UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





Form 10-K/A

(Amendment No. 1)

(Mark One)

|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission file number 333-150853-4





Forbes Energy
Services Ltd.

(Exact name of registrant as specified in its charter)



|                                         |  |                    
|---------------------------------------- |  | -------------------
|Bermuda                                  |  | 98-0581100         
|(State or other jurisdiction of          |  | (I.R.S. Employer   
|incorporation or organization)           |  | Identification No.)
|                                         | 
|3000 South Business Highway 281          |  |                    
|Alice, Texas                             |  | 78332              
|(Address of principal executive offices) |  | (Zip Code)         

Registrants telephone number, including area code:

(361) 664-0549

Securities registered pursuant to
Section 12(b) or Section 12(g) of the Act: None





Indicate by
check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.      ̈  Yes    þ  No

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.     þ  Yes     ̈  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.     þ  Yes     ̈  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).      ̈  Yes     ̈  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.      ̈



Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2
of the Exchange Act.



|                          |  |                            
|------------------------- |  | ---------------------------
| ̈ Large Accelerated Filer |  |  ̈ Accelerated Filer        
|þ Non-Accelerated Filer   |  |  ̈ Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act
Rule 12b-2).     ̈  Yes    þ  No

The aggregate market value of the stock held by non-affiliates of the registrant as of the last business day of the most recently
completed second fiscal quarter, June 30, 2010, was approximately USD 24,699,600 based on the closing sales price of the registrants common stock as reported by the Toronto Stock Exchange on June 30, 2010 of USD $0.4227 per share,
converted from CDN$ to USD$ based on the exchange rate on June 30, 2010 of CDN $1.00 equaling USD $0.9393 as reported in the Wall Street Journal.

Indicate the number of common shares outstanding of each of the registrants classes of common shares, as of the latest practicable date.

At April 26, 2011, there were 83,673,700 common shares outstanding.









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The Registrant hereby amends the following items of its Form 10-K for the fiscal year
ended December 31, 2010 filed with the Securities and Exchange Commission on March 30, 2011. No other information in our originally filed Form 10-K is amended hereby. Capitalized terms used but not defined herein shall have the meaning
ascribed to such terms in the Form 10-K as originally filed.



|Item 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------

The following table sets out information for each of our directors and executive officers.



|                    |  |     |  |                                                               
|------------------- |  | --- |  | --------------------------------------------------------------
|Name                |  | Age |  | Position                                                      
|John E. Crisp       |  | 49  |  | Chairman of the Board, President and Chief Executive Officer  
|Charles C. Forbes   |  | 57  |  | Executive Vice President, Chief Operating Officer and Director
|L. Melvin Cooper    |  | 57  |  | Senior Vice President, Chief Financial Officer and Secretary  
|Dale W. Bossert     |  | 66  |  | Director                                                      
|Travis H. Burris    |  | 49  |  | Director                                                      
|Janet L. Forbes     |  | 56  |  | Director                                                      
|William W. Sherrill |  | 84  |  | Director                                                      

The following are brief
biographies of each of our executive officers and directors, including a description of their present occupations; their principal occupations during the last five years; and the specific experience, qualifications, attributes or skills that caused
the nominating and corporate governance committee and the Board to determine that the person should continue serving in his or her stated capacity.

Executive Officers

John E. Crisp, Chairman of the Board, President
and Chief Executive Officer

Mr. Crisp is our President and Chief Executive Officer and was appointed to such
offices and elected as a director and Chairman of the Board upon Forbes Energy Services Ltd.s formation effective April 11, 2008 and since the Delaware Reorganization effective January 1, 2008, has been the Chairman of the Board,
President and Chief Executive Officer of Forbes Energy Services LLC. Prior to the Delaware Reorganization, Mr. Crisp was a founding partner of the Forbes Group and Director of Operations of TX Energy Services since 2003. Prior to founding the
Forbes Group, Mr. Crisp was a Division Manager at Key Energy from 1998 to 2003. Key Energy acquired Dawson Production Services shortly after Dawson acquired Hellums Services, Inc. in 1998. Mr. Crisp became a partner of Hellums in 1995,
after serving as their Equipment and Safety Manager from 1990 and served in the same capacity until it was sold to Dawson in 1998, at which time Mr. Crisp was serving as a district manager. Mr. Crisp started in the energy industry in 1978,
working as an equipment operator. Mr. Crisp has over 30 years of oilfield services industry experience and has twice before founded, built and later sold oilfield service businesses.

Charles C. Forbes, Executive Vice President, Chief Operating Officer and Director

Mr. Forbes is our Executive Vice President and Chief Operating Officer and was appointed to such offices and elected a director upon
Forbes Energy Services Ltd.s formation effective April 11, 2008 and since the Delaware Reorganization effective January 1, 2008, has been a director and Executive Vice President and Chief Operating Officer of Forbes Energy Services
LLC. Prior to the Delaware Reorganization, Mr. Forbes was a founding partner of the Forbes Group and Director of Operations of C.C. Forbes since 2003. Mr. Forbes founded Forbes Oil & Gas Company, an independent exploration and
production company, in the mid-1980s which he continues to operate. From 1998 to 2003, Mr. Forbes served as a consultant to various independent oilfield services companies in South Texas. Mr. Forbes started in the oilfield industry with
Otis Engineering doing workover and wireline work. Mr. Forbes purchased Hellums Services, Inc. in 1995, which was acquired by Dawson Production Services in 1998. Mr. Forbes started O.K. Well Service in 1978, with three rigs and sold it to
Pride Petroleum Services in 1990, when such company had 22 workover rigs, 12 swabbing rigs and 6 winch trucks with approximately 145 employees. Mr. Forbes managed the operations of oil and natural gas leases from 1980 through 2006 and various
salt water disposal wells from 1980 through 2006. Mr. Forbes has over 35 years of oilfield services industry experience and has experience founding, building and selling oilfield services businesses.

