares. Holders of Class B shares had the right to be present at annual shareholder meetings, but, except as otherwise provided in the Companies Act and the bye-laws, had no right to vote on any matters at such meetings. The holders of the Class B shares were permitted to vote with the common shares on an as-converted basis for the following actions:

• any increase or decrease in the authorized number of common shares or preference shares;

• any agreement by the Company or its shareholders regarding a “business combination” (as defined in the bye-laws);

• any increase or decrease in the authorized number of members of the board of directors;

• the liquidation, dissolution or winding up of the Company; and

• the voluntary placement of the Company into receivership proceedings in any relevant jurisdiction.

In addition, the following actions required the approval of holders of 75% of the Class B shares:

• any increase or decrease in the authorized number and any issuance of Class B shares;

• any amendment, alteration or waiver of any provision of the bye-laws in a manner adverse to the holders of the Class B shares; and

• any authorization or any designation, whether by reclassification or otherwise, of any new class or series of shares or any other securities convertible into equity securities of the Company having

voting rights or ranking on a parity with or senior to the Class B shares in right of redemption, liquidation preference, or dividend rights, or any increase in the authorized or designated number of any such new class or series.

In addition to the rights above, holders of Class B shares had the right to nominate a majority of the board of directors for election for as long as such holders own at least a majority of the shares of the Company. In the event that such holders owned between 25% and 50% of the shares of the Company, they would have had the right to nominate that number of directors commensurate with their percentage ownership of the Company, with such number being not less than two.

There were no Class B shares outstanding immediately prior to the Texas Conversion and the board of directors of the Company had no intention of issuing any further Class B shares. For this reason, the organizational documents of Forbes Texas do not contain any class of share equivalent to the Class B shares of Forbes Bermuda.

Duties of Directors

Bermuda law provides that directors of a Bermuda company owe a fiduciary duty to the company to act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following elements: (i) a duty to act honestly and in good faith with a view to the best interests of the company; (ii) a duty not to make a personal profit from opportunities that arise from the office of director; (iii) a duty to avoid conflicts of interest; and (iv) a duty to exercise powers for the purpose for which such powers were intended. The Companies Act also imposes a duty on directors and officers of a Bermuda company to (i) act honestly and in good faith with a view to the best interests of the company; and (ii) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In addition, the Companies Act imposes various duties on directors and officers of a company with respect to certain matters of management and administration of the company. The bye-laws of Forbes Bermuda in effect prior to the Texas Conversion stated that our business is to be managed and conducted by the board of directors.

Under Texas law, the board of directors of a corporation is charged with the fiduciary duties of obedience, loyalty and due care. The duty of obedience demands that a director avoid committing ultra vires acts, i.e., acts beyond the scope of the authority of the corporation. The duty of loyalty requires that a director act in good faith, not allowing his or her personal interests to prevail over the interests of the corporation. The duty of due care dictates that a director handle his corporate duties with such care as an ordinarily prudent man would use under similar circumstances. In applying the duty of care, Texas courts have given directors the benefit of the “business judgment rule” and have often refrained from imposing liability on directors absent a showing of an ultra vires action or the taint of fraud.

Interested Directors

Both the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion and the current bylaws of Forbes Texas allow an interested director to be taken into account in determining whether a quorum is present and, if not disqualified by the chairman of the relevant meeting, to vote on a transaction in which the director has an interest, provided that such director makes a declaration of his or her interest in the transaction pursuant to the applicable laws.

Further, under Texas law, an otherwise valid contract or transaction is valid notwithstanding that the director has an interest if (i) the material facts as to the relationship or interest are disclosed or are known to (a) the board of directors and the board of directors authorizes the contract by the approval of a majority of the disinterested directors, regardless of whether the disinterested directors constitute a quorum; or (b) the shareholders entitled to vote on the authorization of the contract or transaction and the contract or transaction is specifically approved in good faith by a vote of the shareholders; and (ii) the contract or transaction is fair to the company when the contract or transaction is authorized, approved or ratified. The fact that an interested director is present and voting on a transaction in which he is interested does not, in and of itself, make the transaction void. Under Texas law, such interested director could be held liable for a transaction in which such director breached his or her duty of loyalty or received improper benefit.

Voting Rights

Under Bermuda law, the voting rights of shareholders are regulated by the company’s bye-laws and, in certain circumstances, the Companies Act. With the exception of certain shareholder actions discussed below, the bye-laws of Forbes Bermuda in effect prior to the Conversion provided that questions proposed for the consideration of the shareholders, including the removal of a director, would be decided by the affirmative vote of a majority of the votes cast in accordance with the bye-laws. With respect to the election of directors, the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion only required a plurality of the shareholder votes properly cast. Further, the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion required the affirmative vote of at least 66 2/3% of the shares represented, in person or by proxy at a meeting at which a quorum is present, in order to pass a shareholder resolution approving (i) a business combination with an interested shareholder, (ii) the amendment of certain bye-laws or (iii) a change to the board of directors which reduces the number of directors below five or increases the number above seven. Additionally, the bye-laws of Forbes Bermuda provided that any variation of the rights of the holders of a class of the Company’s securities requires the vote of at least 66 2/3% of the shares of that class represented in person or by proxy at a meeting at which a quorum is present.

Under Texas law, which governs Forbes Texas, unless otherwise provided in a company’s certificate of formation or bylaws, (i) directors shall be elected by a plurality of votes cast by the holders of shares entitled to vote thereon; (ii) fundamental actions, which shall include an amendment to the certificate of formation or a voluntary winding up the company, shall be approved by the affirmative vote of the holders of at least two-thirds of the outstanding shares entitled to vote on such action; (iii) all other shareholder action must be approved by a vote of a majority of the shares entitled to vote on, and who voted for, against, or expressly abstained with respect to, the matter at a shareholder meeting at which a quorum is present. The certificate of formation and bylaws of Forbes Texas provide for similar voting rights to those described above in the bye-laws of Forbes Bermuda, provided that the organizational documents of Forbes Texas do not contain requirements for the approval of business combinations with interested shareholders. Texas law imposes statutory requirements on the approval of transactions with affiliated shareholders, which are described above in “Capital Stock—Anti-Takeover Provisions in Texas Law and the New Forbes Texas Certificate of Formation and Bylaws.”

Bermuda law permits a Bermuda company to divide its board of directors into multiple classes having staggered terms of up to three years each. Similarly, Texas law permits a company to divide its directors into two or three classes of directors with staggered terms of office of up to three years each. Nevertheless, our board of directors has not been divided into classes with staggered terms.

Each share of our Series A Preferred Stock, none of which are currently outstanding, entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Company, subject to adjustment, including a proportional adjustment in connection with the Share Consolidation. Further, in the event that dividends on the Series A Preferred Stock have not been declared and paid or set apart for payment, the holders of the Series A Preferred Stock shall have the right to elect two members to the board of directors. Holders of our Series B Preferred Stock, of which 588,059 shares are outstanding, also have the right to vote with the holders of the common shares on an “as-converted” basis, upon all matters presented to the shareholders of the Company for their action or consideration, in the event that Forbes Texas has not declared and paid in full dividends on the Series B Preferred Stock, in cash or in kind, for eight or more quarterly dividend periods. Both the Series A Preferred Stock and the Series B Preferred Stock grant their holders certain rights to vote as a separate class on matters that affect their rights adversely. See “Capital Stock—Preferred Stock” above for more information. The voting rights of the Series A Preferred Stock and the Series B Preferred Stock of Forbes Texas are substantially identical to the voting rights of the Series A Preferred Shares and Series B Preferred Shares of Forbes Bermuda.

Dividends and Other Distributions

Bermuda law does not permit a company to declare or pay dividends if there are reasonable grounds for believing that (i) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (ii) the realizable value of its assets would thereby be less than the aggregate of its liabilities, its issued share capital and its share premium accounts. Issued share capital is the aggregate

par value of the company’s issued shares, and the share premium account is the aggregate amount paid for issued shares over and above their par value. Share premium accounts may be reduced in certain limited circumstances. The byelaws of Forbes Bermuda in effect prior to the Texas Conversion provided that the holders of common shares are entitled to such dividends as the board of directors may from time to time declare.

Under Texas law, subject to any restrictions contained in the company’s certificate of formation, a company may pay dividends if there is surplus that is equal to or greater than the aggregate par value of the dividend and if the payment of the dividend would not render the company insolvent. Each share of Forbes Texas common stock is entitled to dividends if, as and when dividends are declared by the board of directors of Forbes Texas, subject to any preference dividend right of the holders of any preferred stock, which include the rights of the Series B Preferred Stock discussed above.

Special Meetings of Shareholders

Bermuda law and the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion provided that a special general meeting of shareholders may be called by the president or chairman of the board of directors of the Company. Further, upon the request of shareholders holding not less than one-tenth of the paid-up capital of the Company carrying the right to vote at general meetings the board of directors would have to call a special general meeting.

Texas law provides that a special meeting of the shareholders of a corporation may be called by the president, the board of directors, shareholders of at least 10% of more of the shareholders entitled to vote (unless a greater percentage is required by the certificate of formation), and any other person authorized to call special meetings by the certificate of formation or the bylaws.

Similar to the bye-laws of Forbes Bermuda, the bylaws of Forbes Texas permit shareholders who hold one-tenth or more of the share capital entitled to vote, to request a special meeting of the shareholders. Additionally, as with the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion, the bylaws of Forbes Texas do not permit shareholders to call special meetings for the purpose of electing directors.

Notice of Shareholder Meetings

Bermuda law requires that a company give its shareholders at least five days notice of a meeting of the company, other than an adjourned meeting. The bye-laws of Forbes Bermuda in effect prior to the Texas Conversion provided that we must give our shareholders at least 21 days’ notice of an annual or special general meeting. Notices had to state the date, place and time at which the meeting would be held and the general nature of the business to be considered at the meeting. Notice could be given by the Company to a shareholder by delivering it to such shareholder in person, sending it by letter or courier or transmitting it by electronic means in accordance with the consent and directions of such shareholder. The accidental omission to give notice of a general meeting to, or the non-receipt of a notice of a general meeting by, any person entitled to receive notice would not have invalidated the proceedings at the meeting.

Under Texas law and the new bylaws of Forbes Texas, notice of an annual or special meeting must be give no later than the tenth day and not earlier than the sixtieth day before the date of the meeting to each shareholder entitled to vote thereat. Notice must state the date, place and time of the meeting and a statement regarding the purpose or purposes of the meeting. In the event that a fundamental business transaction (as defined by the TBOC) is to be considered at a special or annual meeting, notice must be given to the shareholders not later than the 21 day before the date of the meeting.

Similar to the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion, the bylaws of Forbes Texas permit notice to be given to shareholders by delivering it to such shareholder in person, sending it by letter or courier or transmitting it by electronic means in accordance with the consent and directions of such shareholder. Texas law and the bylaws of Forbes Texas require that a shareholder consent before the Company is permitted to provide notice by electronic transmission. Further such shareholder retains the right to revoke its consent to notice by electronic transmission. Under Texas law,

electronic notice is deemed given when the notice is: (i) transmitted to a facsimile number provided by the shareholder for the purpose of receiving notice; (ii) transmitted to an electronic mail address provided by the shareholder for the purpose of receiving notice; (iii) posted on an electronic network and a message is sent to the shareholder at the address provided by the shareholder for the purpose of alerting the shareholder of a posting; or (iv) communicated to the shareholder by any other form of electronic transmission consented to by the shareholder. An affidavit of the secretary, assistant secretary, transfer agent or other agent of the Company stating that notice has been provided to a shareholder by electronic transmission is, in the absence of fraud, prima facie evidence that the notice was provided.

Advance Notice of Shareholder Proposals

The bye-laws of Forbes Bermuda in effect prior to the Texas Conversion provided that any shareholder wishing to propose for election as a director someone who is not an existing director and not proposed by the board of directors had to give notice of the intention to propose the person for election. This notice generally had to be given not less than 20 and no more than 60 days before the anniversary of the last annual meeting.

Consistent with securities law, the new Forbes Texas bylaws provide that notice of shareholder nomination for director or other proposals must be given in writing to the secretary of Forbes Texas during a specific period prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at the principal executive offices of Forbes Texas (i) in the case of an annual meeting, not less than 90 and no more than 150 days before the one-year anniversary of the preceding year’s annual meeting and (ii) in the case of a special meeting, not less than 90 and no more than 150 days before the special meeting or 10 days following the day on which notice of the special meeting is publicly announced. Such notices must set forth (i) information regarding the shareholder giving the notice, including the name, address and holdings of such shareholder, (ii) any agreements such shareholder has made with respect to the equity securities of the Company, (iii) a description of the matter to be considered at the meeting, including if the matter relates to the election of a director, information about the director nominee, and (iv) other information required by securities laws. Shareholders may not nominate directors at a special meeting unless the board of directors calls for an election of directors at the meeting. To submit a nomination or other proposal for consideration at a shareholder meeting, the shareholder must be entitled to vote on the matter at the meeting.

Conduct of Meetings

Bermuda law provides that a company’s bye-laws may contain provisions relating to the conduct of annual and special meetings and the bye-laws of Forbes Bermuda prior to the Texas Conversion provided that the Chairman of our board of directors, or if there was no Chairman, the President of the Company, would serve as chairman of shareholder meetings at which he or she is present and in his or her absence a chairman shall be appointed or selected by those present at the meeting and entitled to vote.

Texas law does not restrict a company’s ability to provide for the conduct of shareholder meetings in its organizational documents. The bylaws of Forbes Texas, similar to the bye-laws of Forbes Bermuda, provide that the Chairman of its board of directors or, in his or her absence, the President of the Company, will serve as chairman of shareholder meetings. In the absence of the chairman of the board of directors and the President, a chairman shall be appointed or elected by those present at the meeting and entitled to vote.

Approval of Corporate Matters by Written Consent

Bermuda law provides that, unless otherwise provided in a company’s bye-laws, anything which may be done in a general meeting of the shareholders may be done by resolution in writing, without a meeting, provided that notice of such resolution is circulated, along with a copy of the resolution, to all shareholders who would be entitled to attend a meeting and vote on the resolution. The bye-laws of Forbes Bermuda in effect prior to the Texas Conversion provided that, after an initial public offering, holders of voting shares, other than holders of Class B Shares, would not have been entitled to vote their respective voting shares in the form of a written resolution.

With certain limited exceptions, Texas law permits shareholders to take action by unanimous written consent. Nevertheless, Texas law only permits shareholder action by less than unanimous written consent to the extent it is provided for in the certificate of formation of the company. The certificate of formation of Forbes Texas does not contain a provision allowing for shareholder action by less than unanimous written consent. Thus, shareholders will only be permitted to take action by written consent only if such consent is unanimous.

Bylaws

The bye-laws of Forbes Bermuda in effect prior to the Texas Conversion contained provisions which under Texas law are contained in a corporation’s certificate of formation, such as provisions related to the power to issue shares and the rights attaching to shares. Therefore, those provisions are located in the certificate of formation of Forbes Texas.

Alteration of Share Capital

Under the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion, the board of directors of the Company was authorized to increase, divide, consolidate, subdivide or reduce its share capital in any manner permitted by Bermuda law, without the consent of the shareholders. Under Texas law, the reclassification of issued securities requires an amendment to the Company’s certificate of formation, which would require shareholder consent, as discussed below. Therefore, after the Texas Conversion, Forbes Texas does not have the ability to conduct a future stock split without shareholder consent.

Amendment of Certificate of Formation and Bylaws

Bermuda law provides that the memorandum of association of a company may be amended by a resolution passed at a general meeting of shareholders. Nevertheless, the holders of not less than 20% in par value of the company’s issued share capital or any class thereof have the right, under Bermuda law, to apply to the Supreme Court of Bermuda for an annulment of any amendment of the memorandum of association adopted by shareholders at any general meeting, other than an amendment which alters or reduces a company’s share capital as provided in the Companies Act. Where such an application is made, the amendment becomes effective only to the extent that it is confirmed by the Bermuda court. An application for an annulment of an amendment of the memorandum of association must be made within 21 days after the date on which the resolution altering the company’s memorandum of association is passed and may be made on behalf of persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose. No application may be made by shareholders voting in favor of the amendment.

The Companies Act provides that the board of directors of a company may amend bye-laws but any such amendment shall be submitted to a general meeting of the company and shall become operative only to such extent as they are approved at such meeting. The bye-laws of Forbes Bermuda in effect prior to the Texas Conversion provided that no bye-law may be rescinded, altered or amended and no new bye-law may be made until the same has been approved by a majority of the directors then in office and by a resolution of the shareholders. In the case of certain bye-laws, such as the bye-laws relating to approval of business combinations and the power to alter the share capital, the required resolutions would have needed to be approved by the affirmative vote of at least 66 2/3% of our directors then in office and of at least 66 2/3% percent of the votes attaching to all shares in issue (including any Class B shares outstanding, voting on an as-converted basis). In the case of certain bye-laws related to matters affecting Class B shares, the required resolutions would have also needed to include the affirmative vote of holders of at least 75% of the Class B shares then outstanding.

Under Texas law, certain provisions regarding the regulation of a corporation which would traditionally be found in the bye-laws of a Bermuda company, such as the description of the share capital of the company, are placed in a corporation’s certificate of formation. Therefore, provisions regarding the share capital and amendments to the bylaws of Forbes Texas are found in its certificate of formation. Under Texas law, most amendments to the certificate of formation require the affirmative vote of 66 2/3% of the voting stock.

Under Texas law, the board of directors of a corporation may amend, repeal or adopt new bylaws unless the corporation’s certificate of formation wholly or partly reserves this power to the shareholders. The certificate of formation of Forbes Texas partly reserves this right to the shareholders. Similar to the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion, the certificate of formation of Forbes Texas requires that amendments to the bylaws be approved by a resolution of a majority of our board of directors and by a resolution of the shareholders. Further, similar to the bye-laws of Forbes Bermuda, certain amendments to the bylaws, such as the bylaw regarding the removal of directors, must be approved by at least 66 2/3% of the voting stock.

Mergers and Similar Arrangements

The amalgamation (or merger) of a Bermuda company with another company or corporation (other than certain affiliated companies) requires approval of the amalgamation agreement by the company’s board of directors and by its shareholders. Unless the company’s bye-laws otherwise provide, the Companies Act requires the approval of 75% of the shareholders voting at such meeting to approve the amalgamation and amalgamation agreement, and the quorum for such meeting must be at least two persons holding or representing by proxy more than one-third of the issued and outstanding shares of the company. The bye-laws of Forbes Bermuda in effect prior to the Texas Conversion contained provisions regarding “business combinations” with “interested shareholders”. Pursuant to the bye-laws of Forbes Bermuda, in addition to any other approval that may be required by applicable law, any business combination with an interested shareholder within a period of three years after the date of the transaction in which the person became an interested shareholder had to be approved by our board and authorized at an annual or special general meeting by the affirmative vote of at least 66 2/3% of our issued and outstanding voting shares that are not owned by the interested shareholder, unless: (i) prior to the time that the shareholder becoming an interested shareholder, our board of directors approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder; or (ii) upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of our issued and outstanding voting shares at the time the transaction commenced. For purposes of these provisions, “business combinations” include mergers, amalgamations, consolidations and certain sales, leases, exchanges, mortgages, pledges, transfers and other dispositions of assets, issuances and transfers of shares and other transactions resulting in a financial benefit to an interested shareholder. An “interested shareholder” was a person that beneficially owned 15% or more of our issued and outstanding voting shares and any person affiliated or associated with us that owned 15% or more of our issued and outstanding voting shares at any time three years prior to the relevant time.

Under Texas law, with certain exceptions (discussed below), a merger, consolidation or sale of all or substantially all of the assets of a corporation must be approved by the board of directors and shareholders. Unless the certificate of formation provides otherwise, which the bylaws of Forbes Texas do not, the vote of at least two-thirds of the issued and outstanding shares entitled to vote thereon is required to approve most of these types of transactions. Further, in certain circumstances, separate voting by a class is required for the approval of the merger or consolidation.

Under Texas law, no shareholder approval is required with respect to a merger or consolidation where (i) the corporation is the sole surviving corporation in the merger; (ii) the certificate of formation of the corporation following the merger will not differ from the corporation’s certificate of formation before the merger; (iii) immediately after the merger, each shareholder of the company before the merger will hold the same number of shares, with identical designations, preferences, limitations and relative rights; (iv) the sum of the voting power of the shares outstanding immediately after the merger and the voting power of the securities that may be acquired on the conversion of securities issued under the merger does not exceed by more than 20% the voting power of the shares outstanding immediately before the merger; and (v) the sum of the number of participating shares that are outstanding immediately after the merger and the number of participating shares that may be acquired on the conversion of securities issued under the merger does not exceed by more than 20% the total number of participating shares of the outstanding immediately before the merger.

Texas law also prohibits companies from engaging in any business combination with an “affiliated shareholder” (which is defined as a person owning 20% or more of the outstanding voting stock of an issuing corporation) for a period of three years subsequent to the date on which the shareholder became

an interested shareholder unless: (i) the business combination or acquisition of shares by the affiliate shareholder is approved prior to the time that the person becomes an affiliated shareholder; or (ii) the business combination is approved by the affirmative vote of two-thirds of the outstanding voting stock that is not owned by the affiliated shareholders.

These provisions may have anti-takeover implications in that they may delay, defer or prevent a change of control through a merger or other transaction having a similar effect.

Appraisal Rights

Under Bermuda law, any shareholder of a Bermuda company who does not vote in favor of an amalgamation (or merger) of such Bermuda company with another company and is not satisfied that fair value offered for his or her shares may apply to the Bermuda Supreme Court within one month of notice of the shareholders’ meeting, for appraisal of the fair value of his or her shares. Under Bermuda law and our bye-laws, our amalgamation with another company (other than certain affiliated companies) requires the amalgamation and the agreement related thereto first be approved and recommended by a majority of our board of directors and then approved by a majority of shareholder votes cast at a meeting at which the transaction is considered.

Except for the limited classes of mergers, share exchanges, sales and asset dispositions for which no shareholder approval is required under Texas law, shareholders of Texas corporations have rights of dissent and appraisal in the event of a merger, share exchange, sale, lease, exchange or other disposition of all, or substantially all, the property and assets of the corporation if special authorization of the shareholders is required by Texas law. Notwithstanding the foregoing, a shareholder of a Texas corporation has no rights of dissent and appraisal with respect to any plan of merger in which there is a single surviving or new domestic or foreign corporation, or with respect to any plan of exchange, if: (i) the shares held by the shareholder are part of a class of shares which are (a) listed on a national securities exchange, (b) listed on NASDAQ or successor entity or (c) are held of record by not less than 2,000 holders, on the record date for the plan of merger or the plan of exchange; (ii) the shareholder is not required by the terms of the plan of merger or exchange to accept for his shares any consideration that is different than the consideration (other than cash in lieu of fractional shares that the shareholder would otherwise be entitled to receive) to be provided to any holder of shares of the same class or series; and (iii) the shareholder is not required by the terms of the plan of merger or exchange to accept any consideration other than (a) shares of a corporation that, immediately after the merger or exchange, will be part of a class or series of shares which are (A) listed, or authorized for listing upon official notice of issuance, on a national securities exchange, (B) approved for quotation as a national market security on an interdealer quotation system by the NASD or successor entity, or (C) held of record by not less than 2,000 holders, (b) cash in lieu of fractional shares otherwise entitled to be received or (c) any combination of (a) and (b).

Shareholder Suits

Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong done to the company where the act complained of is alleged to be beyond the corporate power of the company or is illegal or would result in violation of the company’s memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to allegations of acts constituting fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company shareholders than the percentage of shareholders who actually approved it.

When the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interests of some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company. Further, the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion contained a provision by virtue of which the shareholders waived any claim or right of action that they had, both individually and on behalf of the Company, against any director or officer in relation to any action or failure to take action by such director or officer, except in respect of any fraud or dishonesty of such director or officer. See “—Limitation of Liability and Indemnification Matters” below.

Under Texas law, class actions and derivative actions are generally available to shareholders of a corporation. With regard to derivative actions, except in limited circumstances, a shareholder of a Texas corporation may not institute a derivative action until 91 days after the date a written demand is filed with the corporation stating with particularity the act, omission or other matter that is the subject of the claim. Further, Texas law permits a court to order the winning party in a derivative action to pay the attorneys’ fees incurred in connection with such action.

The new Forbes Texas certificate of formation limits or eliminates the liability of directors of Forbes Texas to the shareholders of Forbes Texas under certain circumstances. See “—Limitation of Liability and Indemnification Matters” below.