L. Melvin Cooper, Senior Vice President, Chief Financial Officer and Assistant Secretary

Mr. Cooper is our Senior Vice President, Chief Financial Officer and Assistant Secretary and was appointed to such offices upon
Forbes Energy Services Ltd.s formation effective April 11, 2008 and since the Delaware Reorganization effective January 1, 2008, has been the Senior Vice President, Chief Financial Officer and Secretary of Forbes Energy Services LLC.
Prior to the Delaware



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Reorganization, Mr. Cooper was Senior Vice President & Chief Financial Officer of the Forbes Group from June 2007. In October 2010, Mr. Cooper joined the board of Flotek
Industries Inc., a company listed on the New York Stock Exchange. From January to June, 2007, he served as Senior Vice President and Chief Financial Officer of Cude Oilfield Contractors, Inc., an oilfield construction company. From September 2004 to
January 2007, Mr. Cooper served as President of SpectraSource Company, a supplier of products and services to the new home building industry. From April 2000 to September 2004, Mr. Cooper served as President and Chief Executive Officer of
Cerqa, the supply chain management division of Nationwide Graphics, Inc., a national printing and supply chain management company where Mr. Cooper served as Senior Vice President and Chief Financial Officer. Mr. Cooper has also served as Chief
Financial Officer of private and public companies involved in scrap metal recycling, manufacturing, water purification, natural gas marketing and drilling fluids. Mr. Cooper earned a degree in accounting from Texas A & I University in 1975.
Mr. Cooper is a Certified Public Accountant.

Directors

In addition to Messrs. Crisp and Forbes, the following individuals are our directors.

Dale W. Bossert

Mr. Bossert was elected as a director upon
Forbes Energy Services Ltd.s formation effective April 11, 2008 and has served as a director of Forbes Energy Services LLC since March 20, 2008. Since its inception on May 1, 2006, Mr. Bossert has served as a director of GasFrac
Energy Services. In August 2010 GasFrac Energy Services conducted a Canadian initial public offering and was listed on the Toronto Stock Exchange. Mr. Bossert recently served as the Chairman of the Board and a director of Turnkey E&P Inc.,
or Turnkey, a company listed on the Toronto Stock Exchange, from July 16, 2007 to February 14, 2009 and served as director of Keeper Resources Inc., a company that was listed on the Toronto Stock Exchange, until its sale in May 2008. Prior
to his service as Chairman of the Board and director of Turnkey, he was its President and Chief Executive Officer for three years and prior to that was President of DWB Oil and Gas Consulting Ltd. for four years. On November 17, 2008, the
principal operating subsidiary of Turnkey filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Turnkey was subject to a cease trade order by the Alberta Securities Commission on December 14, 2009 and received cease trade orders
from other Canadian securities commissions subsequently. Mr. Bossert resigned as a director of Turnkey on February 14, 2010. Mr. Bossert has approximately 40 years of experience in the upstream oil and natural gas industry and has
held various positions with Amoco Corporation in Calgary, Alberta and Chicago, Illinois, and with Union Pacific Resources Company in Calgary, Alberta, Denver, Colorado and Fort Worth, Texas. Mr. Bossert has worked for or acted as a consultant
to a number of U.S. based energy companies, including Celsius Energy Company, Chesapeake Energy Corp. and Bass Enterprises.

Travis H. Burris

Mr. Burris was elected as a director upon Forbes Energy Services Ltd.s formation effective April 11, 2008 and since the Delaware Reorganization effective January 1, 2008, has served
as a director of Forbes Energy Services LLC. Mr. Burris has been President, Chief Executive Officer and a director of Texas Champion Bank since 1987. Mr. Burris received a BBA degree in Finance from Texas A & M University.

Janet L. Forbes

Ms. Forbes was elected as a director upon Forbes Energy Services Ltd.s formation effective April 11, 2008 and since the Delaware Reorganization effective January 1, 2008, has served
as a director of Forbes Energy Services LLC. Ms. Forbes was a founding investor in the Forbes Group. Ms. Forbes was a partner and Chief Financial Officer of O.K. Well Service from 1978 until it was sold to Pride Petroleum Services in 1990.
When such company was sold, it had 22 workover rigs, 12 swabbing rigs and 6 winch trucks with approximately 145 employees. Ms. Forbes was the Managing Director and owner of CJC Ventures, LLC, a salon company, since January 2007 until the
companys dissolution in 2010. Prior to that time, Ms. Forbes was a private investor.

William W. Sherrill

Mr. Sherrill was elected as a director upon Forbes Energy Services Ltd.s formation effective April 11,
2008 and since the Delaware Reorganization effective January 1, 2008, has served as a director of Forbes Energy Services LLC. Mr. Sherrill has extensive experience in both operations and finance. In addition to his active business
interests, Mr. Sherrill has taught Entrepreneurship as an Executive Professor at the University of Houstons Bauer College of Business Administration since September 1990 and has been Chairman of the Center for Entrepreneurship and
Innovation at that university since September 1993, which recently ranked second in the nation among similar programs at other universities. Mr. Sherrill is also an Adjunct Professor at the Cullen College of Engineering. Mr. Sherrill was
President of Associates Company of North America. Mr. Sherrill has served as a



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director of Gulf and Western and Dasa Company. In addition, Mr. Sherrill was a director of the Federal Deposit Insurance Corporation, a Commissioner to the United Nations Commission for
UNESCO (the United Nations Educational, Scientific and Cultural Organization), a Governor of the Federal Reserve System in Washington D.C., Treasurer of the City of Houston, President of a commercial bank, Executive Vice President of a savings and
loan association and President of a federal credit union. Mr. Sherrill holds an MBA from Harvard Graduate School of Business Administration, with Distinction in Finance and Manufacturing.

The Board of Directors has determined that Dale W. Bossert, Travis H. Burris and William W. Sherrill are independent directors under the
definition of independence used by NASDAQ, as set forth in more detail below.

Corporate Governance

Our board of directors has implemented the corporate governance initiatives below consistent with the Sarbanes-Oxley Act of 2002 and has
adopted corporate governance guidelines. Our corporate governance guidelines address various topics, including:



| |  |  | responsibilities and duties of our board of directors;
| | - |  | ------------------------------------------------------



| |  |  | composition of our board of directors, including criteria for remaining a director;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | compensation of our board of directors;
| | - |  | ---------------------------------------



| |  |  | the audit committee of our board of directors;
| | - |  | ----------------------------------------------



| |  |  | the relationship of our board of directors to management; and
| | - |  | -------------------------------------------------------------



| |  |  | director orientation and continuing education.
| | - |  | ----------------------------------------------

Our board of directors will continue to evaluate and seek to improve upon, as appropriate, our corporate governance principles and policies on a going-forward basis.

In connection with the Delaware Reorganization, our board of directors and audit committee adopted an employee code of business conduct
and ethics and a director code of business conduct and ethics, which address various topics, including:



| |  |  | compliance with laws, rules and regulations;
| | - |  | --------------------------------------------



| |  |  | competition and fair dealing;
| | - |  | -----------------------------



| |  |  | protection and proper use of company assets;
| | - |  | --------------------------------------------



| |  |  | corporate opportunities;
| | - |  | ------------------------



| |  |  | conflicts of interest;
| | - |  | ----------------------



| |  |  | confidentiality;
| | - |  | ----------------



| |  |  | insider trading; and
| | - |  | --------------------



| |  |  | record keeping and public disclosure obligations.
| | - |  | -------------------------------------------------

On April 30, 2010, the board of directors amended the employee code of business conduct and ethics. The primary purpose of the amendment was to clarify the procedures for reporting violations of the
code. Both the employee code of business conduct and ethics and a director code of business conduct and ethics are available on the Investor Relations section of our website at http://www.forbesenergyservices.com.

Board of Directors

Our
bye-laws provide for a board of directors consisting of six directors, which is the current number of directors we have. Our board of directors has had six meetings in 2010, conducting all other business to date by unanimous written consent. The
board of directors intends to meet at least quarterly every year.

As we are not currently listed on a U.S. national
securities exchange or an inter-dealer quotation system that has requirements that a majority of the board of directors be independent, we use the definition of independence of the Nasdaq Stock Exchange, or NASDAQ, to determine whether our directors
are independent for purposes of U.S. securities laws. The board of directors has determined that Dale W. Bossert, Travis H. Burris and William W. Sherrill are independent directors as defined by NASDAQ. Our securities are listed on the Toronto Stock
Exchange, which employs a different definition of independence than NASDAQ. The board of directors has determined that Messrs. Bossert, Burris and Sherrill are independent under the rules of the Toronto Stock Exchange.



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Nominating and Voting Agreement

In connection with the Bermuda Reorganization, Charles C. Forbes, Janet L. Forbes, John E. Crisp and FES Ltd entered into a nominating and
voting agreement. Under the terms of this agreement, Mr. Crisp, Mr. Forbes, Ms. Forbes and their respective successors or assigns, or the Founders, were granted the right to designate a majority of members of the board of directors of the Company
for election. In connection with the Companys proposed listing of its common stock on NASDAQ, the Company and the Founders decided to amend certain provisions of this agreement in order to tie the Founders nomination rights more closely
to their combined ownership percentage of the Companys voting stock. On March 9, 2011, the Company and the Founders executed an amended and restated nominating and voting agreement to become effective as of the date of the Conversion. Pursuant
to this restated agreement, effective as of the Conversion, for as long as the Founders own greater than 25% in the aggregate of the total outstanding common stock of the Company (or other stock that at such time votes with the Common Stock with
respect to the election of directors), they will have the right to designate for election such number of members of the board of directors, rounded up to the greatest whole number, commensurate with their aggregate ownership percentage of such
stock. Notwithstanding the foregoing, the Founders will not have the right to designate for election a majority of the board of directors unless the Founders own a majority of the such voting stock of the Company. To the extent that the Founders are
unable to mutually agree upon which individuals shall be the board designees, the Founders agree to use good-faith best efforts to nominate Mr. Crisp, Mr. Forbes and Ms. Forbes as board designees, provided that if the number of board designees is
less than three, then the Founders agree to use good-faith best efforts to nominate the individuals with the higher ownership percentage of the Companys voting stock to the available designee positions.