Takeovers

Under Bermuda law, if a scheme or contract involving the transfer of shares (or any class of shares) of a company to another company has, within four months after the making of the offer, been approved by the holders of not less than 90% of the shares whose transfer is involved, the transferee company may, at any time within two months of the date on which such approval is obtained, require the dissenting shareholders to transfer their shares on the terms of the offer. Dissenting shareholders may apply to the Bermuda Supreme Court within one month of the notice objecting to the transfer. The burden is on the dissenting shareholders to show that the court should exercise its discretion to enjoin the required transfer, which the court should be unlikely to do unless there is evidence of fraud or bad faith or collusion between the offeror and the holders of the shares who have accepted the offer as a means of unfairly forcing out minority shareholders.

Under Texas law, a parent company is permitted to merge with a subsidiary by the resolution of its board of directors, without shareholder approval, if the parent company owns at least 90% of each class of equity interest of its subsidiary and the parent company will be the surviving entity. With respect to certain mergers and takeovers of Texas corporations, Texas law provides rights of dissent and appraisal for dissenting shareholders.

Share Repurchases

Bermuda law permits a company to purchase its own shares if authorized to do so by its memorandum of association or byelaws. The bye-laws of Forbes Bermuda in effect prior to the Texas Conversion allowed us to purchase our own shares for cancellation or to acquire them as treasury shares on such terms as our board of directors saw fit, without obtaining prior shareholder approval.

Texas law permits a corporation to redeem its own shares on such terms as its board of directors may authorize, provided that a redemption may not violate such corporation’s certificate of formation and, unless done in compliance with the termination of the corporation, may not cause the corporation to become insolvent and may not exceed the net assets of the corporation. As with Forbes Bermuda prior to the Texas Conversion, the ability of Forbes Texas to repurchase its common stock may be limited by the indenture governing its senior notes and the rights of the holders of the Series B Preferred Stock.

Blank Check Preferred Stock

The authorized share capital of Forbes Bermuda, under the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion, included 10,000,000 authorized preference shares, of which no Series A Preferred Shares and 588,059 Series B Preferred Shares were issued. The bye-laws of Forbes Bermuda allowed our board of directors, without shareholder approval, to determine the powers, preferences and rights of the preference shares and to issue any authorized but unissued preference shares (subject to restrictions in our current certificates of designation).

The share capital of Forbes Texas includes 10,000,000 authorized shares of preferred stock of which no shares of Series A Preferred Stock and 588,059 shares of Series B Preferred Stock are outstanding. Similar to the bye-laws of Forbes Bermuda, the certificate of formation of Forbes Texas

permits the board of directors, without shareholder approval, to determine the powers, preferences and rights of the preference shares and to issue any authorized but unissued preference shares. This ability could be used by our board to delay, defer or prevent a change of control. Further, the issuance of preferred stock with a liquidation preference greater than the common stock could decrease the amount of assets available for distribution to holders of common stock in the event of a liquidation. Our board of directors does not currently intend to seek shareholder approval to issue any preferred stock, unless otherwise required by law.

Variation of Shareholder Rights

Under Bermuda law, if at any time a company has more than one class of shares, the rights attaching to any class, unless otherwise provided for by the terms of issue of the relevant class, of share may be varied with (i) the consent in writing of the holders of 75% in nominal value of the issued shares of that class, or (ii) the sanction of a resolution passed at a separate general meeting of holders of the shares of the class at which a quorum consisting of at least two persons holding or representing one-third of the issued shares of the relevant class is present. Notwithstanding the foregoing, the bye-laws of Forbes Bermuda in effect prior to the Texas Conversion provided that the rights attached to any class of share (unless otherwise provided by the terms of the issue of the shares of that class) could have been varied with the consent in writing of the holders of 66 2/3% of the issued shares of that class or with the sanction of a resolution passed by holders of 66 2/3% of the shares of the class represented in person or by proxy at a meeting at which a quorum is present. In addition, the rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

The rights attached to the share classes of Forbes Texas are set forth in its certificate of formation. Under the TBOC, an amendment to the certificate of formation requires the approval of the holders of at least two-thirds of the outstanding shares of the corporation, unless any class or series is entitled to vote thereon as a class, in which event the proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds of the shares within each class or series entitled to vote thereon as a class and at least two-thirds of the total outstanding shares entitled to vote thereon. Holders of the outstanding shares of a class, or series, must vote as a class upon a proposed amendment, regardless of whether the holders are entitled to vote thereon by the certificate of formation, if the amendment would: (i) increase or decrease the aggregate number of authorized shares of such class or series; (ii) increase or decrease the par value of the shares of such class or series; (iii) effect an exchange, reclassification or cancellation of all or part of the shares of such series; (iv) effect an exchange, or create a right of exchange of all or part of the shares of such class or series; (v) change the designations, preferences, limitations or relative rights of such class or series; (vi) change the shares of such class or series into the same or a different number of shares of the same class or another class or series; (vii) create a new class or series of shares having rights and preferences equal, prior or superior to the shares of such class or series; (viii) increase the rights and preferences of any class or series having rights and preferences equal, prior or superior to the shares of such class or series; (ix) increase the rights and preferences of any class or series having rights or preferences later or inferior to the shares of such class or series in such a manner as to become equal, prior or superior to the shares of such class or series; (x) divide the shares of such class into series; (xi) limit or change the existing preemptive rights of the shares of such class or series; (xii) cancel or otherwise affect dividends on the shares of such class or series which had accrued but had not been declared; or (xiii) include or delete any provision required or permitted as to close corporations.

Access to Books and Records and Dissemination of Information

Under Bermuda law, members of the general public have a right to inspect the public documents of a Bermuda company available at the office of the Registrar of Companies in Bermuda. These documents include the company’s memorandum of association, including its objects and powers, and certain alterations to the memorandum of association, notice of registered office, certificate of incorporation, register of charges and any prospectus filed with the Bermuda Registrar of Companies. The shareholders have the additional right to inspect the bye-laws of the company, minutes of general meetings, and the company’s audited financial statements, which must be presented to the annual general meeting. The register of members of a company is also open to inspection by shareholders and

by members of the general public without charge. The register of members is required to be open for inspection for not less than two hours in any business day (subject to the ability of a company to close the register of members for not more than thirty days in a year). A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda. A company is required to keep at its registered office a register of directors and officers that is open for inspection for not less than two hours in any business day by members of the public without charge. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.

Texas law provides that, subject to the governing documents and on written demand stating a proper purpose, a shareholder of a corporation, which has been a shareholder for at least six months immediately preceding the demand or holds at least five percent of all the outstanding shares of the corporation, is entitled to examine and copy the relevant books, records of account, minutes and share transfer records. Further, a list of shareholders entitled to vote at each shareholder meeting must be available for inspection by shareholders during regular business hours at least 10 days prior to such shareholder meeting.

Limitation of Liability and Indemnification Matters

Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers, and auditors against any liability that by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty, or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer, or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers, and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to section 281 of the Companies Act.

The bye-laws of Forbes Bermuda in effect prior to the Texas Conversion provided that it shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. The bye-laws of Forbes Bermuda provided that the shareholders waived all claims or rights of action that they had, individually or in right of the Company, against each of the Company’s directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. The Companies Act permits the Company to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him or her in respect of any negligence, default, breach of duty, or breach of trust, whether or not the Company may otherwise indemnify such officer or director. The Company purchased and maintained a directors’ and officers’ liability policy for such a purpose.

Under the TBOC, a corporation is permitted to provide indemnification by certificate of formation or bylaw provision, resolution of the shareholders or directors, agreement, or otherwise, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by a governing person, former governing person, or delegate, who was, is, or is threatened to be made a named defendant or respondent in a proceeding if it is determined that the person: (i) conducted himself in good faith; (ii) reasonably believed that (a) in the case of conduct in his official capacity that his conduct was in the corporation’s best interest and (b) in any other case, that his conduct was not opposed to the corporation’s best interest; and (iii) in the case of any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. However, if the person is found liable to the corporation, or if the person is found liable on the basis that he received an improper personal benefit, indemnification under Texas law is limited to the reimbursement of reasonable expenses actually incurred by the person in connection with the proceedings and does not include a judgment, a penalty, a fine, and an excise or similar tax, and no indemnification will be available if the person is found liable for willful or intentional misconduct, breach of the person’s duty of loyalty, or an act or omission not committed in good faith that constitutes a breach of a duty owed by the person to the corporation. Under Texas law, indemnification by the corporation is mandatory if the director is wholly successful on the merits or otherwise, in the defense of the proceeding.

The bylaws of Forbes Texas provide that it shall indemnify, to the fullest extent permitted by Texas law, any person who was, is or is threatened to be made a respondent in a proceeding by reason of the fact that such person is or was a governing person or a delegate of the Company. Under Texas law, Forbes Texas will remain obligated on any indemnification obligations of Forbes Bermuda arising prior to the Texas Conversion.

Dissolution

Under Bermuda law, a solvent company may be wound up by way of a shareholders’ voluntary liquidation. Prior to the company entering liquidation, the majority of the directors, shall each make and file with the Bermuda Register of Companies a statutory declaration to the effect that they have formed the opinion that the company would be able to pay its debts in full within such period not exceeding twelve months from the commencement of the winding up. A general meeting of shareholders would be convened primarily for the purposes of passing a resolution that the company be wound up voluntarily and appointing a liquidator. The winding up of the company is deemed to commence at the time of the passing of the resolution.

Under Texas law, a corporation with outstanding capital stock may voluntarily dissolve (1) if the board of directors adopts a resolution to that effect and the holders of two-thirds of the outstanding shares entitled to vote thereon vote for such resolution (unless any class or series is entitled to vote thereon as a class, in which event the proposed resolution shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds of the shares within each class or series entitled to vote thereon as a class and at least two-thirds of the total outstanding shares entitled to vote thereon); or (2) if all shareholders of the corporation consent in writing to the dissolution.

Listing

Prior to the Share Consolidation and Texas Conversion, the common shares of Forbes Bermuda were listed on the Toronto Stock Exchange under the symbol “FRB.TO” and traded in the U.S. on the “pink sheets” under the symbol “FESLF.PK.” We have received approval from the TSX to continue listing the common stock of Forbes Texas after the Share Consolidation and Texas Conversion under the symbol “FRB.TO.” We began trading on a post-consolidated, post-conversion basis on the TSX on Tuesday, August 16, 2011. As discussed above, the Company’s common stock was listed on NASDAQ on Tuesday, August 16, 2011. No preference shares of Forbes Bermuda were listed on any exchange and Forbes Texas does not currently intend to list its Preferred Stock on any exchange.

Transfer Agent and Registrar

Prior to the Texas Conversion, the transfer agent and registrar for the common shares of Forbes Bermuda was CIBC Mellon Trust Company. Upon effectiveness of the Conversion, American Stock Transfer & Trust Company, LLC became the transfer agent and registrar for the common stock of Forbes Texas and CIBC Mellon Trust Company became the co-transfer agent for the common stock of Forbes Texas.

Governing Documents

We effected the Texas Conversion by filing a plan of conversion, certificate of formation and certificate of conversion of Forbes Texas with the Texas Secretary of State and a notice of discontinuance for Forbes Bermuda with the Bermuda Registrar of Companies. In connection with the Texas Conversion, we also adopted a new set of bylaws that will be governed by Texas law. The governing documents of Forbes Texas differ from the governing documents of Forbes Bermuda. Similarly, Texas law differs from Bermuda law. These differences may affect the rights of our shareholders. See “Description of Capital Stock—Differences between the Governing Corporate Law and Organizational Documents for Forbes Bermuda and Forbes Texas” above.

Effective Time

To effect the Texas Conversion we (i) filed the plan of conversion, certificate of formation and certificate of conversion of Forbes Texas with the Texas Secretary of State, (ii) filed a notice of discontinuance with the Bermuda Registrar of Companies and (iii) filed certified copies of the certificates filed in Texas with the Bermuda Registrar of Companies. The Texas Conversion was deemed effective on the effective date set forth in the certificate of formation, plan of conversion and certificate of conversion, which was August 12, 2011 at 6:00 a.m., Central time, once all the necessary documents had been properly filed.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE SHARE CONSOLIDATION

AND TEXAS CONVERSION

Since its formation in 2008, Forbes Bermuda had always been treated as a U.S. domestic corporation pursuant to Section 7874 (b) of the Internal Revenue Code of 1986, as amended, and, as a result, was subject to U.S. federal income taxes. Further, as the principal operations of Forbes Bermuda are in Texas, Forbes Bermuda had been subject to Texas franchise taxes. For these reasons, the Texas Conversion did not cause the Company to be subject to additional U.S. federal Income taxes or Texas franchise taxes.

Additionally, with respect to the Company’s shareholders, the Share Consolidation and Texas Conversion each constituted a tax-free reorganization within the meaning of Section 368(a)(1)(E) and Section 368(a)(1)(F) of the Code, respectively. Accordingly, for federal income tax purposes: (i) no gain or loss should be recognized by the holders of common stock of Forbes Texas as a result of the consummation of the Share Consolidation and Texas Conversion (except with respect to any cash received in lieu of fractional shares), (ii) the aggregate tax basis of shares of common stock of Forbes Texas received as a result of the Share Consolidation and in the Texas Conversion is the same as the aggregate tax basis of common shares of Forbes Bermuda exchanged in the Share Consolidation and Texas Conversion, (iii) the holding period with respect to the common stock of Forbes Texas includes the period during which such shareholder held the corresponding common shares of Forbes Bermuda, so long as the common shares were held as a capital asset at the time of the consummation of the Share Consolidation and Texas Conversion, and (iv) the Company did not recognize any gain or loss as a result of the Share Consolidation and Texas Conversion.

For United States federal income tax purposes, the payment of cash in lieu of the issuance of fractional shares as a result of the Share Consolidation will result in a taxable gain or loss. The amount of such gain or loss to a shareholder will be the same as if fractional shares were actually issued by the Company and were immediately sold by such shareholder for the cash payment received.

The foregoing is a discussion of all material federal income tax consequences associated with the Share Consolidation and the Tax Conversion for the Company and its U.S. shareholders. The laws, regulations, rulings and decisions on which this overview is based, are all subject to change (possibly with retroactive effect). This discussion does not address applicable state, local or foreign tax laws. WE STRONGLY URGE EACH SHAREHOLDER TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE SHARE CONSOLIDATION AND TEXAS CONVERSION.

This filing includes forward-looking statements concerning the Company’s plans and intentions regarding the trading of the Company’s common stock on the TSX and NASDAQ. These forward-looking statements are based upon management’s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company and which could cause actual results to differ materially from such statements. Additional factors that you should consider are set forth in detail in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, which was previously filed, as well as other filings the Company has made with the Securities and Exchange Commission.

Item 5.03 – Amendments to the Articles of Incorporation or Bylaws, Change in Fiscal Year.

The information included in Item 3.03 above is hereby incorporated by reference into this Item 5.03.

Item 8.01 – Other Events.

In connection with the Company’s listing and trading of its common stock on a post-consolidation, post-conversion basis on the NASDAQ, the board of directors adopted and approved amendments to the Audit Committee Charter, the Compensation Committee Charter, Nominating Corporate Governance Committee Charter and the Corporate Governance Guidelines to comply with NASDAQ’s requirements relating to Audit Committees, the Director Nominations Process, the Compensation of Officers, Board Composition, Executive Sessions, Quorum and Code of Conduct.

The amended and restated Audit Committee Charter, the Compensation Committee Charter, Nominating Corporate Governance Committee Charter and the Corporate Governance Guidelines are attached hereto as Exhibits 99.3, 99.4, 99.5 and 99.6 respectively, and will each be posted in the Investor Relations section of the Company’s website, www.forbesenergyservices.com, as soon as practicable.

Item 9.01 – Financial Statements and Exhibits.

EXHIBIT INDEX

Exhibit No.	Description
3.1	Certificate of Formation of Forbes Energy Services Ltd. (including the certificates of designation for the Company’s Series A Preferred Stock and Series B Preferred Stock attached as appendices thereto).
3.2	Amended and Restated Bylaws of Forbes Energy Services Ltd.
4.1	Specimen Certificate for the Company’s common stock, $0.04 par value.
99.1	Press Release, dated August 12, 2011.
99.2	Press Release, dated August 15, 2011.
99.3	Audit Committee Charter
99.4	Compensation Committee Charter
99.5	Nominating Corporate Governance Committee Charter
99.6	Corporate Governance Guidelines

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Forbes Energy Services Ltd
Date: August 17, 2011	/s/ L. Melvin Cooper
	L. Melvin Cooper, Chief Financial Officer

EX-3.1

Exhibit 3.1

CERTIFICATE OF FORMATION

OF

FORBES ENERGY SERVICES LTD.

The corporation is being incorporated pursuant to a plan of conversion. The converting entity is Forbes Energy Services Ltd., an entity formed under the laws of Bermuda (“Forbes Bermuda”) on April 9, 2008. As provided in Section 10.106 of the Texas Business Organizations Code (the “TBOC”), the existence of corporation shall be deemed to have commenced on the date that the corporate existence of Forbes Bermuda commenced and the corporation shall be deemed to be the same legal entity as Forbes Bermuda.

ARTICLE ONE

NAME

The name of the entity is Forbes Energy Services Ltd.

ARTICLE TWO

TYPE OF ENTITY

The type of filing entity being formed is a Texas for-profit corporation.

ARTICLE THREE

DURATION

The period of the corporation’s duration is perpetual.

ARTICLE FOUR

PURPOSE

The purpose for which the corporation is formed is for the transaction of any and all lawful business for which a for-profit corporation may be organized under the Texas Business Organizations Code. The corporation is specifically authorized to conduct operations in Mexico, including the rendering of services contemplated in any contracts with Mexican governmental organisms or entities, to the extent granted, but not including the drilling of oil and gas wells or the constructions of pipelines for oil or its derivatives unless the corporation has first received all necessary authorizations from the relevant Mexican authorities.

ARTICLE FIVE

INITIAL REGISTERED OFFICE AND AGENT

The address of the initial registered office of the corporation is 800 Brazos Street, Suite 400, Austin, Texas 78701 and the name of its initial registered agent at such address is Capitol Services Inc.

ARTICLE SIX

BOARD OF DIRECTORS

The number of directors constituting the initial Board of Directors is six, and the names and addresses of the person who are to serve as directors until the first annual meeting of the shareholders or until his successor is elected and qualified are:

NAME	ADDRESS
John E. Crisp	3000 South Business Highway 281, Alice, Texas 78332
Charles C. Forbes	3000 South Business Highway 281, Alice, Texas 78332
Dale W. Bossert	3000 South Business Highway 281, Alice, Texas 78332
Travis H. Burris	3000 South Business Highway 281, Alice, Texas 78332
Janet L. Forbes	3000 South Business Highway 281, Alice, Texas 78332
William W. Sherrill	3000 South Business Highway 281, Alice, Texas 78332

ARTICLE SEVEN

CAPITAL STOCK

The total number of shares of all classes of stock that the corporation is authorized to issue is fifty-five million (55,000,000) shares, consisting of one hundred twelve million five hundred thousand (112,500,000) shares of Common Stock, $0.04 par value per share (the “Common Stock”), and ten million (10,000,000) shares of Preferred Stock, $0.01 par value per share (the “Preferred Stock”). The holders of Common Stock shall, subject to the limitations provided herein (including, without limitation, the rights attaching to the Preferred Stock), (a) be entitled to one vote per share; (b) be entitled to such dividends as the board of directors of the corporation (the “Board”) may from time to time declare; (c) in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganization or otherwise or upon any distribution of capital, be entitled to the surplus assets of the Company; and (d) generally be entitled to enjoy all of the rights attaching to common stock under the TBOC.

Subject to the limitations set forth elsewhere herein, the Board is authorized to provide, by a vote of at least seventy-five percent (75%) of the directors then in office, for the issuance of the Preferred Stock in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the terms, including designation, powers, preferences, rights, qualifications, limitations and restrictions of the shares of each such series (and, for the avoidance of doubt, such matters and the issuance of such Preferred Stock shall not be deemed to vary the rights attached to the Common Stock or, subject to the terms of any other series of Preferred Stock, to vary the rights attached to any other series of Preferred Stock). The authority of the Board with respect to each series shall include, but not be limited to, determination of the following:

(a) the number of shares constituting that series and the distinctive designation of that series;

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(b) the dividend rate on the shares of that series, whether dividends shall be cumulative and, if so, from which date or dates, and the relative rights of priority, if any, of the payment of dividends on shares of that series;

(c) whether that series shall have voting rights, in addition to the voting rights provided by law, and if so, the terms of such voting rights;

(d) whether that series shall have conversion or exchange privileges (including, without limitation, conversion into Common Stock), and, if so, the terms and conditions of such conversion or exchange, including provision for adjustment of the conversion or exchange rate in such events as the Board shall determine;

(e) whether or not the shares of that series shall be redeemable or repurchaseable, and, if so, the terms and conditions of such redemption or repurchase, including the manner of selecting shares for redemption or repurchase if less than all shares are to be redeemed or repurchased, the date or dates upon or after which they shall be redeemable or repurchaseable, and the amount per share payable in case of redemption or repurchase, which amount may vary under different conditions and at different redemption or repurchase dates;

(f) whether that series shall have a sinking fund for the redemption or repurchase of shares of that series, and, if so, the terms and amount of such sinking fund;

(g) the right of the shares of that series to the benefit of conditions and restrictions upon the creation of indebtedness of the corporation or any subsidiary, upon the issue of any additional shares (including additional shares of such series or any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the corporation or any subsidiary of any issued shares of the corporation;

(h) the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment in respect of shares of that series; and

(i) any other relative participating, optional or other special rights, qualifications, limitations or restrictions of that series.

Any share of Preferred Stock of any series which have been redeemed (whether through the operation of a sinking fund or otherwise) or which, if convertible or exchangeable, have been converted into or exchanged for shares of any other class or classes shall have the status of authorized and unissued Preferred Stock of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board or as part of any other series of Preferred Stock, all subject to the conditions and the restrictions on issuance set forth in the resolution or resolutions adopted by the Board providing for the issue of any series of Preferred Stock.

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At the discretion of the Board, whether or not in connection with the issuance and sale of any shares or other securities of the corporation, the corporation may issue securities, contracts, warrants or other instruments evidencing any shares, option rights, securities having conversion or option rights, or obligations on such terms, conditions and other provisions as are fixed by the Board, including, without limiting the generality of this authority, conditions that preclude or limit any person or persons owning or offering to acquire a specified number or percentage of the issued shares of Common Stock, other shares, option rights, securities having conversion or option rights, or obligations of the corporation or transferee of the person or persons from exercising, converting, transferring or receiving the shares, option rights, securities having conversion or option rights, or obligations.

All the rights attaching to a share of treasury stock shall be suspended and shall not be exercised by the corporation while it holds such treasury stock and, except where required by the TBOC, all treasury stock shall be excluded from the calculation of any percentage or fraction of the share capital, or shares, of the corporation.

If, at any time, the capital stock is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the corporation is being wound-up, be varied with the consent in writing of the holders of 66 2/3% of the issued shares of that class or by a resolution passed by holders of 66 2/3% of the shares of the class represented in person or by proxy at a meeting at which a quorum is present or otherwise by consent as set forth in the bylaws. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

The corporation has created a series of Preferred Stock designated as Series A Junior Participating Preferred Shares (the “Series A Preferred Stock”) and a series of Preferred Stock designated as the corporation’s Series B Senior Convertible Preferred Shares (the “Series B Preferred Stock”). The designations, powers, preferences and other special rights of the Series A Preferred Stock and Series B Preferred Stock, and the qualifications, limitations or restrictions thereof, are set forth in Appendix A and Appendix B hereto, respectively (and for the purposes of this certificate of incorporation, Appendix A and Appendix B are deemed to be the certificates of designation for the Series A Preferred Stock and Series B Preferred Stock, respectively). Each certificate of designations for a series of Preferred Stock created pursuant to this certificate of incorporation (including Appendix A and Appendix B) shall be incorporated by reference in and be deemed part of this certificate of incorporation.

Upon the filing of this certificate of formation and the related plan of conversion of Forbes Bermuda with the Secretary of State of the State of Texas (the “Effective Time”), (i) each common share, $0.04 par value, of Forbes Bermuda issued and outstanding immediately prior to the Effective Time shall become and for all purposes be deemed to be one issued and outstanding, fully paid and non-assessable share of Common Stock of the corporation., without any action required on the part of the corporation, its stockholders or Forbes Bermuda’s Shareholders, and any share certificate that, immediately prior to the Effective Time, represented common shares of Forbes Bermuda shall, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent the same number of shares

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of Common Stock, and (ii) each of the Series B Senior Convertible Preferred Shares of Forbes Bermuda issued and outstanding immediately prior to the Effective Time shall become and for all purposes be deemed to be one issued and outstanding, fully paid and non-assessable share of Series B Preferred Stock, without any action required on the part of the corporation, its stockholders or Forbes Bermuda’s Shareholders, and any share certificate that, immediately prior to the Effective Time, represented any Series B Preferred Shares of Forbes Bermuda shall, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent the same number of shares of Series B Preferred Stock of the corporation.