Similar to the original agreement, pursuant to the restated agreement, to the extent that the Founders hold any shares of the Company
entitled to vote, such parties have agreed to vote their shares in favor of the designees nominated by the Founders to the Board of Directors. Such parties have also agreed to vote any shares of the Company entitled to vote, and to instruct their
designees on the Board of Directors to vote, so as to provide that each subsidiary has at least one manager or director who is also designee of the Founder. Unless 100% of the Founders are in agreement, the parties are contractually bound to
instruct their designees to vote against (i) the issuance, reduction, redemption, or alteration of rights of any equity or debt securities of the Company or any other capitalization of the Company; (ii) the formation or sale of any subsidiary, the
issuance, reduction, redemption, sale, disposition, or alteration of rights of any equity or debt securities of any subsidiary; and (iii) any decision to increase or decrease the number of directors. The Nominating and Voting Agreement will
terminate upon (i) the bankruptcy or dissolution of the Company, (ii) the ownership by the Founders of all the then issued and outstanding share capital of the Company, (iii) the execution of a written instrument of termination by all applicable
parties, and (iv) ten years following the date of execution of the restated agreement. The Nominating and Voting Agreement applies to the Founders as owners of common shares of the Company following the conversion by the Founders of their Class B
shares into common shares in May 2010.

Committees of the Board of Directors

The board of directors has established three board committees: the audit committee, the compensation committee, and the nominating and
corporate governance committee. The information below summarizes the functions of each of the committees in accordance with their charters. Copies of our committee charters are available on the Investor Relations section of our website at
http://www.forbesenergyservices.com.

Audit Committee

The audit committee has been structured to comply with the requirements of Multilateral Instrument 52-110Audit Committees of the
Canadian Securities Administrators, or MI 52-110, and the equivalent requirements under U.S. federal securities laws. The board of directors has determined that the audit committee members have the appropriate level of financial understanding and
industry specific knowledge to be able to perform the duties of the position and in particular are financially literate as defined in MI 52-110 and qualify as audit committee financial experts as defined in Item 407(d)(5)(ii) of Regulation S-K
of the Exchange Act of 1934, as amended, or the Exchange Act.

The audit committee, as permitted by, and in accordance with,
the requirements of the Companies Act of 1981 (Bermuda) and our memorandum of association and bye-laws and any legal or regulatory authority having jurisdiction, is responsible to periodically assess the adequacy of procedures for the public
disclosure of financial information and review on behalf of the board of directors, and report to the board of directors, the results of its review and its recommendation regarding all material matters of a financial reporting and audit nature,
including, but not limited to, the following main subject areas:



| |  |  | financial statements, including managements discussion and analysis thereof;
| | - |  | -----------------------------------------------------------------------------



| |  |  | financial information in any annual information form, management proxy circular, prospectus or other offering document, material change report, or
business acquisition report;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | reports to shareholders and others;
| | - |  | -----------------------------------



| |  |  | press releases regarding annual and interim financial results or containing earnings guidance;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | internal controls;
| | - |  | ------------------



| |  |  | audits and reviews of financial statements of us and our subsidiaries; and
| | - |  | --------------------------------------------------------------------------



| |  |  | filings with securities regulators containing financial information.
| | - |  | --------------------------------------------------------------------

The audit committee is responsible to ensure satisfactory procedures for receipt, retention, and treatment of complaints and for the
confidential, anonymous submission by employees regarding any accounting, internal accounting controls or auditing matters. The board of directors is informed of the audit committees activities by a report delivered at each regular meeting of
the board of directors.

The audit committee is responsible to recommend the appointment and compensation of the independent
registered public accounting firm annually and to review and evaluate the external auditor. Once appointed by the shareholders, the external auditor reports directly to the audit committee. The audit committee is responsible to review and approve
our hiring policies regarding current and former partners and employees of the external auditor. In addition, the audit committee is responsible to pre-approve non-audit services undertaken by the external auditor.

The audit committee has direct responsibility for overseeing the work of the external auditor engaged for the purpose of preparing or
issuing an auditors report or performing other audit, review or attest services, including the resolution of disagreements between the external auditor and management.

The audit committee meets at least once per financial quarter to fulfill its responsibilities under its charter, which includes the review of our quarterly and annual financial statements. In 2010, the
audit committee met eight times. The audit committee is comprised of Dale W. Bossert, Travis H. Burris and William W. Sherrill, each of whom is independent under the rules of the NASDAQ and the Toronto Stock Exchange, financially literate as
required by MI 52-110 and qualifies as audit committee financial experts as defined in Item 407(d)(5)(ii) of Regulation S-K of the Exchange Act. Mr. Sherrill is the chair of the audit committee.