ARTICLE EIGHT

AMENDMENT OF BYLAWS

The bylaws of the Company shall not be rescinded, altered or amended until the same has been approved by a majority of the Directors then in office and by a resolution of the Shareholders. Further bylaws 14, 15, 32, 34, 36 and 63 may not be rescinded, altered or amended (and no new bylaw may be made which would have the effect of rescinding, altering or amending the provisions of such bylaws) until the same has been approved by a resolution of the Board, including the affirmative vote of not less than two-thirds of the Directors then in office and by a resolution of the Shareholders including the affirmative vote of not less than two-thirds of the voting shares.

ARTICLE NINE

LIABILITY OF DIRECTORS

No director of the corporation shall be personally liable to the corporation or the shareholders thereof for monetary damages for an act or omission in the director’s capacity as director, except for liability for any of the following:

(a) a breach of the director’s duty of loyalty to the corporation or its shareholders;

(b) an act or omission not in good faith that constitutes a breach of the director’s duty to the corporation;

(c) an act or omission not in good faith that involves intentional misconduct or a knowing violation of the law;

(d) a transaction from which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director’s duties; or

(e) an act or omission for which the director’s liability is provided expressly by an applicable statute.

If the TBOC is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the TBOC, as so amended.

[Signature Page to Follow]

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IN WITNESS WHEREOF, I have signed this certificate of incorporation this 12^th day of August, 2011.

/s/ L. Melvin Cooper

L. Melvin Cooper, Chief Financial Officer

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Appendix A

Certificate of Designation of the Series A Preferred Stock

CERTIFICATE OF DESIGNATION

OF

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

OF

FORBES ENERGY SERVICES LTD.

Pursuant to the authority conferred upon the Board of Directors of the Company by its certificate of formation (the “Certificate of Formation”) and its bylaws (the “Bylaws”), a series of preferred stock, par value $0.01 each (shares of any authorized series of preferred stock, the “Preferred Stock”) be and it hereby is established, in the number and having the designation, preferences, terms, qualifications, limitations, restrictions and relative rights, including voting rights, set forth below:

Section 1. Designation and Amount. The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares constituting such series shall be six hundred thousand (600,000).

Section 2. Dividends and Distributions.

(A) Subject to the provisions for adjustment hereinafter set forth, and subject to the Texas Business Organizations Code, as amended, the holders of Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, (i) cash dividends in an amount per share (rounded to the nearest cent) equal to 100 times the aggregate per share amount of all cash dividends declared or paid on the Common Stock, $.04 par value per share, of the Company (the “Common Stock”) and (ii) a preferential cash dividend (the “Preferential Dividends”), if any, on the first day of January, April, July and October of each year (each a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share of Series A Preferred Stock or fraction of a share of Series A Preferred Stock, in an amount equal to $1.00 per share of Series A Preferred Stock less the per share amount of all cash dividends declared on the Series A Preferred Stock pursuant to clause (i) of this sentence since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share of Series A Preferred Stock or fraction of a share of Series A Preferred Stock. If the Company shall, at any time after the issuance of any shares of Series A Preferred Stock or fraction of a share of Series A Preferred Stock, make any distribution on the Common Stock of the Company, whether by way of a dividend or a reclassification of shares, a recapitalization, reorganization or partial liquidation of the Company or otherwise, which is payable in cash or any debt security, debt instrument, real or personal property or any other property (other than cash dividends subject to the immediately preceding sentence, a distribution of Common Stock or other capital stock of the Company or a distribution of rights or warrants to acquire any such share, including any debt security convertible into or exchangeable for any such share, at a price less than the Fair Market Value of such share), then and in each such event the Company shall simultaneously pay on each then outstanding share of Series A Preferred Stock of the Company a distribution, in like kind, of 100 times such distribution paid on a share of Common Stock (subject to the provisions for adjustment hereinafter set forth). The dividends and distributions on the Series A Preferred Stock to which holders thereof are entitled pursuant to clause (i) of the first sentence of this paragraph and pursuant to the second sentence of this paragraph are hereinafter referred to as

“Participating Dividends” and the multiple of such cash and non-cash dividends on the Common Stock applicable to the determination of the Participating Dividends, which shall be 100 initially but shall be adjusted from time to time as hereinafter provided, is hereinafter referred to as the “Dividend Multiple”. If the Company shall at any time after May 19, 2008 declare or pay any dividend or make any distribution on Common Stock payable in Common Stock, or effect a subdivision or split or a combination, consolidation or reverse split of the outstanding Common Stock into a greater or lesser number of shares of Common Stock, then in each such case the Dividend Multiple thereafter applicable to the determination of the amount of Participating Dividends which holders of Series A Preferred Stock shall be entitled to receive shall be the Dividend Multiple applicable immediately before such event multiplied by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately before such event.

(B) The Company shall declare each Participating Dividend at the same time it declares any cash or non-cash dividend or distribution on the Common Stock in respect of which a Participating Dividend is required to be paid. No cash or non-cash dividend or distribution on the Common Stock in respect of which a Participating Dividend is required to be paid shall be paid or set aside for payment on the Common Stock unless a Participating Dividend in respect of such dividend or distribution on the Common Stock shall be simultaneously paid, or set aside for payment, on the Series A Preferred Stock.

(C) Preferential Dividends shall begin to accrue on outstanding Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issuance of any shares of Series A Preferred Stock. Accrued but undeclared or unpaid Preferential Dividends shall cumulate but shall not bear interest. Preferential Dividends paid on the Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued, declared and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.

Section 3. Voting Rights. The holders of Series A Preferred Stock shall have the following voting rights:

(A) Subject to the provisions for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Company. The number of votes which a holder of Series A Preferred Stock is entitled to cast, as the same may be adjusted from time to time as hereinafter provided, is hereinafter referred to as the “Vote Multiple”. If the Company shall at any time after May 19, 2008 declare or pay any dividend on Common Stock payable in Common Stock, or effect a subdivision or split or a combination, consolidation or reverse split of the outstanding Common Stock into a greater or lesser number of shares of Common Stock, then in each such case the Vote Multiple thereafter applicable to the determination of the number of votes per share to which holders of Series A Preferred Stock shall be entitled after such event shall be the Vote Multiple immediately before such event multiplied by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately before such event.

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(B) Except as otherwise provided by law or in this Designation, the Certificate of Formation or the Bylaws of the Company, the holders of Series A Preferred Stock and the holders of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Company.

(C) If the Preferential Dividends accrued on the Series A Preferred Stock for four or more quarterly dividend periods, whether consecutive or not, shall not have been declared and paid or set apart for payment, the holders of record of Preferred Stock of the Company of all series (including the Series A Preferred Stock), other than any series in respect of which such right is expressly withheld by the Bylaws of the Company or the authorizing resolutions designating the rights in respect thereof, shall have the right, at the next meeting of shareholders called for the election of directors, to elect two members to the Board of Directors, which directors shall be in addition to the number required by the Bylaws before such event, to serve until the next Annual Meeting and until their successors are elected and qualified or their earlier resignation, removal or incapacity or until such earlier time as all accrued and unpaid Preferential Dividends upon the outstanding Series A Preferred Stock shall have been paid (or set aside for payment) in full. The holders of Series A Preferred Stock shall continue to have the right to elect directors as provided by the immediately preceding sentence until all accrued and unpaid Preferential Dividends upon the outstanding Series A Preferred Stock shall have been paid (or set aside for payment) in full. Such directors may be removed and replaced by such shareholders, and vacancies in such directorships may be filled only by such shareholders (or by the remaining director elected by such shareholders, if there be one) in the manner permitted by law; provided, however, that any such action by shareholders shall be taken at a meeting of shareholders and shall not be taken by written consent thereto.

(D) Except as otherwise set forth herein or required by law, or the Bylaws of the Company, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for the taking of any corporate action.

Section 4. Certain Restrictions.

(A) Whenever Preferential Dividends or Participating Dividends are in arrears, whether or not declared, or the Company shall be in default of payment thereof, thereafter and until all accrued and unpaid Preferential Dividends and Participating Dividends, whether or not declared, on Series A Preferred Stock outstanding shall have been paid or set aside for payment in full, and in addition to any and all other rights which any holder of Series A Preferred Stock may have in such circumstances, the Company shall not:

(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration, any shares ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

(ii) declare or pay dividends on or make any other distributions on any shares ranking on a parity as to dividends with the Series A Preferred Stock, unless dividends are paid ratably on the Series A Preferred Stock and all such parity shares on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled if the full dividends accrued thereon were to be paid;

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(iii) except as permitted by subparagraph (iv) of this paragraph 4(A), redeem or purchase or otherwise acquire for consideration any shares ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, provided, however, that the Company may at any time redeem, purchase or otherwise acquire shares of any such parity shares in exchange for any shares of the Company ranking junior (both as to dividends and upon liquidation, dissolution or winding up) to the Series A Preferred Stock; or

(iv) purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares ranking on a parity with the Series A Preferred Stock (either as to dividends or upon liquidation, dissolution or winding up), except in accordance with a purchase offer made to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B) The Company shall not permit any Subsidiary (as hereinafter defined) of the Company to purchase or otherwise acquire for consideration any shares of the Company unless the Company could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. A “Subsidiary” of the Company shall mean any corporation or other entity of which securities or other ownership interests having ordinary voting power sufficient to elect a majority of the Board of Directors or other persons performing similar functions are beneficially owned, directly or indirectly, by the Company or by any corporation or other entity that is otherwise controlled by the Company.

(C) The Company shall not issue any Series A Preferred Stock except upon exercise of Rights issued pursuant to that certain Rights Agreement dated as of May 19, 2008 between the Company and CIBC Mellon Trust Company, as Rights Agent, a copy of which is on file with the Assistant Secretary of the Company at its principal executive office and shall be made available to shareholders of record without charge upon written request therefor addressed to said Assistant Secretary. Notwithstanding the foregoing sentence, nothing contained in the provisions hereof shall prohibit or restrict the Company from issuing for any purpose any series of Preferred Stock with rights and privileges similar to, different from or greater than those of the Series A Preferred Stock.

Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares upon their retirement and cancellation shall become authorized but unissued Preferred Stock, without designation as to series, and such shares may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors in accordance with the Bylaws.

Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, no distribution shall be made

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(i) to the holders of shares ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless the holders of Series A Preferred Stock shall have received, subject to adjustment as hereinafter provided, (A) $100.00 per share plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, or (B) if greater than the amount specified in clause (i)(A) of this sentence, an amount equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock, as the same may be adjusted as hereinafter provided, and (ii) to the holders of shares ranking on a parity upon liquidation, dissolution or winding up with the Series A Preferred Stock, unless simultaneously therewith distributions are made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of Series A Preferred Stock are entitled under clause (i)(A) of this sentence and to which the holders of such parity shares are entitled, in each case upon such liquidation, dissolution or winding up. The amount to which holders of Series A Preferred Stock may be entitled upon liquidation, dissolution or winding up of the Company pursuant to clause (i)(B) of the foregoing sentence is hereinafter referred to as the “Participating Liquidation Amount” and the multiple of the amount to be distributed to holders of Common Stock upon the liquidation, dissolution or winding up of the Company applicable pursuant to said clause to the determination of the Participating Liquidation Amount, as said multiple may be adjusted from time to time as hereinafter provided, is hereinafter referred to as the “Liquidation Multiple”. If the Company shall at any time after May 19, 2008 declare or pay any dividend on Common Stock payable in Common Stock, or effect a subdivision or split or a combination, consolidation or reverse split of the outstanding Common Stock into a greater or lesser number of shares of Common Stock, then in each such case the Liquidation Multiple thereafter applicable to the determination of the Participating Liquidation Amount to which holders of Series A Preferred Stock shall be entitled after such event shall be the Liquidation Multiple applicable immediately before such event multiplied by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately before such event.

Section 7. Certain Reclassifications and Other Events.

(A) If holders of Common Stock of the Company receive after May 19, 2008 in respect of their Common Stock any share of capital stock of the Company (other than any shares of Common Stock of the Company), whether by way of reclassification, recapitalization, reorganization, dividend or other distribution or otherwise (a “Transaction”), then and in each such event the dividend rights, voting rights and rights upon the liquidation, dissolution or winding up of the Company of the Series A Preferred Stock shall be adjusted so that after such event the holders of Series A Preferred Stock shall be entitled, in respect of each Series A Preferred Stock held, in addition to such rights in respect thereof to which such holder was entitled immediately before such adjustment, to (i) such additional dividends as equal the Dividend Multiple in effect immediately before such Transaction multiplied by the additional dividends which the holder of a share of Common Stock shall be entitled to receive by virtue of the receipt in the Transaction of such capital stock, (ii) such additional voting rights as equal the Vote Multiple in effect immediately before such Transaction multiplied by the additional voting rights which the holder of a share of Common Stock shall be entitled to receive by virtue of the receipt in the Transaction of such capital stock and (iii) such additional distributions upon liquidation, dissolution or winding up of the Company as equal the Liquidation Multiple in effect

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immediately before such Transaction multiplied by the additional amount which the holder of a share of Common Stock shall be entitled to receive upon liquidation, dissolution or winding up of the Company by virtue of the receipt in the Transaction of such capital stock, as the case may be, all as provided by the terms of such capital stock.

(B) If holders of Common Stock of the Company receive after May 19, 2008 in respect of their Common Stock any right or warrant to purchase Common Stock (including as such a right, for all purposes of this paragraph, any security convertible into or exchangeable for Common Stock) at a purchase price per share less than the Fair Market Value (as hereinafter defined) of a share of Common Stock on the date of issuance of such right or warrant, then and in each such event the dividend rights, voting rights and rights upon the liquidation, dissolution or winding up of the Company of the Series A Preferred Stock shall each be adjusted so that after such event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple shall each be the product of the Dividend Multiple, the Vote Multiple and the Liquidation Multiple, as the case may be, in effect immediately before such event multiplied by a fraction the numerator of which shall be the number of shares of Common Stock outstanding immediately before such issuance of rights or warrants plus the maximum number of shares of Common Stock which could be acquired upon exercise in full of all such rights or warrants and the denominator of which shall be the number of shares of Common Stock outstanding immediately before such issuance of rights or warrants plus the number of shares of Common Stock which could be purchased, at the Fair Market Value of the Common Stock at the time of such issuance, by the maximum aggregate consideration payable upon exercise in full of all such rights or warrants.

(C) If holders of Common Stock of the Company receive after May 19, 2008 in respect of their Common Stock any right or warrant to purchase shares of the Company (other than Common Stock), including as such a right, for all purposes of this paragraph, any security convertible into or exchangeable for shares of the Company (other than Common Stock), at a purchase price per share less than the Fair Market Value of such shares on the date of issuance of such right or warrant, then and in each such event the dividend rights, voting rights and rights upon liquidation, dissolution or winding up of the Company of the Series A Preferred Stock shall each be adjusted so that after such event each holder of a share of Series A Preferred Stock shall be entitled, in respect of each share of Series A Preferred Stock held, in addition to such rights in respect thereof to which such holder was entitled immediately before such event, to receive (i) such additional dividends as equal the Dividend Multiple in effect immediately before such event multiplied, first, by the additional dividends to which the holder of a share of Common Stock shall be entitled upon exercise of such right or warrant by virtue of the shares which could be acquired upon such exercise and multiplied again by the Discount Fraction (as hereinafter defined) and (ii) such additional voting rights as equal the Vote Multiple in effect immediately before such event multiplied, first, by the additional voting rights to which the holder of a share of Common Stock shall be entitled upon exercise of such right or warrant by virtue of the shares which could be acquired upon such exercise and multiplied again by the Discount Fraction and (iii) such additional distributions upon liquidation, dissolution or winding up of the Company as equal the Liquidation Multiple in effect immediately before such event multiplied, first, by the additional amount which the holder of a share of Common Stock shall be entitled to receive upon liquidation, dissolution or winding up of the Company upon exercise of such right or warrant by virtue of the shares which could be acquired upon such exercise and multiplied again by the Discount Fraction. For purposes of this paragraph, the “Discount Fraction” shall be a fraction

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the numerator of which shall be the difference between the Fair Market Value of a share of the capital stock subject to a right or warrant distributed to holders of Common Stock of the Company as contemplated by this paragraph immediately after the distribution thereof and the purchase price per share for such share pursuant to such right or warrant and the denominator of which shall be the Fair Market Value of such share immediately after the distribution of such right or warrant.

(D) For purposes of this Section 7, the “Fair Market Value” of a share of the Company (including a Common Stock) on any date shall be deemed to be the average of the daily closing price per share thereof over the thirty consecutive Trading Days (as such term is hereinafter defined) immediately before such date; provided, however, that, if such Fair Market Value of any such share is determined during a period which includes any date that is within thirty Trading Days after (i) the ex-dividend date for a dividend or distribution payable in such shares of such stock or securities convertible into shares of such stock, or (ii) the effective date of any subdivision, split, combination, consolidation, reverse stock split or reclassification of such stock, then, and in each such case, the Fair Market Value shall be appropriately adjusted by the Board of Directors of the Company to take into account ex-dividend or post-effective date trading. The closing price for any day shall be the last sale price, regular way, or, in case, no such sale takes place on such day, the average of the closing bid and asked prices, regular way (in either case, as reported in the applicable transaction reporting system with respect to securities listed or admitted to trading on the Toronto Stock Exchange), or, if the shares are not listed or admitted to trading on the Toronto Stock Exchange or the Toronto Stock Exchange is not the principal national securities exchange on which the shares are listed or admitted to trading, as reported in the applicable transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares are listed or admitted to trading or, if the shares are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System (“Nasdaq”) or such other system then in use, or if on any such date the shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the shares selected by the Board of Directors of the Company. The term “Trading Day” shall mean a day on which the principal national securities exchange on which the shares are listed or admitted to trading is open for the transaction of business or, if the shares are not listed or admitted to trading on any national securities exchange, on which the Toronto Stock Exchange or such other national securities exchange as may be selected by the Board of Directors of the Company is open. If the shares are not publicly held or not so listed or traded on any day within the period of thirty Trading Days applicable to the determination of Fair Market Value thereof as aforesaid, “Fair Market Value” shall mean the fair market value thereof per share as determined in good faith by the Board of Directors of the Company. In either case referred to in the foregoing sentence, the determination of Fair Market Value shall be described in a statement filed with the Secretary of the Company.

Section 8. Consolidation, Merger, etc. If the Company shall enter into any consolidation, merger, combination, amalgamation or other transaction in which the Common Stock is exchanged for or changed into other shares or securities, cash and/or any other property, then in any such case each outstanding share of Series A Preferred Stock shall at the same time

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be similarly exchanged for or changed into the aggregate amount of shares, securities, cash and/or other property (payable in like kind), as the case may be, for which or into which each share of Common Stock is changed or exchanged multiplied by the highest of the Vote Multiple, the Dividend Multiple or the Liquidation Multiple in effect immediately before such event.

Section 9. Effective Time of Adjustments.

(A) Adjustments to the Series A Preferred Stock required by the provisions hereof shall be effective as of the time at which the event requiring such adjustments occurs.

(B) The Company shall give prompt written notice to each holder of a share of Series A Preferred Stock of the effect of any adjustment to the voting rights, dividend rights or rights upon liquidation, dissolution or winding up of the Company of such shares required by the provisions hereof. Notwithstanding the foregoing sentence, the failure of the Company to give such notice shall not affect the validity of or the force or effect of or the requirement for such adjustment.

Section 10. No Redemption. The Series A Preferred Stock shall not be redeemable at the option of the Company or any holder thereof. Notwithstanding the foregoing sentence of this Section, the Company may acquire Series A Preferred Stock in any other manner permitted by law, the provisions hereof or Bylaws of the Company.

Section 11. Ranking. Unless otherwise provided in the Bylaws of the Company or the rights relating to a subsequent series of preferred stock of the Company, the Series A Preferred Stock shall rank junior to all other series of the Company’s preferred stock as to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up and senior to the Common Stock.

Section 12. Amendment. Except as contemplated herein, the provisions hereof and the Bylaws of the Company shall not be amended in any manner which would adversely affect the rights, privileges or powers of the Series A Preferred Stock without, in addition to any other vote of shareholders required by law, the affirmative vote of the holders of two-thirds or more of the outstanding Series A Preferred Stock, voting together as a single class.

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Appendix B

Certificate of Designation of the Series B Preferred Stock

CERTIFICATE OF DESIGNATION

OF

SERIES B SENIOR CONVERTIBLE PREFERRED STOCK

OF

FORBES ENERGY SERVICES LTD.

Pursuant to the authority conferred upon the board of directors (the “Board of Directors”) of Forbes Energy Services Ltd. (the “Company”) by its certificate of formation (the “Certificate of Formation”) and its bylaws (the “Bylaws”), a series of preferred stock, par value $0.01 each (shares of any authorized series of preferred stock, the “Preferred Stock”) be and it hereby is established, in the number and having the designation, preferences, terms, qualifications, limitations, restrictions and relative rights, including voting rights, set forth below:

Section 1. Designation and Amount. The shares of such series shall be designated as “Series B Senior Convertible Preferred Stock” (the “Series B Preferred Stock”) and the number of shares constituting such series shall be eight hundred and twenty-five thousand (825,000).

Section 2. Dividends and Distributions.

(A) Subject to the provisions for adjustment hereinafter set forth, and subject to the Texas Business Organizations Code, as amended (the “TBOC”), the holders of Series B Preferred Stock shall be entitled to receive out of funds legally available for the purpose, preferential dividends in an amount per share (rounded to the nearest cent) equal to five percent (5%) of the Series B Original Issue Price (as defined in paragraph 2(B) of this Section 2) (or $1.25) per annum per share, payable quarterly on the 28th day of February, May, August and November, respectively (the “Quarterly Payment Date”), in each year during which any shares of Series B Preferred Stock remain issued and outstanding (the “Preferential Dividends”). The Preferential Dividends shall accrue from the Issuance Date (as defined in paragraph 8(A) of Section 8), whether or not declared; shall be fully cumulative, prior and in preference to any declaration or payment of any dividend or other distribution on any other class or series of capital stock of the Company that is junior to the Series B Preferred Stock including, for greater certainty, the Series A Junior Participating Preferred Stock described in the Company’s rights agreement with CIBC Mellon Trust Company, as rights agent (the “Series A Junior Participating Preferred Stock”), and the common stock, par value $0.04 each (the “Common Stock”) of the Company. Except with the consent in writing of the holders of the Series B Preferred Stock, no dividend will at any time be declared and paid on or set apart for payment on any other class or series of capital stock of the Company that ranks in parity with the Series B Preferred Stock (the “Parity Stock”) in any quarter unless the Preferential Dividends on all the Series B Preferred Stock outstanding prior to such payment have been declared and paid through the most recent Quarterly Payment Date either prior to or coincidental with the payment of such dividends on the Parity Stock. The Preferential Dividends shall be payable, at the sole election of the Company, (i) in cash or (ii) in kind in the form of additional Series B Preferred Stock (with an issue price equal to the Series B Original Issue Price).

(B) If the Company elects to pay a Preferential Dividend in kind in the form of additional Series B Preferred Stock, subject to paragraph 7(D) of Section 7, the Company shall issue and deliver to each holder of the Series B Preferred Stock certificates representing the

number of additional shares of Series B Preferred Stock equal to the Preferential Dividend not paid in cash divided by twenty-five dollars ($25.00) (the “Series B Original Issue Price”). Subject to paragraph 7(D) of Section 7, any fractional share owing such holder of Series B Preferred Stock shall be held by the Company and paid in the form of a whole share when any fractional shares owed to such holder of Series B Preferred Stock equal at least one whole share and any such fractional shares thereafter to be held and accounted for by the Company in accordance with generally accepted accounting principles until paid as a whole share or shares. The Company shall at all times when the Series B Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock such number of its duly authorized shares of Series B Preferred Stock as shall be sufficient to pay in kind all unpaid and potential Preferential Dividends that the outstanding Series B Preferred Stock (and any shares of Series B Preferred Stock that may be issued as Preferential Dividends) may accrue prior to the Maturity Date (as defined in Section 10) (the “Potential In-Kind Dividends”). If at any time the number of authorized but unissued shares of Series B Preferred Stock shall not be sufficient to pay the Potential In-Kind Dividends, the Company shall take such corporate action as may be necessary to increase its authorized but unissued Series B Preferred Stock to such number of shares as shall be sufficient for such purposes, including, amending this Certificate of Designation pursuant to Section 12.

(C) Notwithstanding the foregoing, in the event that (i) the payment of a Preferential Dividend in cash would cause the Company to violate a covenant (“Cash Restriction”) under any of the agreements governing the Company’s debt facilities in existence on the Issuance Date (as defined in Section 8), as subsequently amended, supplemented, modified or replaced (the “Debt Agreements”), and (ii) the payment of a Preferential Dividend in kind would trigger a change of control provision in any of the Debt Agreements (“In-Kind Restriction”), the Company’s obligation to pay, in cash or in kind, Preferential Dividends would be suspended until the earlier to occur of and, with respect to subparagraph (a), only to the extent, (a) the Cash Restriction or the In-Kind Restriction is removed or lapses in applicability, or (b) February 16, 2015. During any period of time when the payment of Preferential Dividends is suspended, the Series B Preferred Stock shall continue to accrue and accumulate Preferential Dividends.