Compensation Committee

In accordance with its charter, the compensation committees role is to assist the board of directors in fulfilling its responsibilities relating to matters of human resources and compensation,
including equity compensation and to establish a plan of continuity and development for our senior management. The compensation committee also reviews and recommends to the board of directors a comprehensive statement of compensation philosophy,
strategy and principles for our executives and periodically evaluates our compensation and benefits program in accordance with such statement. The compensation committee reviews and makes recommendations to the board of directors regarding all new
employment, consulting, retirement and severance agreements and arrangements proposed for our executives and evaluates existing agreements with our executives, including the Chief Executive Officer and with our directors. The compensation committee
may not form or delegate authority to subcommittees without the prior approval of the board of directors.

The compensation
committee is comprised of Dale W. Bossert, Travis H. Burris and William W. Sherrill, all of whom are independent under the rules of the NASDAQ and the Toronto Stock Exchange. Mr. Burris is the chair of the compensation committee. In 2010, our
compensation committee has met two times. The compensation committee meets as necessary.

Nominating and Corporate
Governance Committee

The nominating and corporate governance committees charter provides that the
responsibilities of such committee include:



| |  |  | establishing and reviewing member characteristics for the board of directors;
| | - |  | -----------------------------------------------------------------------------



| |  |  | evaluating, identifying and recommending nominees to the board of directors;
| | - |  | ----------------------------------------------------------------------------



| |  |  | considering written recommendations from the shareholders of the Company for nominees for directors;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | monitoring and reviewing the education and development of members of the board of directors;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | recommending directors to serve as committee members and chairs;
| | - |  | ----------------------------------------------------------------



| |  |  | reviewing and developing corporate governance guidelines, policies and procedures for the board of directors;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | establishing and implementing evaluation processes for the board of directors, committees and chairs;
| | - |  | -----------------------------------------------------------------------------------------------------



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| |  |  | establishing procedures for the engagement of independent counsel by a director;
| | - |  | --------------------------------------------------------------------------------



| |  |  | reviewing disclosure by us of matters within the committees mandate; and
| | - |  | -------------------------------------------------------------------------



| |  |  | reviewing and evaluating the committees charter and efficacy.
| | - |  | --------------------------------------------------------------

The nominating and corporate governance committee is comprised of Dale W. Bossert, Travis H. Burris and William W. Sherrill, all of whom
are independent under the rules of the NASDAQ and the Toronto Stock Exchange. Mr. Bossert is the chair of the nominating and corporate governance committee. Our nominating and corporate governance committee met once in 2010. The nominating and
corporate governance committee meets at least annually and otherwise as necessary.

The nominating and corporate governance
committee is responsible for, among other things, identifying and recommending potential candidates for nomination to the board of directors. The identification of potential board members is undertaken with a view to ensuring overall diversity of
experience, backgrounds, skills and geographic representation of board members. The nominating and corporate governance committee receives advice from the board of directors and considers written recommendations from the shareholders of the Company
respecting individuals best suited to serve as directors and, when necessary, develops its own list of appropriate candidates for directorships.

Indemnification of Directors and Officers

Section 98 of the Companies
Act of 1981 (Bermuda) 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 such 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.

Our bye-laws have provisions that provide that it
shall indemnify its officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. The bye-laws provide that the shareholders waive all claims or rights of action that they might have, individually
or on our behalf, against each of our 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 of 1981 (Bermuda) permits us 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 we may otherwise indemnify such officer or director. We have purchased and maintain a directors and officers liability policy for such a purpose.

The limited liability company agreement of Forbes Energy Services LLC provides its officers and directors with the maximum indemnification provisions permitted under Delaware law. Section 108 of the
Delaware Limited Liability Company Law, or Delaware law, empowers a Delaware limited liability company to indemnify any member or manager or other person from and against any and all claims and demands whatsoever. In addition, Delaware case law
provides broad discretion to a limited liability company to provide advancement or insurance in respect of such indemnification.



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Directors and Officers Liability Insurance and Indemnification

We have a directors and officers liability insurance policy that covers indemnification of directors and officers and
individual directors and officers in certain circumstances. The policy has a $5 million coverage limit and indemnification deductibles apply. In addition, both Forbes Energy Services Ltd. and Forbes Energy Services LLC have entered into
indemnification agreements with each of their respective directors and officers for liabilities and costs in respect of any action or suit against them in connection with the execution of their duties, subject to customary limitations prescribed by
applicable law. These agreements, among other things, would indemnify such directors and officers for certain expenses (including advancing expenses for attorneys fees), judgments, fines and settlement amounts incurred by any such person in
any action or proceeding, including any action by us or on our behalf, arising out of such persons services as a director or officer of us, any subsidiary of ours or any other company or enterprise to which the person provides services at our
request.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors,
officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.



|Item 11. | Executive Compensation
|-------- | ----------------------

Compensation Discussion and Analysis

Our philosophy on the compensation of
our executive officers is to provide competitive salary levels and compensation incentives that attract and retain individuals of high quality, recognize performance and align executive goals with the short-term and long-term objectives of the
Company. Our compensation program is designed to reward performance, leadership and loyalty. The elements of our executive compensation program for our executive officers consist of base salary and benefits, cash bonuses and equity incentive awards.
We provide base salary and benefits in order to compensate executive officers for their day-to-day services rendered to the Company, cash bonuses in order to encourage achievement of operating results and equity incentive awards in order to better
align the interests of our executive officers with the long-term interests of our shareholders. We believe that each of these three principal elements play a role in achieving our overall compensation objective of attracting and maintain high
quality individuals, recognizing performance and aligning executive goals with the objectives of the Company.