Section 3. Voting Rights.

(A) The holders of Series B Preferred Stock shall not be entitled to any voting rights, except as provided in paragraph 3(B) of this Section 3, the Certificate of Formation, the Bylaws or otherwise under the TBOC.

(B) If the Preferential Dividends accrued on the Series B Preferred Stock for eight or more quarterly dividend periods, whether consecutive or not, shall not have been declared and paid in full, either in cash or in kind, the holders of record of the Series B Preferred Stock shall be entitled to notice of any shareholder meeting in accordance with the Bylaws and each holder of Series B Preferred Stock shall in such event be entitled to vote with the holders of the Common Stock, upon all matters presented to the shareholders of the Company for their action or consideration at any meeting of shareholders of the Company (or by written consent of shareholders in lieu of meeting), to cast the number of votes equal to the number of whole shares of Common Stock into which the Series B Preferred Stock held by such holder are convertible

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(as set out in Section 7) as of the record date for determining shareholders entitled to vote on such matter (the “Preferential Voting Rights”). Except as provided by law or elsewhere herein, holders of Series B Preferred Stock shall vote together with the holders of Common Stock as a single class.

(C) The voting rights provided in paragraph 3(B) of this Section 3 shall cease upon payment in full, in cash or in kind, by the Company of all the dividends then in arrears to which the holders are entitled on the Series B Preferred Stock.

Section 4. Certain Restrictions.

(A) Whenever Preferential Dividends have not been paid through the most recent Quarterly Payment Date, thereafter and until all such unpaid Preferential Dividends on Series B Preferred Stock outstanding shall have been paid in full or set aside for payment on the date declared for payment, and in addition to any and all other rights which any holder of Series B Preferred Stock may have in such circumstances, the Company shall not:

(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration, any shares ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock;

(ii) declare or pay dividends on or make any other distributions on any Parity Stock, other than in accordance with paragraph 2(A) of Section 2;

(iii) except as permitted by subparagraph (iv) of this paragraph 4(A), redeem or purchase or otherwise acquire for consideration any shares ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, provided, however, that the Company may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for any shares of the Company ranking junior (both as to dividends and upon liquidation, dissolution or winding up) to the Series B Preferred Stock; or

(iv) purchase or otherwise acquire for consideration any shares of Series B Preferred Stock, or any shares ranking on a parity with the Series B Preferred Stock (either as to dividends or upon liquidation, dissolution or winding up), except in accordance with a purchase offer made to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B) Notwithstanding the foregoing, nothing in Section 4(A) will prohibit the purchase by the Company of, or the payment of cash in lieu of the issuance of, fractional shares of the Company arising out of any bonus issue of shares, share consolidations or subdivisions, stock dividends, splits or combinations or business combinations.

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(C) The Company shall not permit any Subsidiary (as hereinafter defined) of the Company to purchase or otherwise acquire for consideration any shares of the Company unless the Company could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. A “Subsidiary” of the Company shall mean any corporation or other entity of which securities or other ownership interests having ordinary voting power sufficient to elect a majority of the Board of Directors or other persons performing similar functions are beneficially owned, directly or indirectly, by the Company or by any corporation or other entity that is otherwise controlled by the Company.

(D) While any shares of Series B Preferred Stock remain issued and outstanding, the Company shall not issue any series of Preferred Stock with rights and privileges senior to or greater than those of the Series B Preferred Stock.

Section 5. Reacquired Stock. Any shares of Series B Preferred Stock purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares upon their retirement and cancellation shall become authorized but unissued Preferred Stock, without designation as to series, and such shares may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors in accordance with the Certificate of Formation and Bylaws.

Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, no distribution shall be made (i) to the holders of shares ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock including, for greater certainty, the Series A Junior Participating Preferred Stock and the Common Stock of the Company, unless the holders of Series B Preferred Stock shall have received, subject to adjustment as provided in Section 8, an amount equal to the Series B Original Issue Price per share plus an amount equal to accumulated and unpaid dividends and distributions thereon to the date of such payment, and (ii) to the holders of shares ranking on a parity upon liquidation, dissolution or winding up with the Series B Preferred Stock, unless simultaneously therewith distributions are made ratably on the Series B Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of Series B Preferred Stock are entitled under clause (i) of this sentence and to which the holders of such parity shares are entitled, in each case upon such liquidation, dissolution or winding up. The amount to which holders of Series B Preferred Stock may be entitled upon liquidation, dissolution or winding up of the Company pursuant to clause (i) of the foregoing sentence is hereinafter referred to as the “Liquidation Amount.”

Section 7. Conversion Rights.

(A) Each of the shares of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into thirty-six (36) fully paid and nonassessable shares of Common Stock (the “Conversion Rate”). Such Conversion Rate shall be subject to adjustment as provided in Section 8 below. In the event of a Redemption Notice (as defined below) of any share of Series B Preferred Stock pursuant to Section 9, the conversion rights of the shares designated for redemption shall terminate at the close of business on the last full day

4

preceding the date fixed for redemption, unless the redemption price is not fully paid on such redemption date, in which case the conversion rights for such shares shall continue until such price is paid in full. In the event of a liquidation, dissolution or winding up of the Company, the conversion rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of the Liquidation Amount to the holders of Series B Preferred Stock.

(B) Notwithstanding anything herein, no holder of Series B Preferred Stock shall be entitled to effect and no holder shall effect any conversion of Series B Preferred Stock to the extent that after giving effect to such conversion and taking into account any Common Stock already owned by such holder (together with the holder’s affiliates), the holder (together with the holder’s affiliates) would beneficially own twenty percent (20%) or more of the number of shares of Common Stock outstanding immediately after giving effect to such conversion.

(C) No fractional shares of Common Stock shall be issued upon conversion of the Series B Preferred Stock. In lieu of any fractional shares of Common Stock to which the holder would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the fair market value (as defined below), unless the Company determines, in its sole discretion, that such cash payment would cause the Company to be in violation of a Debt Agreement, in which case any fractional share of Common Stock to which the holder would otherwise be entitled shall be forfeited. For the purpose hereof, the fair market value of a share of Common Stock (the “Common Stock Fair Market Value”) shall be determined by:

(i) its trailing five (5) day volume weighted average trading price per share of the Common Stock on the date immediately preceding the date of conversion of such Series B Preferred Stock on (a) the Toronto Stock Exchange (the “TSX”), converted into U.S. dollars at the average noon rate for converting Canadian dollars into U.S dollars as quoted by the Bank of Canada (or, if no longer available, by another institution selected by the Board of Directors) during such five (5) day trading period; or (b) on such other market or exchange as the Common Stock may then trade, in the event that the Common Stock is not then traded on the TSX; or

(ii) the Board of Directors in good faith, in the event that the Common Stock is not then traded on any market or exchange;

(D) In order for a holder of Series B Preferred Stock to voluntarily convert Series B Preferred Stock into Common Stock, such holder shall request from the Company the total number of shares of Common Stock outstanding and the Conversion Rate, as adjusted pursuant to Section 8, if applicable. The chief executive officer or chief financial officer of the Company shall provide the holder with such information as soon as reasonably practicable, but in any event within one (1) business day after receipt of notice of the request. After receiving this information from the Company, the holder desiring to convert shall, within one (1) business day, provide the Company with a certificate, in the form attached hereto as Exhibit A (the “Conversion Certificate”), certifying (i) the number of shares of Common Stock currently held by such holder (together with such holder’s affiliates), (ii) the number of shares of Series B Preferred Stock that the holder elects to convert, (iii) the name or the names of the nominees in which such holder wishes the certificate or certificates of Common Stock to be issued and the number of shares of Common Stock that will be held by such holder and such holder’s affiliates

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after the conversion and (iv) whether, based on the number of shares of Common Stock outstanding represented by the Company, the conversion complies with paragraph (B) of this Section 7. Together with the Conversion Certificate, the holders should provide the Company with the certificate or certificates for such Series B Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate), at the principal office of the Company’s transfer agent for the Series B Preferred Stock (or at the principal office of the Company if the Company serves as its own transfer agent for the Series B Preferred Stock).

Absent manifest error on the Conversion Certificate, the close of business on the date of receipt by the Company’s transfer agent (or by the Company if the Company serves as its own transfer agent) of such Conversion Certificate and such Series B Preferred Stock certificates (or lost certificate affidavit and agreement) shall be the time of conversion (the “Conversion Time”) and the Company shall cause the Company’s transfer agent for its Common Stock to, as soon as practicable after the Conversion Time, (a) issue and deliver to such holder of Series B Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Series B Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (b) if required by paragraph 7(C) of this Section 7, pay in cash such amount as provided therein in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (c) pay in cash or in kind (as provided in Section 2) all dividends (accumulated but unpaid through the Conversion Time) on the Series B Preferred Stock converted. Business day means any day, other than a Saturday or a Sunday, upon which banks are open for business in Toronto, Ontario and Houston, Texas. If the Company elects to pay such accumulated but unpaid dividends in kind, the holder submitting the Series B Preferred Stock for conversion under this Section 7 shall be deemed to have also submitted for conversion the Series B Preferred Stock otherwise payable under this subparagraph (b) (the “In-Kind Stock Conversion”), which In-Kind Stock Conversion will be added to the other Series B Preferred Stock of such holder submitted for conversion for purposes of the fractional share calculation under subparagraph (b) of this paragraph 7(D) of Section 7, if applicable. The Common Stock issuable upon conversion of the Series B Preferred Stock submitted for conversion under this Section 7 (along with any such shares that are deemed to be converted under this Section 7) shall be deemed to be outstanding of record as of the date on which the Conversion Time occurs.

(E) The Company shall at all times when the Series B Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series B Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all the outstanding Series B Preferred Stock (including any In-Kind Stock Conversion); and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding Series B Preferred Shares, the Company shall take such corporate action as may be necessary to increase its authorized but unissued Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite shareholder approval

6

of any necessary amendment to the Certificate of Formation. Before taking any action which would cause an adjustment to the Conversion Rate such that the Series B Original Issue Price per share divided by the Conversion Rate would be less than the then par value of the Common Stock issuable upon conversion of the Series B Preferred Stock, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Conversion Rate.

(F) All Series B Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in paragraph 7(C) of this Section 7 and to receive payment of any dividends pursuant to paragraph 7(D)(iii) of this Section 7. Upon any such conversion, no adjustment to the Conversion Rate shall be made for any accumulated but unpaid dividends on the Series B Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.

(G) The Company shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of Common Stock upon conversion of Series B Preferred Stock pursuant to this Section 7. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of Common Stock in a name other than that in which the Series B Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

Section 8. Certain Reclassifications and Other Events.

(A) If the Company shall at any time or from time to time after May 28, 2010 (the “Issuance Date”) effect a subdivision of the outstanding Common Stock, the Conversion Rate in effect immediately before that subdivision shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of Series B Preferred Stock shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Company shall at any time or from time to time after the Issuance Date consolidate the outstanding Common Stock, the Conversion Rate in effect immediately before the consolidation shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding.

(B) In the event the Company at any time or from time to time after the Issuance Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional Common Stock, then and in each such event the Conversion Rate in effect immediately before such event shall be increased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Conversion Rate then in effect by a fraction:

(i) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution, and

7

(ii) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date.

Notwithstanding the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Rate shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Rate shall be adjusted pursuant to this paragraph (C) of Section 8 as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made if the holders of Series B Preferred Stock simultaneously receive a dividend or other distribution of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding Series B Preferred Stock had been converted into Common Stock on the date of such event.

(C) In the event the Company at any time or from time to time after the Issuance Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Company (other than a distribution of Common Stock in respect of outstanding Common Stock) or in other property (excluding cash), then and in each such event the holders of Series B Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding Series B Preferred Stock had been converted into Common Stock on the date of such event.

(D) If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock (but not the Series B Preferred Stock) are converted into or exchanged for securities, cash or other property (other than a transaction covered by paragraphs (B) and (C) of this Section 8), then, following any such reorganization, recapitalization, reclassification, consolidation, merger or amalgamation, each share of Series B Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Company issuable upon conversion of one share of Series B Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation, merger or amalgamation would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions in this Section 8 with respect to the rights and interests thereafter of the holders of the Series B Preferred Stock, to the end that the provisions set forth in this Section 8 (including provisions with respect to changes in and other adjustments of the Conversion Rate) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series B Preferred Stock.

8

(E) In the event the Company at any time or from time to time after the Issuance Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend payable in cash, which is greater in value than five percent (5%), on a cumulative basis over the previous twelve months prior to such making, issuing or fixing, of the then current Common Stock Fair Market Value, then and in each such event the holders of Series B Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend payable in cash in an amount equal to the amount in excess of five percent (5%) of the then current Common Stock Fair Market Value per share of Common Stock they would have received if all outstanding Series B Preferred Stock had been converted into Common Stock on the date of such event.

(F) Upon the occurrence of each adjustment or readjustment of the Conversion Rate pursuant to this Section 8, the Company at its expense shall, as promptly as reasonably practicable but in any event not later than twenty (20) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series B Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Series B Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, as promptly as reasonably practicable after the written request at any time of any holder of Series B Preferred Stock (but in any event not later than twenty (20) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Conversion Rate then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Series B Preferred Stock.

(G) In the event:

(i) the Company shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Series B Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(ii) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company; or

(iii) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,

then, and in each such case, the Company will send or cause to be sent to the holders of the Series B Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, amalgamation, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Series B Preferred

9

Stock) shall be entitled to exchange their Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, amalgamation, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series B Preferred Stock and the Common Stock. Such notice shall be sent at least thirty (30) days prior to the record date or effective date for the event specified in such notice.

(H) Adjustments to the Series B Preferred Stock required by the provisions of this Section 8 shall be effective as of the time at which the event requiring such adjustments occurs.

Section 9. Optional Redemption.

(A) The Series B Preferred Stock may be redeemed by the Company, at its election, out of funds lawfully available therefor, at any time after the third anniversary of the Issuance Date, provided that at the time written notice of redemption is provided to the holders of the Series B Preferred Stock, the Common Stock has a Common Stock Fair Market Value that is greater than 120% of the Series B Issue Price per share divided by the number of shares of Common Stock issuable on conversion of each share of Series B Preferred Stock under the applicable Conversion Rate. The Series B Preferred Stock shall be redeemed by a cash payment equal to the Series B Original Issue Price per share, plus the cash amount of any accumulated and unpaid dividends thereon (the “Redemption Price”) to the date on which the Company proposes to pay the Redemption Price (the “Redemption Date”). Before making any redemption, the Company shall mail by certified or registered mail, return receipt requested, to each record holder of any shares of Series B Preferred Stock, at the address shown on the Company’s records, a written notice (the “Redemption Notice”) stating the number of shares of Series B Preferred Stock that the Company proposes to redeem, the Redemption Price, the Redemption Date, and the place at which the shares to be redeemed shall be surrendered for the Redemption Price. The Redemption Notice must be mailed not more than 60 days nor less than 30 days prior to the redemption.

(B) If less than all of the outstanding Series B Preferred Stock is to be redeemed, the number of shares of Series B Preferred Stock to be redeemed from each holder thereof under this Section 9 shall be the greatest whole number generated by multiplying the total number of shares of Series B Preferred Stock held by such holder by a fraction, the numerator of which shall be the total number of shares of Series B Preferred Stock to be redeemed and the denominator of which shall be the total number of shares of Series B Preferred Stock then outstanding. On and after the Redemption Date specified in the Redemption Notice, each holder of Series B Preferred Stock called for redemption as aforesaid, upon presentation and surrender at the place designated in such notice of the certificate or certificates representing the Series B Preferred Stock to be redeemed (or a properly executed affidavit of lost securities), properly endorsed in blank for transfer or accompanied by proper instruments of assignment in blank, shall be entitled to receive the Redemption Price thereof. From and after the Redemption Date specified in the Redemption Notice, unless default shall be made by the Company in payment of the Redemption Price, all dividends on the Series B Preferred Stock so called for redemption shall cease to accrue, such shares shall not be deemed to be outstanding for any purposes whatsoever, and the rights of the holders thereof shall be solely limited to the right

10

receive payment of the Redemption Price. In the event less than all of the shares represented by such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

Section 10. Mandatory Redemption. On the seventh anniversary of the date of issuance (the “Maturity Date”), the Company shall redeem any shares of Series B Preferred Stock then outstanding at the applicable Redemption Price. For the purpose of this Section 10, the Redemption Price may, at the election of the Company, be paid in cash or Common Stock, valued for such purpose at 95% of the Common Stock Fair Market Value.

Section 11. Ranking. Unless otherwise provided in the Certificate of Formation of the Company or the rights relating to a subsequent series of Preferred Stock of the Company ranking pari passu with the Series B Preferred Stock, the Series B Preferred Stock shall rank senior to all other series of the Company’s Preferred Stock and to the Common Stock as to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up.

Section 12. Amendment. Except as contemplated herein, the provisions hereof and the Certificate of Formation of the Company shall not be amended in any manner which would adversely affect the rights, privileges or powers of the Series B Preferred Stock without, in addition to any other vote of shareholders required by law, the affirmative vote of the holders of 66 2/3% of the outstanding Series B Preferred Stock, voting together as a single class. Notwithstanding the foregoing, in the event that the authorized but unissued Series B Preferred Stock shall not be sufficient to pay the Potential In-Kind Dividends pursuant to paragraph 2(B) of Section 2, without a vote of the holders of the Series B Preferred Stock, the Company may amend this Certificate of Designation of the Series B Preferred Stock to increase the number of shares constituting the Series B Preferred Stock as necessary to ensure there are sufficient authorized but unissued Series B Preferred Stock to pay the Potential In-Kind Dividends.

Section 13. Currency. As used herein, reference to dollar amounts, unless otherwise specifically indicated, shall mean the lawful money of the United States of America.

Section 14. Notice. All notices given pursuant to this certificate of designation shall be done in the manner prescribed in the subscription agreement (including the requirement to provide copies to counsel) whereby the Series B Preferred Stock were originally issued.

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EXHIBIT A

Conversion Certificate

Date:                                         

CURRENT HOLDINGS OF COMMON STOCK

Holder
Name:	Number of shares:
Affiliates of Holder
Name:	Number of shares:
Name:	Number of shares:
	Total:

PROPOSED CONVERSION OF SERIES B PREFERRED STOCK

Holder
Name:	Number of shares:
Affiliates of Holder
Name:	Number of shares:
Name:	Number of shares:
	Total:

CONVERSION RATE, AS ADJUSTED, IF APPLICABLE

HOLDINGS OF COMMON STOCK AFTER PROPOSED CONVERSION (ASSUMING IN-KIND STOCK CONVERSION OF ACCUMULATED BUT UNPAID DIVIDENDS)

Holder
Name:	Number of shares:
Affiliates of Holder
Name:	Number of shares:
Name:	Number of shares:
	Total:

PERCENTAGE OF COMMON STOCK HELD AFTER PROPOSED CONVERSION (ASSUMING IN-KIND STOCK CONVERSION OF ACCUMULATED BUT UNPAID DIVIDENDS)

Total number of shares of Common Stock held by the holder and its affiliates
after proposed conversion:
Total number of shares of Common Stock outstanding:1
Percentage ownership of the holder and its affiliates:	%

¹  Utilizing information provided by the chief executive officer or chief financial officer of the Company pursuant to paragraph 7(D) of Section 7 of the Certificate of Designation of the Series B Preferred Shares.

NAME AND NUMBER OF SHARES TO BE PLACED ON COMMON STOCK CERTIFICATES

Name:	Number of shares:
Name:	Number of shares:
Name:	Number of shares:
	Total:

I,                     ,                  of the holder, certify for an on behalf of the holder, and not in my personal capacity and without personal liability to me, that the foregoing is true and correct as of the date written above and that, based on the number of shares of Common Stock outstanding communicated to holder by the Company, the proposed conversion complies with paragraph (B) of the Section 7 the Certificate of Designation of the Series B Preferred Stock.

[INSERT NAME OF HOLDER]

By:

2

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BYLAWS

FORBES ENERGY SERVICES LTD.

TABLE OF CONTENTS

INTERPRETATION		1
1.	Definitions	1
SHARES		3
2.	Power to Issue Shares	3
3.	Power of the Company to Purchase its Shares	4
4.	Prohibition on Financial Assistance	4
5.	Share Certificates	4
6.	Fractional Shares	6
REGISTRATION OF SHARES		6
7.	Share Transfer Records	6
8.	Registered Holder Absolute Owner	7
9.	Transfer of Registered Shares	7
10.	Transmission of Registered Shares	8
DIVIDENDS AND CAPITALIZATION		10
11.	Dividends	10
12.	Power to Set Aside Profits	10
13.	Method of Payment	10
MEETINGS OF SHAREHOLDERS		11
14.	Annual General Meetings	11
15.	Special General Meetings	11
16.	Special General Meetings at the Request of Shareholders	11
17.	Notice	11
18.	Giving Notice and Access	13
19.	Postponement or Cancellation of General Meeting	15

20.	Electronic Participation and Security at General Meetings	15
21.	Quorum at General Meetings	15
22.	Chairman to Preside at General Meetings	16
23.	Voting on Resolutions	16
24.	Power to Demand a Vote on a Poll	17
25.	Voting by Joint Holders of Shares	19
26.	Instrument of Proxy	19
27.	Representation of Corporate Shareholder	20
28.	Other Voting of Shares	20
29.	Adjournment of General Meeting	21
30.	Directors’ Attendance at General Meetings	21
31.	Notice of Shareholder Business and Nominations to be Brought Before a Meeting of Shareholders	21
DIRECTORS AND OFFICERS		27
32.	Number of Directors	27
33.	Election of Directors	28
34.	Term of Office and Qualification of Directors	28
35.	Advisory Directors	28
36.	Removal of Directors	29
37.	Vacancy in the Office of Director	29
38.	Remuneration of Directors	30
39.	Defect in Appointment	30
40.	Directors to Manage Business	30
41.	Powers of the Board of Directors	31
42.	Officers	32

43.	Conflicts of Interest	35
44.	Indemnification and Exculpation of Directors and Officers	36
MEETINGS OF THE BOARD OF DIRECTORS		39
45.	Board Meetings	39
46.	Notice of Board Meetings	40
47.	Electronic Participation in Meetings	40
48.	Quorum at Board Meetings	40
49.	Board to Continue in the Event of Vacancy	40
50.	Chairman to Preside	41
51.	Written Resolutions	41
52.	Validity of Prior Acts of the Board	41
CORPORATE RECORDS		41
53.	Minutes	41
54.	Place Where Corporate Records Kept	42
55.	Form and Use of Seal	42
ACCOUNTS		42
56.	Books of Account	42
57.	Financial Year End	42
AUDITS		43
58.	Annual Audit	43
59.	Appointment of Auditor	43
60.	Remuneration of Auditor	43
61.	Duties of Auditor	43
62.	Access to Records	43
CHANGES TO CONSTITUTION		43
63.	Changes to Bylaws	43
RESIGNATION		44
64.	Resignation	44

i

Forbes Energy Services Ltd. Page 1

INTERPRETATION

1. Definitions

1.1 In these Bylaws, the following words and expressions shall, where not inconsistent with the context, have the following meanings, respectively:

Board	the board of directors appointed or elected pursuant to these Bylaws and acting by resolution in accordance with the Code and these Bylaws or the directors present at a meeting of directors at which there is a quorum;
Code	the Texas Business Organizations Code, as amended from time to time;
Company	the company for which these Bylaws are approved and adopted;
Director	a director of the Company;
Exchange Act	the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;
fundamental business transaction	a merger, interest exchange, conversion or sale of all or substantially all of the Company’s assets, as such terms are used in the Code;
Shareholder	the person registered as the owner of a share in the share transfer records of the Company;
notice	written notice as further provided in these Bylaws unless otherwise specifically stated;

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Forbes Energy Services Ltd. Page 2

Officer	any person appointed by the Board to hold an office in the Company;
Share Transfer Records	the share transfer records referred to in these Bylaws and maintained by the Company or its designated transfer agent;
Secretary	the person appointed to perform any or all of the duties of secretary of the Company and includes any deputy or assistant secretary and any person appointed by the Board to perform any of the duties of the Secretary; and
Treasury Share	a share of the Company that was or is treated as having been acquired and held by the Company and has been held continuously by the Company since it was so acquired and has not been cancelled or retired.

1.2 In these Bylaws, where not inconsistent with the context:

(a) words denoting the plural number include the singular number and vice versa;

(b) words denoting the masculine gender include the feminine and neuter genders;

(c) words denoting persons include companies, associations or bodies of persons whether corporate or not;

(d) the words:

(i) “may” shall be construed as permissive; and

(ii) “shall” shall be construed as imperative; and

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Forbes Energy Services Ltd. Page 3

(e) unless otherwise provided herein, words or expressions defined in the Code shall bear the same meaning in these Bylaws.