The Company
does not have a formal policy for allocating between cash and non-cash compensation, generally or with respect to its named executive officers. Rather the compensation committee evaluates each element of compensation separately. For the named
executive officers, the factors used in such evaluation are set forth below.

In connection with our Bermuda reorganization
and Canadian initial public offering, in May 2008 we entered into employment agreements with each of our executive officers named in our summary Compensation Table on Page 9, or Named Executive Officers. The compensation committee was involved in
this process and considered the following factors in setting compensation levels, including base salary, potential bonus and option awards, for each of the Named Executive Officers:



| |  |  | The roles of Messrs. Forbes and Crisp in launching each of our current lines of business;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | The roles of Messrs. Forbes and Crisp in developing and growing each of our current lines of business to our current levels;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | The roles of Messrs. Forbes and Crisp in creating a business model that allows us to differentiate ourselves from competitors in the marketplace
through newer equipment, enhanced customer service and safety for employees;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The roles of Messrs. Forbes, Crisp and Cooper in completing our most recent, significant business transactions including:
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | The reorganization of our predecessor companies from limited partnerships into limited liability companies in June 2007;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | The reorganization of the limited liability companies under a Delaware holding company in January 2008;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | Our private placement of $205 million in 11% senior secured notes in a 144A transaction in February 2008;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | The reorganization of our companies under our Bermuda holding company in May 2008;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | Our May 2008 Canadian initial public offering and related U.S. private placement of common shares for aggregate gross proceeds of approximately $172
million;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

In connection with the employment agreements described above, at the time of our Canadian initial
public offering, each of the Named Executive Officers were granted an option to purchase 450,000 common shares at an exercise price of $7.00 per share, the price at which common shares were sold in our Canadian initial public offering. This grant
was commensurate with the factors considered by the compensation committee described in the preceding section.



8



---

On August 24, 2010 and September 9, 2010, the compensation committee met to
discuss, among other things, the compensation of Mr. Cooper. It was determined that, in order to ensure that Mr. Coopers compensation adequately reflects what the committee felt, based on the general experience of its members, is
available in the market, Mr. Coopers compensation should be increased. The committee felt that it was appropriate to grant Mr. Cooper an incentive option to purchase 475,000 common shares to Mr. Cooper at an exercise price of
$0.65 per share. The option has a ten year life and vests in four equal installments over two years. Further, the committee decided to raise Mr. Coopers base salary from $200,000 a year to $250,000 a year. The committee feels that this
mix of compensation (both long-term equity compensation and base salary increase) rewards Mr. Cooper for his efforts a Chief Financial Officer and provides incentives for performance that align with the interests of our shareholders.

Our compensation committee has not conducted a complete review of the compensation of Messrs. Crisp and Forbes since May
2008. Nevertheless, due to economic conditions, our compensation committee did acknowledge and agree, in April 2009, to the voluntary and temporary reduction in base salary of Messrs. Crisp, Forbes and Cooper of $37,500, $37,500 and $5,000,
respectively. As discussed above, Mr. Coopers salary has subsequently been increased. Additionally, due to economic conditions, the compensation committee determined that Messrs. Crisp, Forbes and Cooper should not receive bonus payments
for 2009. As economic conditions improve, it is anticipated that the compensation committee will establish formal methodologies for reviewing base salary and determining cash and equity bonus awards.

On April 11, 2011, based on the recommendation of the compensation committee, the board of directors approved cash bonuses of $300,000,
$300,000 and $100,000 to John E. Crisp, Charles C. Forbes and L. Melvin Cooper, respectively. These cash bonuses have been awarded, but have not yet been paid. The compensation committee decided to recommend these bonuses in an attempt to ensure
that the total cash compensation of its executive officers adequately reflects the cash compensation that is available to executives of similarly situated companies in our market. In arriving at this decision, the compensation committee reviewed
data from the following published surveys: 2010 Economics Research Institute Platform Library, Watson Wyatts 2008/2009 Top/Middle Management Calculator, 2010 Mercer Compensation Survey for the Energy Sector.

Summary Compensation

The following table sets forth all compensation paid, payable, awarded, granted, given, or otherwise provided, directly or indirectly, by
Forbes Energy Services Ltd. or a subsidiary thereof, in U.S. dollars, to the individuals who were, at December 31, 2010, the Chief Executive Officer, the Chief Financial Officer and the only other executive officer whose total annual
compensation was more than $100,000. The currency of compensation awarded, earned, paid or payable is in U.S. dollars.