1.3 In these Bylaws expressions referring to a “writing” or its derivations shall, unless the contrary intention appears, include facsimile, printing, lithography, photography, electronic mail and other modes of representing words, letters, characters, numbers, symbols, figures or other textual information in visible form, but does not include sound or video recordings of speech other than transcriptions that are otherwise writings.

1.4 Headings used in these Bylaws are for convenience only and are not to be used or relied upon in the construction hereof.

SHARES

2. Power to Issue Shares

2.1 Subject to these Bylaws and without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, the Board by a vote of at least seventy-five percent (75%) majority shall have the power to issue any unissued shares on such terms and conditions and for such consideration as it may determine.

2.2 Shares may not be issued until the consideration has been paid or delivered as required in connection with the authorization of the shares. When the consideration is paid or delivered, the shares are considered to be issued, the subscriber or other person entitled to receive the shares is a shareholder with respect to the shares and the share are considered fully paid and non-assessable. Consideration for shares may consist of (a) a tangible or intangible benefit to the Company, (b) cash, (c) services performed, (d) a security of the Company or any other organization and/or (e) any other property of any kind or nature actually received, provided, however, that the consideration paid for shares may not be less in value than the fair equivalent of the money that the Company would have received if the shares had been issued for money. In the absence of fraud in the transaction, the judgment of the Board as to the value of consideration received

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shall be conclusive. The consideration received for shares shall be allocated by the Board, in accordance with law, between stated capital and capital surplus accounts.

3. Power of the Company to Purchase its Shares

3.1 The Company may purchase its own shares for cancellation or acquire them as Treasury Shares on such terms as the Board shall think fit.

3.2 The Board may exercise all the powers of the Company to purchase or its own shares.

4. Prohibition on Financial Assistance

The Company shall not give, whether directly or indirectly, whether by means of loan, guarantee, provision of security or otherwise, any financial assistance for the purpose of the acquisition or proposed acquisition by any person of any shares in the Company, but nothing in this Bylaw shall prohibit transactions permitted under the Code.

5. Share Certificates

5.1 The shares of the Company may be either certificated shares or uncertificated shares. In these Bylaws, the term “certificated shares” means shares represented by instruments in bearer or registered form, and the term “uncertificated shares” means shares not represented by instruments and the transfers of which are registered upon the Share Transfer Records maintained for that purpose by or on behalf of the Company.

5.2 Every Shareholder shall be entitled upon request to a certificate representing shares of the Company issued to such Shareholder in such form as is approved by the Board in conformity with law. Certificates shall be consecutively numbered, shall be entered in the Share Transfer Records as they are issued and shall state upon the face thereof (a) that the Company is organized under the laws of the State of Texas, (b) the name of the person to whom issued, (c) the number and class of shares and the designation of the series, if any, which such certificate represents, (d) the par value of each share represented by such certificate or a statement that the shares are without par value and (e) such other matters as may

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be required by law. Certificates shall be signed by the President or any vice president and also by the Secretary or any other Officer. The signatures of any such Officers may be by facsimile. Upon the issuance of uncertificated shares, the Company or the Company’s transfer agent shall send to the registered owner of such uncertificated shares a written notice containing the information required to be stated on certificates representing shares of stock as set forth above and such additional information as may be required by Section 3.202 of the Code as in effect on the date of such notice.

5.3 The Company shall be under no obligation to complete and deliver a share certificate unless specifically called upon to do so by the person to whom the shares have been issued.

5.4 If any share certificate shall be proved to the satisfaction of the Board to have been worn out, lost, mislaid, stolen or destroyed the Board may cause a new certificate to be issued and request an indemnity for the lost certificate if it sees fit.

5.5 Notwithstanding any provisions of these Bylaws:

(a) the Directors shall, subject always to the Code and any other applicable laws and regulations and the facilities and requirements of any relevant system concerned, have power to implement any arrangements they may, in their absolute discretion, think fit in relation to the evidencing of title to and transfer of uncertificated shares and to the extent such arrangements are so implemented, no provision of these Bylaws shall apply or have effect to the extent that it is in any respect inconsistent with the holding or transfer of shares in uncertificated form; and

(b) unless otherwise determined by the Directors and as permitted by the Code and any other applicable laws and regulations, no person shall be entitled to receive a certificate in respect of any share for so long as the title to that share is evidenced otherwise than by a certificate and for so long as transfers of that share may be made otherwise than by a written instrument.

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6. Fractional Shares

The Company may issue fractional shares.

REGISTRATION OF SHARES

7. Share Transfer Records

7.1 The Board shall cause to be kept, at the registered officer principal place of business or at the office of its transfer agent, in one or more books or electronically, the Share Transfer Records in which the issuance and transfer of shares of the Company are recorded in a timely manner. The Share Transfer Records shall record the original issuance of shares issued by the Company, each transfer of those shares that have been presented to the Company or its transfer agent for registration of transfer, the names and addresses of all past Shareholders and the number and class or series of shares issued by the Company held by each current and past Shareholder. The Share Transfer Records shall be prima facie evidence as to the identity of Shareholders entitled to vote.

7.2 In lieu of fixing a record date for the determination of Shareholders entitled to notice of or to vote at any meeting of Shareholders or any reconvening thereof or entitled to receive a distribution (other than a distribution involving a purchase or redemption by the Company of any of its own shares) or a share dividend or to make a determination of Shareholders for any other proper purpose, the Board may provide that the Share Transfer Records be closed for a stated period not to exceed 60 days. If the Share Transfer Records are closed for the purpose of determining Shareholders entitled to notice of or to vote at a meeting of Shareholders, the Share Transfer Records shall be closed for at least 10 days immediately preceding such meeting. If the Share Transfer Records are not closed and if no record date is fixed, the date on which the notice of meeting is mailed or the date on which the resolution of the Board declaring a distribution or share dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders.

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8. Registered Holder Absolute Owner

The Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not be bound to recognise any equitable claim or other claim to, or interest in, such share on the part of any other person, whether or not it has actual or other notice thereof, except as otherwise provided by law.

9. Transfer of Registered Shares

9.1 Shares of stock of the Company shall be transferable only on the books of the Company by the Shareholder thereof in person or by such Shareholder’s duly authorized attorneys or legal representatives. The Company shall have no obligation to cause any transfer to be recorded in the Share Transfer Records until all applicable governmental consents or authorizations with respect to such transfer have been received, all applicable taxes have been paid and the Company has received such evidence as it may reasonably require that such transfer does not require registration under any federal or state securities laws.

9.2 With respect to certificated shares, upon surrender to the Company or its transfer agent of a certificate duly endorsed for transfer and accompanied by such reasonable assurances as the Company may require that such endorsement is genuine and effective, the Company or its transfer agent shall, subject to Bylaw 9.1 above and if it has no notice of an adverse claim or has discharged any duty with respect to any adverse claim, issue one or more new certificates to the person entitled thereto, cancel the old certificate and record the transfer in the Share Transfer Records.

9.3 With respect to uncertificated shares, upon delivery to the Company or its transfer agent of an instruction originated by an appropriate person (as set forth in Section 8.107 of the Texas Uniform Commercial Code as in effect on the date of such instruction) and accompanied by such reasonable assurances as the Company may require that such instruction is genuine and effective, the Company or its

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transfer agent shall, subject to Bylaw 9.1 above and if it has no notice of an adverse claim or has discharged any duty with respect to any adverse claim, record the transfer in the Share Transfer Records. Upon recording such transfer, the Company or its transfer agent shall send to the new registered owner of such uncertificated shares and, if the shares have been transferred subject to a registered pledge, to the registered pledge, a written notice containing the information required to be stated on certificates representing shares of stock set forth in Bylaw 5.2 above and such additional information as may be required by Section 3.202 of the Code as in effect on the date of such notice.

9.4 The Board shall cause such legend to be placed on certificates representing shares of stock as may be deemed necessary or appropriate to comply or ensure compliance with applicable federal or state securities or other laws.

9.5 The Board may delegate its rights under this Bylaw 9 to a duly appointed transfer agent and registrar.

10. Transmission of Registered Shares

10.1 In the case of the death of a Shareholder, the survivor or survivors where the deceased Shareholder was a joint holder, and the legal personal representatives of the deceased Shareholder where the deceased Shareholder was a sole holder, shall be the only persons recognised by the Company as having any title to the deceased Shareholder’s interest in the shares. For the purpose of this Bylaw, the term “legal personal representative” means the executor or administrator of a deceased Shareholder or such other person as the Board may, in its absolute discretion, decide as being properly authorised to deal with the shares of a deceased Shareholder.

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10.2 Any person becoming entitled to a share in consequence of the death or bankruptcy of any Shareholder may be registered as a Shareholder upon such evidence as the Board or the Company’s transfer agent and registrar may deem sufficient or may elect to nominate some person to be registered as a transferee of such share, and in such case the person becoming entitled shall execute in favor of such nominee an instrument of transfer in writing in the form, or as near thereto as circumstances admit, of the following:

Transfer by a Person Becoming Entitled on Death/Bankruptcy of a Shareholder

— (the “Company”)

I/We, having become entitled in consequence of the [death/bankruptcy] of [name and address of deceased/bankrupt Shareholder] to [number] share(s) standing in the Share Transfer Records of the Company in the name of the said [name of deceased/bankrupt Shareholder] instead of being registered myself/ourselves, elect to have [name of transferee] (the “Transferee”) registered as a transferee of such share(s) and I/we do hereby accordingly transfer the said share(s) to the Transferee to hold the same unto the Transferee, his or her executors, administrators and assigns, subject to the conditions on which the same were held at the time of the execution hereof; and the Transferee does hereby agree to take the said share(s) subject to the same conditions.

DATED this [    ] day of [    ], 200[    ]

Signed by:	In the presence of:
Transferor	Witness
Transferee	Witness

10.3 On the presentation of the foregoing materials to the Board, accompanied by such evidence as the Board may require to prove the title of the transferor, the transferee shall be registered as a Shareholder. Notwithstanding the foregoing, the Board shall, in any case, have the same right to decline or suspend registration as it would have had in the case of a transfer of the share by that Shareholder before such Shareholder’s death or bankruptcy, as the case may be.

10.4 Where two or more persons are registered as joint holders of a share or shares, then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to such share or shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.

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DIVIDENDS AND CAPITALIZATION

11. Dividends

11.1 The Board may, subject to these Bylaws and in accordance with the Code, declare a dividend to be paid to the Shareholders, in proportion to the number of shares held by them, and such dividend may be paid in cash or wholly or partly in specie, including shares of the Company, in which case the Board may fix the value for distribution in specie of any assets in accordance with the requirements of the Code. No unpaid dividend shall bear interest as against the Company.

11.2 The Board may fix any date no earlier than 60 days and no later than 10 day before the date of distribution as the record date for determining the Shareholders entitled to receive any dividend.

11.3 The Board may declare and make such other distributions (in cash or in specie) to the Shareholders as may be lawfully made out of the assets of the Company. No unpaid distribution shall bear interest as against the Company.

12. Power to Set Aside Profits

The Board may, before declaring a dividend, set aside out of the surplus or profits of the Company, such amount as it thinks proper as a reserve to be used to meet contingencies or for equalising dividends or for any other purpose.

13. Method of Payment

13.1 Any dividend or other moneys payable in respect of a share may be paid by check sent through the mail directed to the address of the Shareholder in the Share Transfer Records (in the case of joint Shareholders, the senior joint holder, seniority being determined by the order in which the names stand in the Share Transfer Records), or by direct transfer to such bank account as such Shareholder may direct. Every such check shall be made payable to the order of the person to whom it is sent or to such persons as the Shareholder may direct, and payment of the check shall be a good discharge to the Company. Every such check shall be sent at the risk of the person entitled to the money represented thereby. If two or more persons are registered as joint holders of any shares any one of them can give an effectual receipt for any dividend paid in respect of such shares.

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13.2 The Company shall be entitled to cease sending dividend checks by mail or otherwise to a Shareholder if those instruments have been returned undelivered to, or left uncashed by, that Shareholder on at least two consecutive occasions, or, following one such occasion, reasonable enquiries have failed to establish the Shareholder’s new address. The entitlement conferred on the Company by this Bylaw 13 in respect of any Shareholder shall cease if the Shareholder claims a dividend or cashes a dividend check.

13.3 The Board may deduct from the dividends or distributions payable to any Shareholder all moneys due from such Shareholder to the Company.

MEETINGS OF SHAREHOLDERS

14. Annual General Meetings

The annual general meeting of the Company shall be held in each year (other than the year of incorporation) at such time and place as the President or the Chairman (if any) or the Board shall appoint.

15. Special General Meetings

The President or the Chairman (if any) or the Board may call a special general meeting whenever in their judgment such a meeting is necessary.

16. Special General Meetings at the Request of Shareholders

The Board shall, on the request of Shareholders holding at the date of the request not less than one-tenth of such of the paid-up share capital of the Company as at the such date is entitle to vote at such meeting, forthwith proceed to call a special general meeting.

17. Notice

17.1 Notice of an annual or special general meeting shall be given no later than the tenth day and not earlier than the sixtieth day before the date of the meeting to each Shareholder entitled to vote at the meeting, stating the date, place and time at which the meeting is to be held, and, if the meeting is held solely or in part by using

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an electronic communications system authorized by Section 6.002 of the Code, the form of communications system to be used for the meeting, the means of accessing the communications system and the means of accessing the list of shareholders entitled to vote at the meeting required by the Code. The annual general meeting may be held at any place within or without the State of Texas designated by the Board. Special general meetings may be held at any place within or without the State of Texas designated by the person or persons calling such special general meeting. Meetings of Shareholders shall be held at the principal executive offices of the Company unless another place is designated as set forth above. Notice of a special general meeting shall contain a statement regarding the purpose or purposes of the meeting, and no other business except for procedural matters shall be conducted at such special general meeting. Notice shall be given at the direction of the President, Secretary or other person calling the meeting.

17.2 At least 21 days’ notice of an annual or special general meeting at which a fundamental business transaction is being submitted to the Shareholders for approval as required by the Code shall be given to each Shareholder of the Company, regardless of whether the Shareholder is entitled to vote on the matter. The notice shall provide the information required in Bylaw 17.1 and shall also state that the purpose, or one of the purposes, of the meeting is to consider the fundamental business transaction. If the fundamental business transaction is a merger, conversion or interest exchange, the notice shall contain or be accompanied by a copy or summary of the plan of merger, conversion or interest exchange, as appropriate, and shall describe any right of dissent and appraisal provided by the Code.

17.3 The Board may fix any date no earlier than 60 days and no later than 10 days before the date of the meeting as the record date for determining the Shareholders entitled to receive notice of and/or to vote at any general meeting.

17.4 Not later than the eleventh day before the date of each meeting of the Shareholders, the secretary of the Company or the transfer agent shall prepare or cause to be prepared an alphabetical list of the Shareholders entitled to vote at the meeting or at any adjournment of the meeting. The list shall state (a) the address

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of each Shareholder, (b) the type of shares held by each Shareholder, (c) the number of shares held by each Shareholder and (d) the number of votes that each Shareholder is entitled to if such number is different from the number of shares held by such Shareholder. The Company shall not be required to include any electronic contact information of any Shareholder on the list. The list shall be kept on file at the registered office or principal executive office of the Company for at least ten days before the date of the meeting. The list may be kept on a reasonably accessible electronic network if the information required to gain access to the list is provided with notice of the meeting. The Company shall take reasonable measures to ensure that any list available on an electronic network is available only to Shareholders and is available throughout the duration of the meeting.

18. Giving Notice and Access

18.1 A notice may be given by the Company to a Shareholder:

(a) by delivering it to such Shareholder in person; or

(b) by sending it by letter mail or courier to such Shareholder’s address in the Share Transfer Records; or

(c) by transmitting it by electronic means (including facsimile and electronic mail, but not telephone) in accordance with the consent of and such directions as may be given by such Shareholder to the Company for such purpose; or

(d) in accordance with Bylaw 18.4.

18.2 Any notice required to be given to a Shareholder shall, with respect to any shares held jointly by two or more persons, be given to whichever of such persons is named first in the Share Transfer Records and notice so given shall be sufficient notice to all the holders of such shares.

18.3 Any notice (save except a notice delivered in accordance with Bylaw 18.4) shall be deemed to have been served at the time when the same would be delivered in the ordinary course of transmission and, in proving such service, it shall be sufficient to prove that the notice was properly addressed and prepaid, if posted, and the time when it was posted, delivered to the courier or transmitted by electronic means.

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18.4 Where a Shareholder indicates his consent (in a form and manner satisfactory to the Board) to receive information or documents by accessing them on a website rather than by other means, or receipt in this manner is otherwise permitted by the Code, the Board may deliver such information or documents by notifying the Shareholder of their availability and including therein the address of the website, the place on the website where the information or document may be found, and instructions as to how the information or document may be accessed on the website.

18.5 In the case of information or documents delivered in accordance with Bylaw 18.4, service shall be deemed to have occurred when (a) the Shareholder is notified in accordance with that Bylaw; and (b) the information or document is published on the website.

18.6 A Shareholder may revoke consent to receive notice in accordance with Bylaw 18.1(c) or Bylaw 18.4 by giving notice of revocation to the Company. Any such consent by a Shareholder shall be deemed revoked if the Company is unable to deliver by electronic transmission two consecutive notices and the person responsible for delivering notice on behalf of the Company knows that delivery of those two electronic transmissions was unsuccessful. Inadvertent failure to treat the unsuccessful transmissions as a revocation of consent shall not affect the validity of a meeting or other action.

18.7 A Shareholder entitled to notice of a meeting may waive in writing any notice required to be given, whether given before or after the time of the meeting, and such waiver shall satisfy any requirement of notice with respect to such Shareholder for such meeting. Attendance of a Shareholder at a meeting shall constitute a waiver of notice of such meeting, except where such Shareholder attends for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. The business to be transacted at or the purpose of a regular or special meeting of Shareholders is not required to be specified in a written waiver of notice.

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19. Postponement or Cancellation of General Meeting

The Chairman or the President may, and the Secretary on instruction from the Chairman or the President shall, postpone or cancel any general meeting called in accordance with these Bylaws (other than a meeting requested by one or more Shareholders under these Bylaws) provided that notice of postponement or cancellation is given to each Shareholder before the time for such meeting. Fresh notice of the date, time and place for the postponed or cancelled meeting shall be given to the Shareholders in accordance with these Bylaws.

20. Electronic Participation and Security at General Meetings

20.1 The Board may, and at any general meeting, the chairman of such meeting may make any arrangement and impose any requirement or restriction it or he considers appropriate to ensure the security of a general meeting including, without limitation, requirements for evidence of identity to be produced by those attending the meeting, the searching of their personal property and the restriction of items that may be taken into the meeting place. The Board and, at any general meeting, the chairman of such meeting are entitled to refuse entry to a person who refuses to comply with any such arrangements, requirements or restrictions.

20.2 After an initial public offering of any voting shares in the capital of the Company, Shareholders may not participate in any general meeting by telephonic, electronic or other communication facilities or means unless approved by the Board. If such participation is approved by the Board and voting is to take place at the meeting, the Company shall implement reasonable measures to verify that every Shareholder voting at the meeting by such means is sufficiently identified and shall keep a record of any vote or other action taken

21. Quorum at General Meetings

21.1 The holders of a majority of the outstanding shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at any meeting of

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Shareholders, unless otherwise provided by law, the certificate of formation or these Bylaws. The Shareholders present in person or represented by proxy at a duly convened meeting may continue to transact business until adjournment, notwithstanding any withdrawal of Shareholders which may leave less than a quorum remaining.

21.2 If a quorum is not present in person or represented by proxy within 30 minutes from the time appointed for the meeting, a majority of the Shareholders entitled to vote at the meeting and present in person or represented by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At any reconvening of an adjourned meeting at which a quorum shall be present or represented by proxy, any business may be transacted which could have been transacted at the original meeting if a quorum had been present or represented.

22. Chairman to Preside at General Meetings

Unless otherwise agreed by a majority of those attending and entitled to vote thereat, the Chairman and, in the absence of the Chairman, the President shall act as chairman at all general meetings at which such person is present. In the absence of the Chairman and the President, a chairman shall be appointed or elected by those present at the meeting and entitled to vote.

23. Voting on Resolutions

23.1 Subject to the Code and these Bylaws, any question proposed for the consideration of the Shareholders at any general meeting shall be decided by the affirmative votes of a majority of the votes cast in accordance with these Bylaws and in the case of an equality of votes the resolution shall fail.

23.2 At any general meeting a resolution put to the vote of the meeting shall, in the first instance, be voted upon by a show of hands and, subject to these Bylaws, the certificate of formation and any designation of rights or restrictions for the time being lawfully attached to any class of shares, every Shareholder present in person and every person holding a valid proxy at such meeting shall be entitled to one vote for each share and shall cast such vote by raising his or her hand.

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23.3 If a Shareholder participates in a general meeting by telephone, electronic or other communications facilities or means, the chairman of the meeting shall direct the manner in which such Shareholder may cast his vote on a show of hands.

23.4 At any general meeting if an amendment is proposed to any resolution under consideration and the chairman of the meeting rules on whether or not the proposed amendment is out of order, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling.

23.5 At any general meeting a declaration by the chairman of the meeting that a question proposed for consideration has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company shall, subject to these Bylaws, be conclusive evidence of that fact.

24. Power to Demand a Vote on a Poll

24.1 Notwithstanding the foregoing, a poll may be demanded by any of the following persons:

(a) the chairman of such meeting; or

(b) at least three Shareholders present in person or represented by proxy; or

(c) any Shareholder or Shareholders present in person or represented by proxy and holding between them not less than one-tenth of the total voting rights of all the Shareholders having the right to vote at such meeting; or

(d) any Shareholder or Shareholders present in person or represented by proxy holding shares in the Company conferring the right to vote at such meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total amount paid up on all such shares conferring such right.

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24.2 Where a poll is demanded, subject to these Bylaws, the certificate of formation and any designation of rights or restrictions for the time being lawfully attached to any class of shares, every person present at such meeting shall have one vote for each share of which such person is the holder or for which such person holds a proxy and such vote shall be counted by ballot as described herein, or in the case of a general meeting at which one or more Shareholders are present by telephone, electronic or other communication facilities or means, in such manner as the chairman of the meeting may direct and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded and shall replace any previous resolution upon the same matter which has been the subject of a show of hands. A person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

24.3 A poll demanded for the purpose of electing a chairman of the meeting or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time and in such manner during such meeting as the chairman (or acting chairman) of the meeting may direct. Any business other than that upon which a poll has been demanded may be conducted pending the taking of the poll.

24.4 Where a vote is taken by poll, each person physically present and entitled to vote shall be furnished with a ballot paper on which such person shall record his vote in such manner as shall be determined at the meeting having regard to the nature of the question on which the vote is taken, and each ballot paper shall be signed or initialled or otherwise marked so as to identify the voter and the registered holder in the case of a proxy. Each person present by telephone, electronic or other communication facilities or means shall cast his vote in such manner as the chairman shall direct. At the conclusion of the poll, the ballot papers and votes cast in accordance with such directions shall be examined and counted by a committee of not less than two Shareholders or proxy holders appointed by the chairman for the purpose and the result of the poll shall be declared by the chairman.

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25. Voting by Joint Holders of Shares

In the case of joint holders, the vote of the senior who tenders a vote (whether in person or by proxy) shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Share Transfer Records.

26. Instrument of Proxy

26.1 A Shareholder may appoint a proxy by (a) an instrument appointing a proxy in writing in substantially the following form or such other form as the Board may determine from time to time:

Proxy

— (the “Company”)

I/We, [insert names here], being a Shareholder of the Company with [number] shares, HEREBY APPOINT [name] of [address] or failing him, [name] of [address] to be my/our proxy to vote for me/us at the meeting of the Shareholders to be held on the [ ] day of [ ], 20[ ] and at any adjournment thereof. (Any restrictions on voting to be inserted here.)

Signed this [    ] day of [    ], 20[    ]

Shareholder(s)

or (b) such telephonic, electronic or other means as may be approved by the Board from time to time in accordance with the Code.

26.2 The appointment of a proxy must be received by the Company at the registered office or at such other place or in such manner as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting at which the person named in the appointment proposes to vote, and an appointment of proxy which is not received in the manner so permitted shall be invalid.

26.3 The decision of the chairman of any general meeting as to the validity of any appointment of a proxy shall be final.

26.4 No proxy shall be valid after 11 months from the date of its execution, unless otherwise provided in the proxy. If no date is stated on a proxy, such proxy shall

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be presumed to have been executed on the date of the meeting at which it is to be voted. Each proxy shall be revocable unless the proxy form conspicuously states that the proxy is irrevocable and the proxy is coupled with an interest.