|                                                                      |  |      |      |  |           |                      |         |          |                         |  |                      |  |  |                        |   |  |                                           |  |           |                 |  |  |                          |  |  |                       |   |  |  |  |   |  |  |  |        |      |  |  |           | 
|--------------------------------------------------------------------- |  | ---- | ---- |  | --------- | -------------------- | ------- | -------- | ----------------------- |  | -------------------- |  |  | ---------------------- | - |  | ----------------------------------------- |  | --------- | --------------- |  |  | ------------------------ |  |  | --------------------- | - |  |  |  | - |  |  |  | ------ | ---- |  |  | --------- | 
|Name and principal
position                                           |  | Year |      |  | Salary($) |                      |         | Bonus($) |                         |  | Share-basedawards($) |  |  | Option-basedawards ($) |   |  | Non-equity incentive 
plancompensation($) |  |           | Pensionvalue($) |  |  | All
othercompensation($) |  |  | Totalcompensation
($) |  
|                                                                      |  |      |      |  |           | Annualincentiveplans |         |          | Long-termincentiveplans |  |                      |  | 
|John E. Crisp 
President & Chief Executive Officer(1)                 |  |      | 2010 |  |           |                      | 462,500 |          |                         |  |                     |  |  |                        |  |  |                                           |  |          |                 |  |  |                         |  |  |                       |  |  |  |  |  |  |  |  | 57,178 | (2)  |  |  | 519,678   | 
|                                                                      |  |      | 2009 |  |           |                      | 474,038 |          |                         |  |                     |  |  |                        |  |  |                                           |  |          |                 |  |  |                         |  |  |                       |  |  |  |  |  |  |  |  | 61,148 | (3)  |  |  | 535,055   | 
|                                                                      |  |      | 2008 |  |           |                      | 500,019 | (4)      |                         |  |                     |  |  |                        |  |  |                                           |  | 1,307,523 | (5)             |  |  |                         |  |  |                       |  |  |  |  |  |  |  |  | 52,115 | (6)  |  |  | 1,859,657 | 
|Charles C. Forbes
 Executive Vice President & Chief
Operating Officer |  |      | 2010 |  |           |                      | 462,500 |          |                         |  |                     |  |  |                        |  |  |                                           |  |          |                 |  |  |                         |  |  |                       |  |  |  |  |  |  |  |  | 52,337 | (7)  |  |  | 514,837   | 
|                                                                      |  |      | 2009 |  |           |                      | 474,038 |          |                         |  |                     |  |  |                        |  |  |                                           |  |          |                 |  |  |                         |  |  |                       |  |  |  |  |  |  |  |  | 55,145 | (8)  |  |  | 529,053   | 
|                                                                      |  |      | 2008 |  |           |                      | 500,019 | (4)      |                         |  |                     |  |  |                        |  |  |                                           |  | 1,307,523 | (5)             |  |  |                         |  |  |                       |  |  |  |  |  |  |  |  | 46,702 | (9)  |  |  | 1,854,244 | 
|L. Melvin Cooper
 Senior Vice President & Chief
Financial Officer     |  |      | 2010 |  |           |                      | 233,154 |          |                         |  |                     |  |  |                        |  |  |                                           |  | 255,574   | (5)             |  |  |                         |  |  |                       |  |  |  |  |  |  |  |  | 31,403 | (10) |  |  | 520,131   | 
|                                                                      |  |      | 2009 |  |           |                      | 197,692 |          |                         |  |                     |  |  |                        |  |  |                                           |  |          |                 |  |  |                         |  |  |                       |  |  |  |  |  |  |  |  | 27,604 | (11) |  |  | 225,165   | 
|                                                                      |  |      | 2008 |  |           |                      | 200,000 |          |                         |  |                     |  |  |                        |  |  |                                           |  | 1,307,523 | (3)             |  |  | 250,000                  |  |  |                       |  |  |  |  |  |  |  |  | 32,228 | (12) |  |  | 1,789,751 | 



|(1) | Prior to June 1, 2007, Mr. Crisp also performed the functions of Chief Financial Officer. Mr. Cooper was appointed Chief Financial Officer on
June 1, 2007. All of the named executive officers were employed by the Forbes Group prior to the Delaware Reorganization and the Bermuda Reorganization.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | This amount is comprised of $33,000 for fees earned as a director, $6,178 for premiums paid by the Company for health insurance and $18,000 as an allowance for an
automobile and related auto expenses.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



9



---

|(3) | This amount is comprised of $36,000 for fees earned as a director, $7,148 for premiums paid by the Company for health insurance and $18,000 as an allowance for an
automobile and related auto expenses.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Pursuant to the Bermuda Reorganization, Messrs. Crisp and Forbes received equity interests in us in exchange for 63% of their respective equity interests in Forbes
Energy Services LLC. In addition, they have received payments indirectly from us as a result of the related party transactions described under Item 13 on page 20 of this prospectus. Finally, as owners of the member entities of the Forbes Group,
Messrs. Crisp and Forbes received cash distributions from the Forbes Group with respect to the fiscal period ended May 28, 2008, the date immediately preceding the Bermuda Reorganization, of $2.1 million and $2.1 million, respectively,
primarily to allow them to make tax payments.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | The options were priced using the Black-Scholes option pricing model, using assumptions included in Note 5 of our audited financial statements for the year ended
December 31, 2010 included herein.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | This amount is comprised of $23,000 for fees earned as a director, $11,115 for premiums paid by the Company for health insurance and $18,000 as an allowance for an
automobile and related auto expenses.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | This amount is comprised of $30,996 for fees earned as a director, $3,341 for premiums paid by the Company for health insurance and $18,000 as an allowance for an
automobile and related auto expenses.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | This amount is comprised of $33,996 for fees earned as a director, $3,145 for premiums paid by the Company for health insurance and $18,000 as an allowance for an
automobile and related auto expenses.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | This amount is comprised of $21,664 for fees earned as a director, $7,038 for premiums paid by the Company for health insurance and $18,000 as an allowance for an
automobile and related auto expenses.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | This amount is comprised of $13,403 for premiums paid by the Company for health insurance and $18,000 as an allowance for an automobile and related auto expenses.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | This amount is comprised of $9,604 for premiums paid by the Company for health insurance and $18,000 as an allowance for an automobile and related auto expenses.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | This amount is comprised of $14,228 for premiums paid by the Company for health insurance and $18,000 as an allowance for an automobile and related auto expenses.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