27. Representation of Corporate Shareholder

27.1 A corporation which is a Shareholder may, by written instrument, authorise such person or persons as it thinks fit to act as its representative at any meeting and any person so authorised shall be entitled to exercise the same powers on behalf of the corporation which such person represents as that corporation could exercise if it were an individual Shareholder, and that Shareholder shall be deemed to be present in person at any such meeting attended by its authorised representative or representatives.

27.2 Notwithstanding the foregoing, the chairman of the meeting may accept such assurances as he thinks fit as to the right of any person to attend and vote at general meetings on behalf of a corporation which is a Shareholder.

28. Other Voting of Shares

28.1 Treasury shares, shares of the Company’s stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Company and shares of the Company’s stock held by the Company in a fiduciary capacity shall not be shares entitled to vote or to be counted in determining the total number of outstanding shares.

28.2 Shares held by an administrator, executor, guardian or conservator may be voted by such person, in person or by proxy, without transfer of such shares into such person’s name if such shares form a part of the estate served by such person and are in the possession of such estate. Shares held by a trustee may be voted by such person in person or by proxy only after the shares have been transferred into the name of such person as trustee. Shares standing in the name of a receiver may be voted by such person and shares held by or under the control of a receiver without transfer of such shares into such person’s name may be voted by such person if authority to do so is contained in the court order by which such receiver was

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appointed. A Shareholder whose shares are pledged shall be entitled to vote such shares until they have been transferred into the name of the pledgee and thereafter the pledgee shall be entitled to vote such shares.

29. Adjournment of General Meeting

29.1 The chairman of any general meeting at which a quorum is present may with the consent of Shareholders holding a majority of the voting rights of those Shareholders present in person or by proxy (and shall if so directed by Shareholders holding a majority of the voting rights of those Shareholders present in person or by proxy), adjourn the meeting.

29.2 In addition, the chairman may adjourn the meeting to another time and place without such consent or direction if it appears to him that:

(a) it is likely to be impracticable to hold or continue that meeting because of the number of Shareholders wishing to attend who are not present; or

(b) the unruly conduct of persons attending the meeting prevents, or is likely to prevent, the orderly continuation of the business of the meeting; or

(c) an adjournment is otherwise necessary so that the business of the meeting may be properly conducted.

29.3 Unless the meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, fresh notice of the date, place and time for the resumption of the adjourned meeting shall be given to each Shareholder entitled to attend and vote thereat in accordance with these Bylaws.

30. Directors’ Attendance at General Meetings

The Directors shall be entitled to receive notice of, attend and be heard at any general meeting.

31. Notice of Shareholder Business and Nominations to be Brought Before a Meeting of Shareholders

31.1 Nominations of persons for election to the Board, or the proposal of other business to be considered by the Shareholders, may be made at an annual general

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meeting of Shareholders only if properly brought before the meeting. To be properly brought before an annual general meeting of Shareholders, any director nominations or other business must be (a) brought before the meeting by the Company and specified in the notice of meeting given by or at the direction of the Board, (b) brought before the meeting by or at the direction of the Board or ( c) otherwise properly brought before the meeting by a Shareholder who (i) was a shareholder of record (and, with respect to any beneficial owner, if different, on whose behalf such business is proposed, only if such beneficial owner was the beneficial owner of the shares of the Company) both at the time of giving the notice provided for in this Bylaw 31 and at the time of the annual general meeting, (ii) is entitled to vote at the meeting and (iii) has complied with this Bylaw 31 as to such business. Except for proposals properly made in accordance with Rule 14a-8 under the Exchange Act and included in the notice of meeting given by or at the direction of the Board, the foregoing clause (c) shall be the exclusive means for a Shareholder to make nominations or propose other business to be brought before an annual general meeting of Shareholders.

31.2 To properly bring business, including nominations of directors, before an annual general meeting of Shareholders, a Shareholder must provide (a) Timely Notice (as defined below) thereof in writing and in proper form to the Secretary and (b) any updates or supplements to such notice at the times and in the forms required by this Bylaw 31. A Shareholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Company not less than 90 nor more than 150 days before the one-year anniversary of the preceding year’s annual general meeting of Shareholders; provided, however, that if the date of the annual general meeting of Shareholders is more than 30 days before or after such anniversary date, notice by the Shareholder, to be timely, must be so delivered, or mailed and received, not less than 90 nor more than 150 days before such annual meeting or, if later, on or before the tenth day following the day on which public announcement of the date of such meeting was first made. Any notice of nominations or other business within the time periods described above is a “Timely Notice” or purposes of such nomination or other business. The

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adjournment or postponement of an annual general meeting of Shareholders, or the announcement thereof, shall not commence a new period for the giving of Timely Notice as described above.

31.3 At a special general meeting of Shareholders, only such business will be conducted or considered as is properly brought before the meeting. To be properly brought before a special general meeting of Shareholders, business (other than procedural matters) must be specified in the notice of the meeting (or any supplement thereto) given in accordance with Bylaw 17. Nominations of persons for elections to the Board may not be made at a special general meeting of Shareholders unless directors are to be elected pursuant to the Company’s notice of meeting. In such case, any Shareholder who (a) was a shareholder of record (and, with respect to any beneficial owner, if different, on whose behalf such business is proposed, only if such beneficial owner was the beneficial owner of the shares of the Company) both at the time of giving the notice provided for in this Bylaw 31 and at the time of the special general meeting, (ii) is entitled to vote at the meeting and (iii) has complied with this Bylaw 31 as to such nomination may nominate a person or persons, as the case may be, for election to such position(s) as specified in the Company’s notice of meeting

31.4 If the Company calls a special general meeting of Shareholders for the purpose of electing one or more directors to the Board, any Shareholder meeting the criteria in Bylaw 31.3 above may nominate a person or persons, as the case may be, for election to such position(s) as specified in the Company’s notice of meeting, if the Shareholder’s notice with respect to any nomination is delivered to the Secretary at the principal executive offices of the Company not less than 90 nor more than 150 days before the close of business on the day before the special general meeting or on or before the tenth day following the day on which public announcement of the date of such meeting was first made. The adjournment or postponement of a special general meeting of Shareholders, or the announcement thereof, shall not commence a new period for the giving of Timely Notice as described above.

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31.5 To be in proper form for purposes of this Bylaw 31, a Shareholder’s notice to the Secretary must

(a) set forth, as to the Shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (i) the name and address of the Shareholder, as they appear in the Share Transfer Records, and the name and address of such beneficial owner, (ii) the class and number of shares of the Company which are held of record by such Shareholder as of the date of the notice and a representation that the Shareholder will notify the Company in writing within five business days after the record date for such meeting of the class and number of shares of the Company held of record on such record date, (iii) the class and number of shares of the Company which are held of record or are beneficially owned (within the meaning of Section 13(d) of the Exchange Act) by such beneficial owner as of the date of the notice and a representation that the Shareholder will notify the Company within five business days after the record date for such meeting of the class and number of shares of the Company beneficially owned by such Shareholder and such beneficial owner on such record date, (iv) any other information relating to such Shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and (v) such Shareholder’s and beneficial owner’s written consent to the public disclosure of information provided to the Company pursuant to this Bylaw 31 shall set forth (a) the name of the nominee(s) and the address and principal occupation or employment of each;

(b) set forth, as to the Shareholder giving the notice or, if given on behalf of a beneficial owner, as to the beneficial owner on whose behalf the nomination or proposal is made, (i) any agreements, arrangements or

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understandings entered into by the Shareholder or beneficial owner, as appropriate, and its affiliates with respect to equity securities of the Company, including any put or call arrangements, derivative securities, short positions, borrowed shares or swap or similar arrangements, specifying in each case the effect of such agreements, arrangements or understandings on any voting or economic rights of equity securities of the Company, in each case as of the date of the notice and in each case describing any changes in voting or economic rights which may arise pursuant to the terms of such agreements, arrangements or understandings, (ii) to the extent not covered in clause (i) above, any disclosures that would be required pursuant to Item 5 or Item 6 of Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable to the Shareholder or beneficial owner) and (iii) a representation that the Shareholder will notify the Company in writing within five business days after the record date for such meeting of the information set forth in clauses (i) and (ii) above as of such record date;

(c) if the notice relates to any business other than a nomination of a director or directors that the Shareholder proposes to bring before the meeting, set forth (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such Shareholder and the beneficial owner, if any, in such business and (ii) a description of all agreements, arrangements and understandings between such Shareholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such Shareholder;

(d) set forth, as to each person, if any, whom the Shareholder proposes to nominate for election or reelection to the Board (i) all information relating to such person that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the

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Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such Shareholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the Shareholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant;

(e) set forth a representation that such Shareholder intends to appear at the meeting to bring such nomination or other business before such meeting;

(f) set forth such other information as may reasonably be required by the Board as described in the Company’s proxy statement for the preceding year’s annual meeting; and

(g) be followed, within five business days after the record date for such meeting, by the written notice providing the information described in clauses (a) and (b) above.

The Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as an independent director of the Company or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such nominee.

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31.6 Only such persons who are nominated in accordance with the procedures set forth in this Bylaw 31 shall be eligible to serve as directors and only such business shall be conducted at a meeting of Shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Bylaw 31. Except as provided by law, the certificate of formation or these Bylaws, the determination of whether any business sought to be brought before any annual general meeting of Shareholders or special general meeting of Shareholders is properly brought before such meeting in accordance with this Bylaw 31 will be made by the presiding officer of such meeting. If the presiding officer determines that any business is not properly brought before such meeting, such presiding officer will so declare to the meeting and any such business will not be conducted or considered.

31.7 This Bylaw 31 is expressly intended to apply to any business proposed to be brought before an annual general meeting of Shareholders other than any shareholder proposal made pursuant to Rule 14a-8 under the Exchange Act. Notwithstanding the foregoing provisions of this Bylaw 31, a Shareholder must also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in this Bylaw 31. Nothing in this Bylaw 31 will be deemed to affect any rights of Shareholders to request inclusion of proposals in the Company’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

31.8 For purposes of this Bylaw 31, the term “public announcement” means disclosure in a press release reported by a national news service or in a document publicly filed by the Company with the Securities and Exchange Commission pursuant to Sections 13, 14 or l5(d) of the Exchange Act.

DIRECTORS AND OFFICERS

32. Number of Directors

The Board of Directors shall consist of at least five (5) members but no more than seven (7) members, as such number is determined from time to time by a vote of a majority of the directors then in office. The number may be decreased below five (5) or increased

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above seven (7) only by (a) the vote of holders of at least 66 2/3% of the shares entitled to vote thereon, or (b) the unanimous vote of the Board of Directors. No decrease in number of directors shall shorten the term of any incumbent director.

33. Election of Directors

Where the number of person validly proposed fore re-election or election as a Director is greater than the number of Directors to be elected, the persons receiving the most votes (up to the number of Directors to be elected) shall be elected as Directors, and an absolute majority of the votes cast shall not be a prerequisite to the election of such Directors.

34. Term of Office and Qualification of Directors

At each annual general meeting of Shareholders following the adoption of these Bylaws, successors to the Directors whose term expires at that annual general meeting shall be elected for a term to expire at the next annual general meeting or until their successors are duly qualified and elected or appointed or their office is otherwise vacated. Any Director elected to fill a vacancy shall hold office for a term to expire at the next annual general meeting or until his or her successor is duly qualified and elected or appointed or his or her office is otherwise vacated, but in no case shall a decrease in the number of Directors shorten the term of any Director then in office. A director need not be a Shareholder, a resident of the State of Texas or a citizen of the United States.

35. Advisory Directors

The Board may appoint such advisory directors as it determines from time to time to be appropriate. Advisory directors shall not have the right to vote on any matter brought before the Board for a vote, but shall have the right to attend meetings of the Board and to receive such documents and other materials as are provided to all other members of the Board, unless either the President or a majority of the Board determines that such attendance or the provision of such materials could have an adverse effect on the business or operations of the Company or is otherwise not in the best interests of the Company. Advisory directors may receive such compensation, including the grant of stock options, restricted stock awards and similar compensation, as the Board determines to be appropriate. Any advisory directors may be removed by the Board, with or without cause and with or without notice at any time.

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36. Removal of Directors

36.1 Subject to any provision to the contrary in these Bylaws, the Shareholders entitled to vote for the election of Directors may, at any special general meeting convened and held in accordance with these Bylaws, remove a Director; provided, that, the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention to remove the director and a summary of the basis for the proposed removal and be served on such Director not less than 30 days before the meeting and at such meeting the Director shall be entitled to be heard on the motion for such Director’s removal.

36.2 If a Director is removed from the Board under the provisions of this Bylaw the Shareholders may fill the vacancy at the meeting at which such Director is removed if a replacement Director has been included in the notice of special meeting. In the absence of such election, the Board may fill the vacancy.

37. Vacancy in the Office of Director

37.1 The office of Director shall be vacated if the Director:

(a) is removed from office pursuant to these Bylaws or is prohibited from being a Director by law;

(b) is or becomes bankrupt, or makes any arrangement or composition with his creditors generally;

(c) is or becomes of unsound mind or dies; or

(d) resigns his office by notice to the Company.

37.2 The Board, by affirmative vote of a majority of the remaining directors though less than a quorum, shall have the power to appoint any person as a Director to fill a vacancy on the Board occurring as a result of the death, disability, disqualification or resignation of any Director or as a result of an increase in the size of the Board up to the maximum permitted under Bylaw 32. The Board may

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not fill more than two directorships vacant by reason of an increase in the number of directors during the period between any two successive annual general meetings of Shareholders. A director appointed or elected to fill a vacancy shall be appointed or elected to serve for the unexpired term of his predecessor in office or, with respect to an increase in the number of directors, until the next annual general meeting of Shareholders.

38. Remuneration of Directors

The remuneration (if any) of the Directors shall be determined by the Board or by the compensation committee if such duties are delegated to the compensation committee by the Board and shall be deemed to accrue from day to day. The Directors may also be reimbursed for all travel, hotel and other expenses properly incurred by them in attending and returning from the meetings of the Board, any committee appointed by the Board, general meetings, or in connection with the business of the Company or their duties as Directors generally.

39. Defect in Appointment

All acts done in good faith by the Board, any Director, a member of a committee appointed by the Board, any person to whom the Board may have delegated any of its powers shall, or any person acting as a Director shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or person acting as aforesaid, or that he was, or any of them were, disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director or act in the relevant capacity.

40. Directors to Manage Business

The business of the Company shall be managed and conducted by the Board. In managing the business of the Company, the Board may exercise all such powers of the Company as are not, by the Code, the certificate of formation or by these Bylaws, required to be exercised by the Company in general meeting.

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41. Powers of the Board of Directors

The Board may:

(a) by power of attorney, appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Board, to be an attorney of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board) and for such period and subject to such conditions as it may think fit and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions so vested in the attorney;

(b) appoint, suspend, or remove any officer, manager, secretary, clerk, agent or employee of the Company and may fix their remuneration and determine their duties;

(c) authorize the exercise of all the powers of the Company to borrow money and to mortgage or charge its undertaking, property, or any part thereof, and may authorize the Company to issue notes, debentures, capital stock and other securities whether outright or as security for any debt, liability or obligation of the Company or any third party;

(d) appoint a Director as Chairman of the Board, who shall preside over all meetings of the Board or shall designate another Director to preside over such meetings in his or her absence;

(e) appoint the officers set forth in Bylaw 42 below;

(f) procure that the Company pays all expenses incurred in promoting and incorporating the Company and listing the shares of the Company;

(g) delegate any of its powers to a committee appointed by a vote of at least 75% of the Directors then in office which consists entirely of Directors, provided that every such committee shall operate under the charters

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governing such committees and provided further that the meetings and proceedings of any such committee shall be governed by these Bylaws regulating the meetings and proceedings of the Board, so far as the same are applicable and are not superseded by directions imposed by the Board;

(h) present any petition and make any application in connection with the liquidation or reorganisation of the Company;

(i) in connection with the issue of any share, authorize the payment of such commission and brokerage as may be permitted by law; and

(j) authorise any company, firm, person or body of persons to act on behalf of the Company for any specific purpose and in connection therewith to execute any deed, agreement, document or instrument on behalf of the Company.

42. Officers

42.1 Number. The officers of the Company shall be appointed by the Board and shall include a Chief Executive Officer, a President, and a Secretary, and such other officers (including vice presidents) and assistant officers as the Board may determine. Any two (2) or more offices may be held by the same person.

42.2 Election; Term; Qualification. Officers shall be appointed by the Board annually at the meeting of the Board following the annual general meeting of Shareholders. Each officer shall hold office until his death, resignation, or removal, subject to reappointment at each annual Board meeting immediately following the annual general meeting of Shareholders.

42.3 Removal. Any officer or agent elected or appointed by the Board may be removed by the Board whenever in its judgment the best interests of the Company will be served thereby; but, such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create any contract rights.

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42.4 Vacancies. Any vacancy in any office for any cause may be filled by appointment of the Chief Executive Officer or President subject to ratification by the Board at any meeting.

42.5 Duties. The officers of the Company shall have such powers and duties as from time to time shall be conferred by the Board and by these Bylaws.

42.6 Chief Executive Officer. The Chief Executive Officer shall be subject to the control of the Board, and shall in general supervise and control all business and affairs of the Company. The Chief Executive Officer may sign, with the Secretary or any other proper officer of the Company thereunto authorized by the Board, certificates for shares of the Company, deeds, mortgages, bonds, contracts, and other obligations in the name of the Company, which the Board has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by these Bylaws to some other officer or agent of the Company, or shall be required by law to be otherwise signed and executed; and in general is authorized to perform such other duties as may be delegated or assigned by the Board from time to time. In the absence of the Chairman, or if the directors neglect or fail to elect a Chairman, then the Chief Executive Officer of the Company, if he is a member of the Board, shall automatically serve as Chairman of the Board

42.7 The President. In the absence of the Chief Executive Officer, or in the event of his death or inability to act or refusal to act, the President shall perform the duties of the Chief Executive Officer and when so acting shall have all of the powers of and be subject to all of the restrictions upon the Chief Executive Officer. In general, he is authorized to perform such other duties as may be delegated or assigned by the Chief Executive Officer or the Board from time to time.

42.8 The Vice Presidents. At the request of the Chief Executive Officer, or President, or in their absence or disability, the vice presidents, in the seniority of their position and then, in the order of their election, shall perform the duties of the Chief Executive Officer and President, and, when so acting, shall have all the powers of, and be subject to all restrictions upon, the President. Any action taken

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by a vice president in the performance of the duties of the Chief Executive Officer or President shall be conclusive evidence of the absence or inability to act of the President at the time such action was taken. The vice presidents shall perform such other duties as may, from time to time, be assigned to them by the Board, the Chief Executive Officer or the President. A vice president may sign, with the secretary or an assistant secretary, certificates of stock of the Company.

42.9 Secretary. The Secretary shall keep the minutes of all meetings of the Shareholders, of the Board, and of the executive committee, if any, of the Board, in one or more books provided for such purpose and shall see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law. He shall be custodian of the corporate records and of the seal (if any) of the Company and see, if the Company has a seal, that the seal of the Company is affixed to all documents the execution of which on behalf of the Company under its seal is duly authorized; shall have general charge of the stock certificate books, transfer books and stock ledgers, and such other books and papers of the Company as the Board may direct, all of which shall, at all reasonable times, be open to the examination of any director, upon application at the office of the Company during business hours; and in general is authorized to perform such other duties and powers as the Board, the Chief Executive Officer or the President from time to time may assign to or confer on him.

42.10 Treasurer. The treasurer shall keep complete and accurate records of account, showing at all times the financial condition of the Company. He shall be the legal custodian of all money, notes, securities and other valuables which may from time to time come into the possession of the Company. He shall furnish at meetings of the Board, or whenever requested, a statement of the financial condition of the Company, and is authorized to perform such other duties as these Bylaws may require or the Board, the Chief Executive Officer or the President may assign.

42.11 Assistant Officers. Any assistant secretary or assistant treasurer appointed by the Board shall have power to perform, and shall perform, all duties incumbent upon the secretary or treasurer of the Company, respectively, subject to the general

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direction of such respective officers, and shall perform such other duties as these Bylaws may require or the Board, the Chief Executive Officer or the President may prescribe.

42.12 Salaries. The salaries or other compensation of the officers shall be fixed from time to time by the Board or the compensation committee appointed by the Board, consistent with any legal or stock exchange requirements. No officer shall be prevented from receiving such salary or other compensation by reason of the fact that he is also a Director.

42.13 Bonds of Officers. The Board may secure the fidelity of any officer of the Company by bond or otherwise, on such terms and with such surety or sureties, conditions, penalties or securities as shall be deemed proper by the Board.

42.14 Delegation. The Board may delegate temporarily the powers and duties of any officer of the Company, in case of his absence or for any other reason, to any other officer, and may authorize the delegation by any officer of the Company of any of his powers and duties to any agent or employee, subject to the general supervision of such officer.

43. Conflicts of Interest

43.1 Any Director, or any Director’s firm, partner or any company with whom any Director is associated, may act in any capacity for, be employed by or render services to the Company and such Director or such Director’s firm, partner or company shall be entitled to remuneration as if such Director were not a Director. Nothing herein contained shall authorise a Director or Director’s firm, partner or company to act as auditor to the Company.

43.2 A Director who is directly or indirectly interested in a contract or proposed contract or arrangement with the Company shall declare the nature of such interest as required by the Code.

43.3 Following a declaration being made pursuant to this Bylaw, and unless disqualified by the chairman of the relevant Board meeting, a Director may vote in respect of any contract or proposed contract or arrangement in which such Director is interested and may be counted in the quorum for such meeting.

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44. Indemnification and Exculpation of Directors and Officers

44.1 Indemnification. The Company shall indemnify, to the fullest extent then permitted by law, any person who was, is or is threatened to be made a respondent in a proceeding by reason of the fact that such person is or was a governing person or a delegate of the Company, if it is determined in accordance with Section 8.103 of the Code that (a) such person (i) acted in good faith, (ii) reasonably believed (1) in the case of conduct in the person’s official capacity, that the person’s conduct was in the Company’s best interests and (2) in any other case, that the person’s conduct was not opposed to the Company’s best interests and(iii) in the case of a criminal proceeding, did not have a reasonable cause to believe the person’s conduct was unlawful, (b) with respect to expenses, the amount of expenses other than a judgment is reasonable and (c) indemnification should be paid.

44.2 Insurance. The Company may purchase and maintain insurance for the benefit of any governing person or delegate against any liability incurred by him under the Code in his capacity as a governing person or delegate or indemnifying such governing person or delegate in respect of any loss arising or liability attaching to him by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of trust of which the governing person or delegate may be guilty in relation to the Company or any subsidiary thereof.

44.3 Prepayment of Expenses. Expenses incurred by a governing person or delegate of the Company in defending a proceeding shall be paid by the Company in advance of the final disposition of such proceeding to the fullest extent permitted by, and only in compliance with, the Code or any other applicable laws as may from time to time be in effect, including, without limitation, any provision of the Code that requires, as a condition precedent to such expense advancement, the delivery to the Company of an undertaking, by or on behalf of such governing person or delegate, to repay all amounts so advanced if it shall ultimately be determined that

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such director is not entitled to be indemnified under Bylaw 44.1 or otherwise. Repayments of all amounts so advanced shall be upon such terms and conditions, if any, as the Board deems appropriate. Notwithstanding the foregoing, in no event shall a Director or executive officer be entitled to the advancement of expenses if a determination has been made by a judicial authority or governmental entity or agency or, absent such determination, any such authority, entity or agency has taken a position or issued any guidance stating, that the advancement of expenses to a Director or executive officer constitutes a personal loan in contravention of any law or regulation.

44.4 Vesting. The Company’s obligation to indemnify and to prepay expenses under Bylaws 44.1 and 44.3 shall arise, and all rights granted to the Company’s governing persons or delegates hereunder shall vest, at the time of the occurrence of the transaction or event to which a proceeding relates, or at the time that the action or conduct to which such proceeding relates was first taken or engaged in (or omitted to be taken or engaged in), regardless of when such proceeding is first threatened, commenced or completed (and whether arising out of a transaction or event occurring before or after adoption of this Bylaw 44). Notwithstanding any other provision of these Bylaws, no action taken by the Company subsequent to the adoption of this Bylaw 44, either by amendment of these Bylaws or otherwise, shall diminish or adversely affect any rights to indemnification or prepayment of expenses granted under Bylaws 44.1 and 44.3 which shall have become vested as aforesaid prior to the date that such amendment or other corporate action is effective or taken, whichever is later.

44.5 Enforcement. If a claim under Bylaw 44.1 is not paid in full by the Company within 30 days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit in a court of competent jurisdiction against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim. It shall be a defense to any such suit (other than a suit brought to enforce a claim for expenses incurred in defending any proceeding in

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advance of its final disposition when the required undertaking, if any is required, has been tendered to the Company) that the claimant has not met the standards of conduct which make it permissible under the Code or other applicable law to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Company. The failure of the Company (including its Board, independent legal counsel, or stockholders) to have made a determination prior to the commencement of such suit as to whether indemnification is proper in the circumstances based upon the applicable standard of conduct set forth in the Code or other applicable law shall neither be a defense to the action nor create a presumption that the claimant has not met the applicable standard of conduct. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal proceeding, had reasonable cause to believe that his conduct was unlawful.

44.6 Nonexclusive. The indemnification provided by this Bylaw 44 shall not be deemed exclusive of any other rights to which a person seeking indemnification may be entitled under any statute, these Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.

44.7 Permissive Indemnification. The rights to indemnification and prepayment of expenses which are conferred on the Company’s governing persons or delegates by Bylaws 44.1 may be conferred upon any employee or agent of the Company or other person serving at the request of the Company that is not a governing person or delegate if, and to the extent, authorized by the Board.

44.8 Definition. For purposes of this Bylaw 44, the terms “delegate,” “governing person,” “official capacity” and “proceeding” shall have the respective meanings given to such terms in Section 8.001 of the Code.

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MEETINGS OF THE BOARD OF DIRECTORS

45. Board Meetings

45.1 Regular Meetings. Regular meetings of the Board shall be held immediately following each annual general meeting of Shareholders, at the place of such meeting, and at such other times on a quarterly basis and at such places as the Board shall determine. At least ten days advance notice provided by any Director or the Secretary of such regular meetings (other than the meeting immediately following the annual general meeting of Shareholders) needs to be given to members of the Board.

45.2 Special Meetings. Special meetings of the Board shall be held at any time by call of the Chairman of the Board, the Chief Executive Officer, the President, or a majority of the Board. The Secretary shall give notice of each special meeting to each Director at his usual business or residence address by mail at least two days before the meeting or by electronic mail, facsimile transmission, telegraph or telephone at least one day before such meeting. Except as otherwise provided by law or these Bylaws, such notice need not specify the business to be transacted at, or the purpose of, such meeting. No notice shall be necessary for any adjournment of any meeting. The signing of a written waiver of notice of any special meeting by the person or persons entitled to such notice, whether before or after the time stated therein, shall be equivalent to the receiving of such notice. Attendance of a Director at a meeting shall also constitute a waiver of notice of such meeting, except where a Director attends a meeting for the express and announced purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened.

45.3 Order. Business at meetings of the Board shall be transacted in such order as the Board may determine from time to time. A Director who is present at any meeting of the Board at which action on any matter is taken shall be presumed to have assented to the action unless his dissent shall be entered in the minutes of the meeting or unless such Director shall file a written dissent to such action with the

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person acting as secretary of the meeting before the adjournment thereof or shall forward any dissent by certified or registered mail to the Secretary immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.

46. Notice of Board Meetings

A Director may, and the Secretary at the request of a Director shall, at any time summon a meeting of the Board. Notice of a meeting of the Board shall be deemed to be duly given to a Director if it is sent to such Director by mail, electronic means (with the consent of the Director) at such Director’s last known address or in accordance with any other instructions given by such Director to the Company for this purpose. Any meeting at which all of the Directors are present shall be a valid meeting whether notice thereof was given or not, and any business may be transacted at such a meeting.

47. Electronic Participation in Meetings

Directors may participate in any meeting by such telephonic, electronic or other communications facilities or means as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

48. Quorum at Board Meetings

The quorum necessary for the transaction of business at a meeting of the Board shall be a majority of the Directors, as set or established in accordance with these Bylaws. The act of a majority of the Directors present at a meeting at which a quorum is in attendance shall be the act of the Board, unless the act of a greater number is required by law, the certificate of formation or these Bylaws.

49. Board to Continue in the Event of Vacancy

The Board may act notwithstanding any vacancy in its number but, if and so long as its number is reduced below the number fixed by these Bylaws as the quorum necessary for the transaction of business at meetings of the Board, the continuing Directors or Director may only act for the purpose of (i) summoning a general meeting of the Shareholders to elect Directors to fill such vacancies; or (ii) to fill such vacancies to the extent permitted by these Bylaws.

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50. Chairman to Preside

Unless otherwise agreed by a majority of the Directors attending , the Chairman, if there be one, and if not, the President, if there be one, shall act as chairman at all meetings of the Board at which such person is present. In their absence a chairman shall be appointed or elected by the Directors present at the meeting.

51. Written Resolutions

A resolution signed by all the Directors, which may be in counterparts, shall be as valid as if it had been passed at a meeting of the Board duly called and constituted, such resolution to be effective on the date on which the last Director signs the resolution.

52. Validity of Prior Acts of the Board

No regulation or alteration to these Bylaws made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation or alteration had not been made.

CORPORATE RECORDS

53. Minutes

The Board shall cause minutes of the Board and committee meetings to be duly entered in books provided for the purpose:

(a) of all elections and appointments of Officers;

(b) of the names of the Directors present at each meeting of the Board and of any committee appointed by the Board; and

(c) of all resolutions and proceedings of general meetings of the Shareholders, meetings of the Board, and meetings of committees appointed by the Board.

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54. Place Where Corporate Records Kept

Minutes prepared in accordance with the Code and these Bylaws shall be kept by the Secretary at the registered office or at the principal executive offices of the Company.

55. Form and Use of Seal

55.1 The Company may adopt a seal in such form as the Board may determine. The Board may adopt one or more duplicate seals for use in or outside Bermuda.

55.2 A seal may, but need not be affixed to any deed, instrument, share certificate or document, and if the seal is to be affixed thereto, it shall be attested by the signature of (i) any Director; or (ii) any Officer; or (iii) the Secretary; or (iv) any person authorized by the Board for that purpose

ACCOUNTS

56. Books of Account

56.1 The Board shall cause to be kept proper records of account with respect to all transactions of the Company and in particular with respect to:

(a) all sums of money received and expended by the Company and the matters in respect of which the receipt and expenditure relates;

(b) all sales and purchases of goods by the Company; and

(c) all assets and liabilities of the Company.

56.2 Such records of account shall be kept at the registered office of the Company, or subject to the Code, at such other place as the Board thinks fit and shall be available for inspection by the Directors during normal business hours.

57. Financial Year End

The financial year end of the Company may be determined by resolution of the Board and failing such resolution shall be 31^st December in each year.

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AUDITS

58. Annual Audit

Subject to any rights to waive laying of accounts or appointment of an independent auditor, the accounts of the Company shall be audited at least once in every year.

59. Appointment of Auditor

The Audit Committee of the Board shall recommend and appoint the independent auditor to audit the Company’s financial statements, subject to ratification and appoint by the Shareholders. For purposes of this Bylaw 59, independence shall be established in accordance with Rule 10A-2 promulgated under the Exchange Act and any requirements established by any exchange or other similar organization listing any securities of the Company.

60. Remuneration of Auditor

The remuneration of the Auditor shall be fixed by the Board.

61. Duties of Auditor

The financial statements provided for by these Bylaws shall be audited by the independent auditor in accordance with United States generally accepted auditing standards. The independent auditor shall make a written report thereon in accordance with generally accepted auditing standards applicable in the United States.

62. Access to Records

The independent auditor shall at all reasonable times have access to all books kept by the Company and to all accounts and vouchers relating thereto, and the independent auditor may call on the Directors or Officers of the Company for any information in their possession relating to the books or affairs of the Company.

CHANGES TO CONSTITUTION

63. Changes to Bylaws

These Bylaws shall not be rescinded, altered or amended until the same has been approved by a majority of the Directors then in office and by a resolution of the

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Shareholders. Further Bylaws 14, 15, 33, 34, 36 and 63 may not be rescinded, altered or amended (and no new Bylaw may be made which would have the effect of rescinding, altering or amending the provisions of such Bylaws) until the same has been approved by a resolution of the Board, including the affirmative vote of not less than two-thirds of the Directors then in office and by a resolution of the Shareholders including the affirmative vote of not less than two-thirds of the voting shares.

RESIGNATION

64. Resignation

Any Director, committee member, Officer or agent of the Company may resign by so stating at any meeting of the Board or by giving notice in writing or by electronic transmission to the Board, the President or the Secretary. Such resignation shall take effect at the time specified in the statement at the Board meeting or in the written or electronically transmitted notice, but in no event may the effective time of such resignation be before the time such statement is made or such notice given. If no effective time is specified in the resignation, the resignation shall be effective immediately. Unless a resignation specifies otherwise, it shall be effective without being accepted. A resignation shall be irrevocable when it has taken effect and shall be revocable before it takes effect unless the statement or notice expressly states it is irrevocable.

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EX-4.1

Exhibit 4.1

For value received, the undersigned hereby sell(s), assign(s) and transfer(s) unto

(Print name(s) of person(s) to whom the securities are being transferred and the address for the register)

shares

(number of shares if blank, deemed to be all)

of the Corporation represented by this certificate, and hereby irrevocably constitutes

and appoints the attorney of the undersigned to

transfer the said securities with full power of substitution in this matter:

Dated

Signature Guarantee(s) *

(the transfer cannot be processed without acceptable guarantees of all signatures)

Transferor(s) Signature(s) *

*For transfers signed by the registered holder(s), their signatures(s) must correspond with the name(s) on the certificate in every particular, without changes.

In Canada and the US: a Medallion Guarantee obtained from a member of an acceptable Medallion Guarantee Program (STAMP, SEMP or MSP). Many banks, credit unions and broker dealers are members of a Medallion Guarantee Program. The guarantor must affix a stamp in the space above bearing the actual words “Medallion Guaranteed”.

In Canada: a Signature Guarantee obtained from a major Canadian Schedule I bank that is not a member of a Medallion Guarantee Program. The guarantor must affix a stamp in the space above bearing the actual words “Signature Guaranteed”.

Outside Canada and the US: holders must obtain a guarantee from a local financial institution that has a corresponding affiliate in Canada or the US that is a member of an acceptable Medallion Guarantee Program. The corresponding affiliate must over-guarantee the guarantee provided by the local financial institution.

This certificate also evidences and entitles the holder hereof to certain rights as set forth in a Rights Agreement between Forbes Energy Services Ltd. (the “Company”) and CIBC Mellon Trust Company (the “Rights Agent”), dated as of May 19, 2008, as it may from time to time be supplemented or amended (the “Rights Agreement”), the terms of which are incorporated herein by reference and a copy of which is on file at the Company’s principal executive offices. Under certain circumstances, as set forth in the Rights Agreement, such Rights may be redeemed, may be exchanged, may expire or may be evidenced by separate certificates and will no longer evidenced by this certificate. The Company will mail to the registered holder of this certificate a copy of the Rights Agreement without charge after receipt of a written request therefore. As described in the Rights Agreement, Rights issued to any Person who becomes an Acquiring Person (as defined in the Rights Agreement) whether currently held by or on behalf of such Person or by any subsequent holder will become null and void and may not be transferred to any Person.

SECURITY INSTRUCTIONS – INSTRUCTIONS DE SÉCURITÉ

THIS IS WATERMARKED PAPER, DO NOT ACCEPT WITHOUT NOTING WATERMARK. HOLD TO LIGHT TO VERITY WATERMARK.

PAPIER FILIGRANE, NE PAS ACCEPTER SANS VÉRIFIER LA PRESENCE

DU FILIGRANE. POUR CE FAIRE, PLACER À LA LUMIÉRE.

EX-99.1

Exhibit 99.1

	NEWS RELEASE
FOR IMMEDIATE RELEASE	Contacts:	Forbes Energy Services Ltd. L. Melvin Cooper, SVP & CFO 361-664-0549 DRG&L Ken Dennard, Managing Partner Ben Burnham, AVP 713-529-6600

Forbes Energy Services Announces Completion of

Four-to-One Share Consolidation and Texas Conversion

ALICE, TEXAS – August 12, 2011 – Forbes Energy Services Ltd. (TSX: FRB) (the “Company”) announced that, effective August 12, 2011, it completed a four-to-one consolidation of its common stock, whereby each four shares of common stock of par value $0.01 each were consolidated into a single share of common stock of par value $0.04 (the “Share Consolidation”). Following the Share Consolidation, the Company changed its jurisdiction of formation from Bermuda to Texas, by discontinuing its existence in Bermuda and converting into a Texas corporation (the “Texas Conversion”). After the Share Consolidation and Texas Conversion, the number of outstanding shares of the Company’s common stock will be reduced to approximately 20,918,400.

Notwithstanding the effective date of August 12, 2011 for the Share Consolidation and Texas Conversion, in accordance with standard procedures of the Toronto Stock Exchange (the “TSX”), the Company expects that its common stock will continue to trade on the TSX on a pre-consolidation and pre-conversion basis for a number of days. Once the Company’s common stock begins trading on the TSX on a post-consolidated, post-conversion basis, the Company’s expects that its common stock will also begin trading on the NASDAQ Global Market (“NASDAQ”) under the symbol FES. The Company plans to issue an additional press release once the precise timing of these listings is known.

Letters of transmittal are being mailed to shareholders today, requesting them to forward their certificates representing their common stock before the Share Consolidation and Texas Conversion to American Stock Transfer and Trust Company, LLC, who will be acting as the Company’s exchange agent, or CIBC Mellon Trust Company, who will be acting as the Company’s forwarding agent in Canada, to be exchanged for share certificates representing the appropriate number of shares of common stock of the Company, on a post-Share Consolidation and post-Texas Conversion basis. No fractional shares will be issued as a result of these transactions. Holders who would otherwise be entitled to receive a fractional share as a result of the Share Consolidation will receive cash in lieu of such issuance.

About the Company

Forbes Energy Services Ltd. is an independent oilfield services contractor that provides a broad range of drilling-related and production-related services to oil and natural gas companies, primarily onshore in Texas, Mississippi, Pennsylvania and Mexico.

Forward-Looking Statements

This press release includes forward-looking statements concerning the Company’s plans and intentions regarding the trading of the Company’s common stock on a post-consolidated and post-conversion basis on the TSX and NASDAQ. These forward-looking statements are based upon management’s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company and which could cause actual results to differ materially from such statements. Additional factors that you should consider are set forth in detail in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (the “Form 10-K”), which was previously filed, as well as other filings the Company has made with the Securities and Exchange Commission.

EX-99.2

Exhibit 99.2

	NEWS RELEASE
	Contacts:	Forbes Energy Services Ltd.
		L. Melvin Cooper, SVP & CFO
		361-664-0549
FOR IMMEDIATE RELEASE
		DRG&L
		Ken Dennard, Managing Partner
		Ben Burnham, AVP
		713-529-6600

Forbes Energy Services Announces Timing

of TSX Listing Change and New NASDAQ Listing

ALICE, TEXAS – August 15, 2011 – Forbes Energy Services Ltd. (TSX: FRB) (the “Company”) announced that, in connection with its previously announced and completed four-to-one consolidation of its common stock (the “Share Consolidation”) and reincorporation into Texas (the “Texas Conversion”), it has received confirmation from the Toronto Stock Exchange (the “TSX”) that its common stock will begin trading on post-consolidation basis on Tuesday, August 16, 2011. On that day a new CUSIP number of 345143101 will replace the old CUSIP number of G38007103, to distinguish between the Company’s common stock before and after the Share Consolidation and Texas Conversion. Further, beginning on Tuesday, August 16, 2011, the Company’s common stock will begin trading on the NASDAQ Global Market (“NASDAQ”) under the symbol FES.

About the Company

Forbes Energy Services Ltd. is an independent oilfield services contractor that provides a broad range of drilling-related and production-related services to oil and natural gas companies, primarily onshore in Texas, Mississippi, Pennsylvania and Mexico.

Forward-Looking Statements

This press release includes forward-looking statements concerning the Company’s plans and intentions regarding the trading of the Company’s common stock on a post-consolidated and post-conversion on the TSX and NASDAQ. These forward-looking statements are based upon management’s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company and which could cause actual results to differ materially from such statements. Additional factors that you should consider are set forth in detail in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (the “Form 10-K”), which was previously filed, as well as other filings the Company has made with the Securities and Exchange Commission.

EX-99.3

Exhibit 99.3

FORBES ENERGY SERVICES LTD.

AUDIT COMMITTEE CHARTER

Effective August 12, 2011

Composition

There shall be a committee of the Board of Directors (the “Board”) of Forbes Energy Services Ltd. (the “Company”) to be known as the Audit Committee (the “Committee”), which shall be comprised solely of directors appointed by the Board at the annual meeting of the Board held in conjunction with the annual shareholders meeting or at any other meeting of the Board. The Committee’s chairperson shall be designated by the Board or, if it does not do so, the Committee members shall elect a chairperson by vote of a majority of the full Committee.

Each member of the Committee shall meet the independence requirements of the NASDAQ Stock Market (“NASDAQ”), the Toronto Stock Exchange (the “TSX”), the rules promulgated by the U.S. Securities and Exchange Commission (the “SEC”), by the Canadian securities regulatory authorities (the “Canadian Commission”) and any other applicable regulation (collectively, the “Applicable Regulations”). If any member of the Committee ceases to meet the requirements discussed above, such member will not be able to serve as a member of the Committee for such time as they fail to meet such requirements, and will resign or be suspended or removed from the Committee by the Board. Once appointed by the Board, members of the Committee shall, except for any period of suspension, hold office until their successors are duly elected and qualified or until their earlier resignation, removal or death.

The Committee chairperson shall have such accounting or related financial management expertise as is required by Applicable Regulations. Each Committee member shall be able to read and fundamentally understand financial statements, including the balance sheet, income statement and cash flow statement and at least one Committee member shall be a “financial expert” in compliance with the criteria established by Applicable Regulations. The existence of such member shall be disclosed in periodic filings as required by Applicable Regulations.

Statement of Policy

Consistent with the duties set forth below, the Committee shall assist the Board in fulfilling the Board’s oversight responsibilities related to the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, the performance of the Company’s internal audit function and independent auditor, and the Company’s system of disclosure controls and procedures and system of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board have established. In so doing, it is the responsibility of the Committee to maintain free and open communication between the Committee and the Company’s independent auditors, internal accounting personnel and management of the Company.

Authority

In assisting the Board in discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Company, to retain outside counsel or other experts for this purpose, and to set and pay the compensation for the Company’s independent auditor and any advisors employed by the Committee. The Committee is also empowered to pay ordinary administrative expenses resulting from the carrying out of the Committee’s duties. All employees are directed to cooperate as requested by the Committee or any of its members for Committee purposes. The Committee may request any officer or employee of the Company, the Company’s outside counsel or the Company’s independent auditor to attend a meeting of the Committee or to meet with any Committee member or any consultants to the Committee.

Meetings

The Committee shall meet at least once during each fiscal quarter, and as many additional times as the Committee shall deem necessary or appropriate. Each regularly scheduled meeting shall conclude with an executive session of the Committee absent members of management and on such terms and conditions as the Committee may elect. To foster open communication, the Committee shall meet periodically with management, the director of the internal auditing function, if applicable, and the independent auditor in separate executive sessions to discuss any matters that the Committee or each of these groups believe should be discussed privately. The Committee shall also meet quarterly with the independent auditors and management to discuss the annual audited and quarterly financial statements and the Company’s disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Minutes

The Committee shall designate a secretary, who shall prepare or cause to be prepared the minutes of each meeting and cause such minutes, as approved by the Committee, to be filed with the corporate records of the Company. The secretary shall send, or cause to be sent, copies of such minutes to each of the members of the Committee and to each of the members of the Board who are not members of the Committee. Best efforts will be used to circulate the minutes to the Board prior to the Committee making its report to the Board.

Duties

The Board believes that the policies and procedures of the Committee should remain flexible, to best react to changing conditions and circumstances. The Committee shall take appropriate actions to set the overall corporate “tone” for quality financial reporting, sound business risk practices and ethical behavior. In addition to specific assignments that the Board may direct the Committee to carry out from time to time, the Committee shall be charged with, and have the power and authority of the Board, to perform the following duties and to fulfill the following responsibilities:

• oversee the Company’s financial reporting process on behalf of the Board and report the results of the Committee’s activities to the Board. Management is responsible for the

2

preparation, presentation and integrity of the Company’s financial statements and for the appropriateness of the accounting principles and reporting policies that are used by the Company. The internal audit department, or third-party professionals performing such function, are responsible for performing internal audit tasks, including testing of procedures and controls. The independent auditors are responsible for auditing the Company’s financial statements and for reviewing the Company’s unaudited interim financial statements;

• the appointment, retention, termination, compensation and oversight of any registered public accounting firm engaged (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the listed issuer, and each such registered public accounting firm must report directly to the Committee.

• make a recommendation to the Board with respect to the appointment, retention, termination and compensation of the internal auditors, or third-party professionals performing such function;

• directly oversee the work of the independent auditors and the internal auditing department, including resolution of any unresolved disagreements between management and the independent auditor regarding financial reporting;

• review and evaluate the performance of the lead partner of the Company’s independent auditor team and ensure the rotation of the audit engagement team as set forth in the Applicable Regulations;

• pre-approve all audit and non-audit services provided by the independent auditors and refrain from engaging the independent auditors to perform any specific non-audit services prohibited by law or regulation to be performed by the independent auditor in such circumstances;

• delegate, at the Committee’s option, pre-approval authority to a Committee member whose decisions shall be presented to the full Committee at its next scheduled meeting in the event of such a delegation;

• at least annually, obtain and review a report by the independent auditor describing:

• the independent auditor’s internal quality control procedures;

• any material issues raised by the most recent internal quality control review, or peer review, of the independent auditor, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditor, and any steps taken to deal with any such issues;

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• all relationships between the independent auditor and the Company (to assess the auditor’s independence); and

• any other matter that then current accounting requirements mandate;

• set clear hiring policies for employees or former employees of the independent auditor that comply with all Applicable Regulations;

• discuss with the internal auditors, if applicable, and the independent auditor the overall scope and plans for their respective audits, including the adequacy of staffing and compensation;

• discuss with management, the internal auditors, if applicable, and the independent auditor the responsibilities, budget and staffing of the Company’s internal audit function and the adequacy and effectiveness of the accounting and financial controls, including the Company’s policies and procedures to assess, monitor and manage business risk, and the Company’s legal and ethical compliance programs, and make recommendations to management with respect thereto;

• meet separately with management, the internal auditors, if applicable, and the independent auditor to discuss issues and concerns warranting the attention of the Committee. The Committee shall provide sufficient opportunity for the internal auditors, if applicable, and the independent auditor to meet privately with the members of the committee. The Committee shall review with the independent auditor any audit problems or difficulties and management’s response;

• obtain a report from the independent auditor, before the filing of its audit report with the SEC, the TSX and applicable securities regulatory authorities, on all critical accounting policies and practices of the Company, all material alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, including the ramifications of the use of such alternative treatments and disclosures and the treatment preferred by the independent auditor, and other material written communications between the independent auditor and management;

• review management’s assertion on its assessment of the effectiveness of internal controls as of the end of the most recent fiscal year and the independent auditor’s report on management’s assertion;

• discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies by discussing generally the types of information to be disclosed and the type of presentation to be made in connection therewith;

• review the interim financial statements and disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations with management and the independent auditor before the filing of the Company’s quarterly reports in compliance with SEC, Canadian Commission, NASDAQ and TSX rules. Also, the committee shall discuss the results of the quarterly review and any other matters required to be communicated to the committee by the independent auditor under generally accepted auditing standards;

4

• review with management and the independent auditor the financial statements and disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations to be included in the Company’s annual report before the filing of such report in compliance with SEC, Canadian Commission, NASDAQ and TSX rules, including their judgment about the quality, not just the acceptability, of accounting principles, the reasonableness of significant judgments and the clarity of the disclosures in the financial statements;

• discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditor under generally accepted auditing standards;

• establish procedures for the receipt, retention and treatment of complaints received by the issuer regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters;

• review with the Company’s counsel legal compliance matters, including corporate securities trading policies and any legal matter that could have a significant impact on the Company’s financial statements and receive and consider Company legal counsel’s reports of evidence of a material violation of securities laws or breaches of fiduciary duty;

• prepare the report required by the regulations of the SEC and Canadian Commission to be included in the Company’s annual proxy statement;

• periodically review with the internal audit director, if applicable, any significant difficulties, disagreements with management or scope restrictions encountered in the course of the internal audit operations and review at least annually the internal audit charter or the engagement terms entered into with third-party professionals performing the internal audit function, recommending any necessary changes; and

• review with the independent auditor, the internal auditing department, if applicable, and management the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented. The Committee shall perform an evaluation of its performance at least annually to determine whether it is functioning effectively. In connection with such annual evaluation, the Committee shall review, update and assess the adequacy of this Charter and make recommendations with respect to proposed changes to the Board for its approval.

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EX-99.4

Exhibit 99.4

FORBES ENERGY SERVICES LTD.

COMPENSATION COMMITTEE CHARTER

Effective August 12, 2011

Composition

There shall be a committee of the Board of Directors (the “Board”) of Forbes Energy Services Ltd. (the “Company”) to be known as the Compensation Committee (the “Committee”), which shall be comprised solely of directors appointed by the Board at the annual meeting of the Board held in conjunction with the annual members meeting or at any other meeting of the Board. The Committee’s chairperson shall be designated by the Board or, if it does not do so, the Committee members shall elect a chairperson by vote of a majority of the full Committee.

Each member of the Committee shall (i) meet the independence requirements of the NASDAQ Stock Exchange and Multilateral Instrument 52-110, (ii) qualify as a “Non-employee Director” for the purpose of Rule 16b-3 under the Securities Exchange Act of 1934, as amended; and (iii) satisfy the requirements of an “outside director” for purposes of Section 162(m) (or any successor or replacement provisions) of the Internal Revenue Code of 1986, as amended. If any member of the Committee ceases to meet the requirements discussed above, such member will not be able to serve as a member of the Committee for such time as they fail to meet such requirements, and will resign or be suspended or removed from the Committee by the Board. Once appointed by the Board, members of the Committee shall, except for any period of suspension, hold office until their successors are duly elected and qualified or until their earlier resignation, removal or death.

Statement of Policy

Consistent with the duties set forth below, the Committee shall assist the Board by addressing all forms of compensation of the Company’s executive officers, administering the Company’s incentive compensation plan and other benefits plans, including a deferred compensation plan, if applicable, and producing any required report on executive compensation for use in the Company’s proxy statement or other public disclosure.

Authority

In assisting the Board in discharging its oversight role, the Committee shall have sole authority to retain and terminate a compensation consultant, including sole authority to approve the fees and other retention terms with respect to such consultant. The Committee will provide advance notice to the Board of its intention to engage any compensation consultant. The Committee may not form or delegate authority to subcommittees without the prior approval of the Board. Nothing in this Charter is intended to limit the ability of members of management, other members of the Board, advisory directors, consultants, outside counsel, accountants or other advisors to participate in portions of the Committee meetings so long as, in each instance, the Committee is afforded the opportunity to deliberate and vote in executive session.

Meetings

The Committee shall meet at least once annually, and as many additional times as the Committee shall deem necessary or appropriate. The chairperson of the Committee will preside at each meeting of the Committee and, in consultation with the other members of the Committee, will set the frequency and length of each meeting and the agenda of items to be addressed at each meeting. As necessary or desirable, the chairperson of the Committee may request that members of management, members of the Board, advisory directors, consultants, outside counsel, accountants or other advisors be present at meetings of the Committee.

Minutes and Reporting

The Committee shall designate a secretary, who shall prepare or cause to be prepared the minutes of each meeting and cause such minutes, as approved by the Committee, to be filed with the corporate records of the Company. The secretary shall send, or cause to be sent, copies of such minutes to each of the members of the Committee and to each of the members of the Board who are not members of the Committee. Best efforts will be used to circulate the minutes to the Board prior to the Committee making its report to the Board. Reports to the Board shall be made by the Committee on the basis that is determined by the Committee.

Duties

In addition to specific assignments that the Board may direct the Committee to carry out from time to time, the Committee shall be charged with, and have the power and authority of the Board, to perform the following duties and to fulfill the following responsibilities:

• periodically assess compensation of executive officers in relation to companies of comparable size, industry and complexity, taking the performance of the Company and such other companies into consideration;

• review and approve corporate goals and objectives relevant to the compensation of the Chief Executive Officer, evaluate the Chief Executive Officer’s performance in light of these goals and objectives, and, either as a committee or together with the other independent directors (as directed by the Board), determine and approve the Chief Executive Officer’s compensation based on this evaluation;

• make recommendation to the Board regarding the compensation of the executive officers of the Company other than the Chief Executive Officer;

• oversee the administration of the Company’s incentive compensation plan, other benefits plans (including a deferred compensation plan, if applicable) and perquisites, including retirement and termination benefits;

• in consultation with Chief Executive Officer, review director compensation levels and practices, and recommend, from time to time, changes in such compensation levels and practices to the Board;

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• annually review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval;

• at least annually conduct a self-evaluation to assess the effectiveness of the Committee;

• subject to Board direction or approval, perform any other activities consistent with this Charter, the Company’s Certificate of Formation and Bylaws, and governing laws as the Committee or the Board deem appropriate;

• report to the Board on Committee activities and decisions;

• review and approve the executive compensation disclosure required by applicable law; and

• prepare a report as required by the rules of the Securities and Exchange Commission for inclusion in the Company’s annual proxy statement or annual report.

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EX-99.5

Exhibit 99.5

FORBES ENERGY SERVICES LTD.

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER

Effective August 12, 2011

Composition

There shall be a committee of the Board of Directors (the “Board”) of Forbes Energy Services Ltd. (the “Company”) to be known as the Nominating and Corporate Governance Committee (the “Committee”) which shall be comprised solely of directors appointed by the Board at the annual meeting of the Board held in conjunction with the annual shareholders meeting or at any other meeting of the Board. The Committee’s Chairperson shall be designated by the Board or, if it does not do so, the Committee members shall elect a Chairperson by vote of a majority of the full Committee.

Each member of the Committee shall meet the independence requirements of the NASDAQ Stock Market (“NASDAQ”) and the Multilateral Instrument 52-110 (“ML 52-110”). If any member of the Committee ceases to meet the requirements discussed above, such member will not be able to serve as a member of the Committee for such time as they fail to meet such requirements, and will resign or be suspended or removed from the Committee by the Board. Once appointed by the Board, members of the Committee shall, except for any period of suspension, hold office until their successors are duly elected and qualified or until their earlier resignation, removal or death.

Statement of Policy

Consistent with the duties set forth below, the Committee shall assist the Board by: (a) identifying and recommending to the Board individuals qualified to become or remain Board members to facilitate the Board’s selection of a slate of nominees to be proposed for election at each annual meeting of the Company’s members; (b) at the Board’s request, providing input regarding qualified “independent” directors, as that term is defined by NASDAQ and ML 52-110 and other applicable regulations, available to serve on the Board; and (c) developing and recommending to the Board changes to the Company’s corporate governance policies and procedures as applicable.

Authority

To the extent that the Committee determines to use an outside advisor to assist the Committee in discharging its duties, the Committee shall have the sole authority to retain and terminate such advisor, including sole authority to approve such advisor’s fees and other retention terms. The Committee may not form or delegate authority to subcommittees without the prior approval of the Board. Nothing in this Charter is intended to limit the ability of members of management, other members of the Board, advisory directors, consultants, outside counsel, directors, accountants, or other advisors to participate in portions of the Committee meetings so long as, in each instance, the Committee is afforded the opportunity to deliberate and vote in executive session.

Meetings

The Committee shall meet at least once annually, and as many additional times as the Committee shall deem necessary or appropriate. The chairperson of the Committee will preside at each meeting of the Committee and, in consultation with the other members of the Committee, will set the frequency and length of each meeting and the agenda of items to be addressed at each meeting. As necessary or desirable, the chairperson of the Committee may request that members of management, other members of the Board, advisory directors, consultants, outside counsel, accountants, or other advisors be present at meetings of the Committee.

Minutes and Reporting

The Committee shall designate a secretary, who shall prepare or cause to be prepared the minutes of each meeting and cause such minutes, as approved by the Committee, to be filed with the corporate records of the Company. The secretary shall send, or cause to be sent, copies of such minutes to each of the members of the Committee and to each of the members of the Board who are not members of the Committee. Best efforts will be used to circulate the minutes to the Board prior to the Committee making its report to the Board. Reports to the Board shall be made by the Committee on the basis that is determined by the Committee.

Duties

In addition to specific assignments that the Board may direct the Committee to carry out from time to time, the Committee shall be charged with, and have the power and authority of the Board, to perform the following duties and to fulfill the following responsibilities:

• develop and recommend to the Board changes to the Company’s corporate governance policies and procedures, as required;

• identify and review possible candidates for Board membership consistent with the Board’s criteria for selecting new directors;

• consider written recommendations from the Company’s members for nominees for Directors and provide a means for submitting such recommendations and specifics on information required in the submission;

• annually recommend qualified candidates for approval by the Board of a slate of nominees for Directors to be proposed for election at the annual meeting of the Company’s members;

• in the event of a vacancy on the Board between annual meetings of the Company’s members, when so requested by the Board, recommend candidates for appointment by the Board to fill such vacancy, if such vacancy is to be filled;

• when formulating these recommendations, the Committee shall seek and consider advice and recommendations from management, other members of the Board and advisory directors, and may seek or consider advice and recommendations from consultants, outside counsel, accountants, or other advisors as it or the Board may deem appropriate.

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• in consultation with management, recommend Directors to be selected by the Board for membership on and chairmanship of Board committees;

• annually review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval;

• at least annually conduct a self-evaluation to assess the effectiveness of the Committee;

• prepare such reports of the Committee as required to satisfy the disclosure requirements of applicable law; and

• generally report regularly to and advise the Board (as a whole) on corporate governance matters and Committee activities and decisions and perform any other activities consistent with this Charter, the Company’s Memorandum of Association and Bye-laws, and governing laws as the Committee or the Board deems appropriate (the “Governing Requirements”).

In making its recommendations regarding nomination and appointment, the Committee should consider:

a. competencies and skills that the Board considers to be necessary for the Board, as a whole to possess;

b. the competencies and skills that the Board considers each existing director to possess;

c. the competencies and skills of each nominee or appointee will bring to the Board; and

d. whether or not a new director can devote sufficient time and resources to his or her duties as a board member.

The Committee is not authorized to review the appointment of person’s whose nomination is required by the Governing Requirements. Such appointments will be made by the Company pursuant to the Governing Requirements.

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EX-99.6

Exhibit 99.6

FORBES ENERGY SERVICES LTD.

AMENDED AND RESTATED CORPORATE GOVERNANCE GUIDELINES

The following Corporate Governance Guidelines (these “Guidelines”) have been adopted by the Board of Directors (the “Board”) of Forbes Energy Services Ltd., a company organized under the laws of Bermuda (the “Company”), to assist the Board in the exercise of its responsibilities. These Guidelines reflect the Board’s commitment to monitor the effectiveness of policy and decision making both at the Board and management level, with a view to enhancing long-term member value. These Guidelines are not intended to change or interpret any national, federal, provincial or state law or regulation, including the Texas Business Organizations Code, as amended, or the Certificate of Formation, or Bylaws of the Company, and the Board shall continue to comply with those laws, regulations and corporate documents. These Guidelines are intended to serve as a flexible framework within which the board may conduct its business and not as a set of legally binding obligations. These Guidelines are subject to modification from time to time by the Board.

THE BOARD

The Board’s Goals

The Board’s goal is to build long-term value for the Company’s members and to assure the vitality of the Company for its customers, employees and the other individuals and organizations that depend on the Company. The Board understands that the members rely upon the Board to act in the best interest of the Company in making decisions or taking actions not requiring member approval and shall at all times act accordingly.

The Board’s Responsibilities

The business and affairs of the Company shall be managed by or under the direction of the Board. A director is expected to spend the time and effort necessary to properly discharge such director’s responsibilities. Accordingly, a director is expected to regularly attend meetings of the Board and committees on which such director sits, and to review prior to meetings material distributed in advance for such meetings. A director is expected to attend the Company’s annual meeting of members. A director who is unable to attend any meeting (which it is understood will occur on occasion) is expected to notify the Chairman of the Board or the Chairman of the appropriate committee in advance of such meeting. In addition, directors are expected to act in the best interests of the Company, maintain independence and integrity, develop and maintain a sound understanding of the Company’s strategies, industries and businesses, review management development and succession planning, endeavor to be available on reasonable notice, attend and prepare for meetings, and provide active, objective and constructive participation at meetings of the Board and its committees.

The Board’s responsibilities include, but are not limited to the following:

1. Appointing the Company’s Chief Executive Officer and other executive officers, taking into account advice or counsel from committees of the Board, management, or third parties, as the Board deems appropriate and, to the extent feasible, satisfying itself as to the integrity of the Chief Executive Officer and other executive officers and that the Chief Executive Officer and other executive officers create a culture of integrity throughout the organization.

2. Adopting a strategic planning process and approving, on at least an annual basis, a strategic plan which takes into account, among other things, the opportunities and risks of the business.

3. Monitoring the performance of the Company in relation to its goals, strategy and competitors and the performance of the Chief Executive Officer, offering him or her constructive advice and feedback, and, when appropriate or necessary, removing the Chief Executive Officer.

4. Reviewing and approving charters for the Audit Committee and any other committee of the Board in existence from time to time, and appointing the members and chairs of all Board committees.

5. Reviewing and approving the annual budget of the Company.

6. Identifying the principal risks of the Company’s business, and ensuring the implementation of appropriate systems to manage these risks.

7. Adopting a communication policy for the Company.

8. Approving the Company’s internal control and management information systems.

9. Approving the issuance of securities of the Company.

10. Approving investments in and acquisitions and dispositions of assets and businesses.

11. Developing a procedure whereby members and other stakeholders can communicate with the Board or with independent members of the Board, including a process for determining which communications will be relayed to Board members.

12. Developing the Company’s approach to corporate governance, including developing a set of corporate governance principles and guidelines that are specifically applicable to the issuer.

13. Adopting a written code of business conduct and ethics addressing, in particular, the following issues:

a) conflicts of interest, including transactions and agreements in respect of which a director or executive officer has a material interest;

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b) protection and proper use of corporate assets and opportunities;

c) confidentiality of corporate information;

d) fair dealing with the issuer’s security holders, customers, suppliers, competitors and employees;

e) compliance with laws, rules and regulations; and

f) reporting of any illegal or unethical behaviour.

Selection of New Directors

The Board shall be responsible for nominating members for election to the Board and for filling vacancies on the Board that may occur between annual meetings of members based on the recommendations of the Nominating and Corporate Governance Committee. The Board shall identify and review possible candidates for Board membership consistent with criteria approved by the Board, and annually recommend qualified candidates for a slate of nominees to be proposed for election to the Board at the annual meeting of the Company’s members. The Board shall consider the appropriate size of the Board with a view to facilitating effective decision making. In the event of a vacancy on the Board between annual meetings of the Company’s members, the Board may identify, review and recommend qualified candidates for Board membership for Board consideration to fill such vacancies, if the Board determines that such vacancies will be filled.

When formulating these recommendations, the Board shall seek and consider advice and recommendations from management, and may seek or consider advice and recommendations from consultants, outside counsel, accountants, or other advisors as it or the Board may deem appropriate.

Board Membership Criteria

The Board is responsible for periodically determining the appropriate skills, perspectives, experiences, and characteristics required of Board candidates, taking into account the Company’s needs and current make-up of the Board. This assessment should include appropriate knowledge, experience, and skills in areas deemed critical to understanding the Company and its business; personal characteristics, such as integrity and judgment; and candidates’ commitments to the boards of other companies. Each Board member is expected to ensure that other existing and planned future commitments do not materially interfere with the member’s service as a Director and that he or she devotes the time necessary to discharge his or her duties as a Director.

The Board is responsible for periodically reviewing and suggesting appropriate modifications to these qualification guidelines. The Board believes the qualification guidelines included as Exhibit A are currently appropriate, but it may change these guidelines as the Company’s and Board’s needs warrant.

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Other Directorships

The Company does not have a policy limiting the number of other company boards of directors upon which a director may sit. The Board, however, shall consider the number of other public company boards and other boards (or comparable governing bodies) on which an individual is a member in making a determination of whether to recommend such individual to the Board as a candidate for a Board position. Board members are expected to promptly notify the other Board members of any changes in status on other boards and their committees.

Independence of the Board

The Board shall identify each director who qualifies as an independent director (collectively, “Independent Directors”) under the requirements of the NASDAQ Stock Market and the Toronto Stock Exchange. The Board shall review annually the relationships that each director has with the Company (either directly or as a partner, stockholder, officer or representative of an organization that has a relationship with the Company). Following such annual review, only those directors who the Board affirmatively determines have no material relationship with the Company (either directly or as a partner, stockholder, officer or representative of an organization that has a relationship with the Company) will be considered Independent Directors, subject to any additional qualifications prescribed applicable law. The Board may adopt and disclose categorical standards to assist it in determining director independence.

Board Compensation

A director who is also an officer of the Company shall not receive additional compensation for such service as a director. The Company believes that compensation for non-employee directors should be competitive and may from time to time encourage ownership of the Company’s equity securities through the payment of a portion of director compensation in Company stock, options to purchase Company stock, stock appreciation rights or similar compensation whose value is based on the Company’s stock. The Compensation Committee will periodically review the level and form of the Company’s director compensation, including how such compensation compares to director compensation of companies of comparable size, industry and complexity. Such review will also include a review of both direct and indirect forms of compensation to the Company’s directors, including, if applicable, any charitable contributions by the Company to organizations in which a director is affiliated and consulting or other similar arrangements between the Company and a director. Proposed changes to director compensation will be submitted to the Board for approval.

Members of the Audit Committee may not, other than in their capacity as a member of the Audit Committee, the Board, or any other Board committee accept directly or indirectly any consulting, advisory, or other compensatory fees from the Company or any subsidiary thereof; provided that, unless the rules of any applicable securities exchange require otherwise, compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the listed issuer (provided that such compensation is not contingent in any way on continued service).

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Complaint Procedures

Any employees or other interested parties desiring to voice their complaints or concerns regarding the Company with the Independent Directors of the Company may do so by the method set forth in the Company’s Employee Code of Business Conduct and Ethics, which shall be maintained on the Company’s web-site.

Self-Evaluation by the Board

The Board shall conduct an annual self-assessment of the Board’s performance as well as the performance of each committee of the Board, the results of which will be discussed with the Board and each committee. The assessment should include a review of any areas in which the Board or management believes the Board can make a better contribution to the Company. In conducting such self-assessment, the Board shall seek input from management and may seek input from such other parties as it may deem appropriate.

Board Access to Management and Outside Advisors

Board members shall have access to the Company’s management. Board members shall also have access to the Company’s outside advisors and shall coordinate such access through the Chief Executive Officer.

Attendance of Management Personnel at Board Meetings

Normally, it is management’s job to formalize, propose and implement strategic choices and the Board’s role to approve strategic direction and evaluate strategic results. As a practical matter, however, the Board and management will be better able to carry out their respective strategic responsibilities if there is an ongoing dialogue among the Chief Executive Officer, other members of senior management and Board members. To facilitate such discussions, members of senior management who are not directors may be permitted to participate in Board meetings when appropriate.

The Board also encourages the Chief Executive Officer to bring members of management from various functional areas into the Board meetings from time to time to provide management insight into items being discussed by the Board that fall within the manager’s scope of responsibility and to make presentations to the Board on matters that fall within the manager’s scope of responsibility.

Advisory Directors

The Board is authorized to appoint one or more advisory directors to the Board. Such advisory directors shall be notified of and entitled to attend and participate in all Board meetings. Each such advisory director will be notified of and entitled to attend and participate in all committee meetings for committees to which he is appointed an advisory director to the committee, subject to applicable legal or stock exchange restrictions. Each such advisory director will be entitled to treatment by management, the Board and its committees as any other director but, as an appointed position, will not have voting power as a director.

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Board Materials Distributed in Advance

Information and materials that are important to the Board’s understanding of the agenda items and other topics to be considered at a Board meeting should, to the extent practicable, be distributed sufficiently in advance of the meeting to permit prior review by the directors. In the event of a pressing need for the Board to meet on short notice or if such materials would otherwise contain highly confidential or sensitive information, it is recognized that written materials may not be available in advance of the meeting.

Board Interaction with Third Parties

The Board believes that only authorized Directors, officers and advisors should speak for the Company. Each Director shall refer all inquiries from institutional investors, analysts, the press or customers, as well as all inquiries regarding potential mergers and acquisitions, to the Chief Executive Officer. Any proposed exceptions to this policy must first be discussed with and agreed to by the Chief Executive Officer prior to contact with such third parties.

Board Orientation and Continuing Education

The Company shall provide new directors with orientation to familiarize such directors with, among other things, the Company’s business, strategic plans, significant financial, accounting and risk management issues, compliance programs, conflicts policies, code of business conduct and ethics, corporate governance guidelines, principal officers, internal auditors and independent auditors. Each director is expected to participate in continuing education to maintain expertise to perform his or her responsibilities as a director.

Board Meetings

Frequency of Meetings

There shall be at least four regularly scheduled meetings of the Board each year. At least one regularly scheduled meeting of the Board shall be held each quarter. Additional meetings may be held as needed.

Selection of Agenda Items for Board Meetings

The Chief Executive Officer, in consultation with the Chairman of the Board if there is a non-management Chairman of the Board, shall prepare an agenda for each meeting of the Board. Each Board member shall be free to suggest inclusion of items on an agenda as well as free to raise at any Board meetings subjects that are not specifically on the agenda for that meeting.

Committee Matters

Number and Names of Board Committees

The Company shall have a standing Audit Committee. The Board also has the authority to appoint other committees from time to time. The purpose and responsibility for each such

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committee shall be outlined in a committee charter adopted by the Board. Such charters shall be designed to comply with all applicable laws, rules and regulations. Such charters shall set forth the duties and responsibilities of the committees, qualifications for committee membership, guidelines covering committee member appointment and removal, committee authority and obligations to report to the Board. The Chairman of each committee, in consultation with committee members, shall determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee’s respective charter. Nothing in the Guidelines or any committee charter is intended to limit the ability of members of management, other members of the Board, consultants, outside counsel, accountants or other advisors to attend meetings of the committee so long as, in each instance, the committee is afforded the opportunity to deliberate and vote in executive session.

The Board shall have the power to hire and fire independent legal, financial or other advisors to the Board, as it may deem necessary. In general, it is assumed that the proposed hiring of any such advisors will be discussed in advance with the Chief Executive Officer of the Company. The Company will provide adequate funding for any such advisors.

Independence of Board Committees

The Audit Committee shall be composed of qualified, Independent Directors to the extent necessary to satisfy legal, stock exchange and other requirements applicable to such committee and, if applicable, any other committee of the Board in existence from time to time.

Assignment of Committee Members

The Board shall be responsible, after consultation with the Chief Executive Officer and the Chairman of the Board, for making recommendations with respect to the assignment of Board members to the various committees of the Board, and for annually reviewing committee assignments made by the Board. The Board shall be responsible for appointing the Chairman and members to the committees on an annual basis.

Minutes

Each committee shall maintain minutes of their meetings in sufficient detail to reflect the material issues considered at the meeting. Such minutes shall be distributed to the entire Board and filed with the corporate records of the Company. Best efforts shall be used to circulate minutes to the Board prior to the committee making its report to the Board.

Leadership Development

Selection of the Chief Executive Officer

When necessary, the Board shall be responsible for identifying potential candidates for, and selecting, the Company’s Chief Executive Officer. In identifying potential candidates for, and selecting, the Company’s Chief Executive Officer, the Board shall consider, among other things, a candidate’s industry experience, understanding of the Company business environment, leadership qualities, knowledge, skills, expertise, integrity, and reputation in the business community.

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Evaluation of Chief Executive Officer

The Board will provide the Chief Executive Officer with an annual performance review for the prior year prior to March 1 of each fiscal year. The Chairman of the Board, if not also a member of management, will provide the performance review of the Chief Executive Officer after consultation with the other members of the Board in separate session. The compensation of the Chief Executive Officer shall be set by the Board by ratification and approval.

Succession Planning

The Board shall plan for the succession to the position of Chief Executive Officer.

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EXHIBIT A

DIRECTOR QUALIFICATION GUIDELINES

The Board of Directors of the Company, in considering qualifications of Directors standing for re-election and candidates for Board membership, will consider the following factors, in addition to those other factors it may deem relevant:

1. Management experience, including, as applicable, any public company experience.

2. Other areas of expertise or experience that are desirable, given the Company’s business and industry and the current make-up of the Board.

3. Desirability of range in age, so that retirements are staggered to permit replacement of Directors of desired skills and experience in a way that will permit appropriate continuity of Board members.

4. Independence, as defined by the Board.

5. Knowledge and skills in accounting and finance, business judgment, general management practices, crisis response and management, industry knowledge, international markets, leadership, and strategic planning.

6. Personal characteristics matching the Company’s values, such as integrity, accountability, financial literacy, and high performance standards.

7. Additional characteristics, such as:

a) Willingness to commit the time required to fully discharge their responsibilities to the Board, including the time to prepare for Board and committee meetings by reviewing the material supplied before each meeting;

b) Commitment to attend the annual meeting of members and a minimum of 75% of all Board and relevant committee meetings;

c) Ability and willingness to represent the members’ long- and short-term interests;

d) Willingness to advance their opinions, but once a decision is made by a majority of the Board, a willingness to support the majority decision, assuming questions of ethics or propriety are not involved.

8. The number of commitments to other entities, with one of the more important factors being the number of other public company boards on which the individual serves.