Employment Agreements

As part of our overall compensation plan, we have long-term employment agreements with our three executive officers. John E. Crisp serves as our President and Chief Executive Officer, Charles C. Forbes
serves as our Executive Vice President and Chief Operating Officer, and L. Melvin Cooper serves as our Senior Vice President, Chief Financial Officer and Assistant Secretary. Each long-term employment agreement has a current term expiring
April 30, 2011. The term of each agreement automatically extends for an additional year every May 1 unless notice of termination is given before any such date by us or the employee.

For the year ending December 31, 2010, the employment agreements of Messrs. Crisp, Forbes, and Cooper provided for annual base
salaries of $500,000, $500,000 and $200,000, respectively. Notwithstanding this fact, in April 2009, Messrs. Crisp, Forbes and Cooper voluntarily agreed to a temporary reduction in base salary of $37,500, $37,500 and $5,000 per year, respectively,
provided that Mr. Coopers salary was subsequently increased in September 2010 as discussed above.

If, during the
term of his respective agreement, we terminate the employment of Messrs. Crisp, Forbes, or Cooper for any reason other than for cause, he would be entitled to his base salary, bonus, automobile, and medical and other benefits through the actual
expiration date of his agreement, and any and all options, rights, or awards granted in conjunction with the Incentive Plan would immediately vest. If we should undergo a change in control while the agreements are in effect and any of Messrs. Crisp,
Forbes, or Cooper is either constructively or actually terminated under the conditions set forth in his agreement, then he would be entitled to receive three times his salary for the year in which the termination occurs and, in general, three times
the bonus he received for the previous year, three years of medical and other insurance benefits from the date of termination, and any and all options, rights, or awards granted in conjunction with the Incentive Plan would immediately vest. To the
extent that such medical benefits are taxable to the employee or his dependents, we would gross-up the employee for such taxes based on the employees actual tax rates.

For Messrs. Forbes and Crisp, if either were terminated without cause as of December 31, 2010, each would have been entitled to his then-current base salary of $500,000 and 450,000 common shares
issuable upon exercise of his options would have immediately vested. If either had been terminated following a change in control, each would have been entitled to three times his then-current base salary, or $1.5 million, and the same acceleration
of vesting of his options would apply. For Mr. Cooper, if he had been terminated without cause as of December 31, 2010, he would have been entitled to his then-current base salary of $200,000 and 450,000 common shares issuable upon
exercise of his options would have immediately vested. If he had been terminated following a change in control, he would have been entitled to three times his then-current base salary, or $600,000, and the same acceleration of vesting of his options
would apply.



10



---

Pursuant to our employment agreements with Messrs. Crisp, Forbes and Cooper, certain tax
protection is provided in the form of a gross-up payment to reimburse the executive for any excise tax under Section 4999 of the U.S. Code as well as any additional income taxes resulting from such reimbursement. Section 4999 of the U.S.
Code imposes a 20% non-deductible excise tax on the recipient of an excess parachute payment and U.S. Code Section 280G disallows the tax deduction to the payor of any amount of an excess parachute payment that is contingent on a
change of control. If such additional excise tax is due, we have agreed to pay such tax on a grossed-up basis for those executives.

Our employment agreements with Messrs. Crisp, Forbes and Cooper define change of control to mean (i) any person or group obtaining a majority of the voting shares of Forbes Energy Services Ltd.
pursuant to a tender offer; (ii) a majority of the directors of

Forbes Energy Services Ltd. being replaced during any twelve months
period by new directors whose appointment or election is not endorsed by a majority of the board prior to such appointment or election; or (iii) any person or group acquires assets from Forbes Energy Services Ltd. that have a total gross fair
market value equal to 75% of the total gross fair market value of all of the assets of the Parent immediately prior to such acquisition.

If the employment of any of Messrs. Crisp, Forbes, or Cooper is terminated for good cause or if any of Messrs. Crisp, Forbes, or Cooper voluntarily terminates his employment with us, we will pay any
compensation earned but not paid to him prior to the effective date of termination. Each of Messrs. Crisp, Forbes, or Cooper may voluntarily terminate his employment by giving at least thirty days notice. At that time, we would have the right
to relieve him of his duties; however, his salary would continue during the notice period.

If any of Messrs. Crisp, Forbes,
or Cooper dies or becomes permanently disabled during the term of his employment, we will pay to his estate the compensation that such executive would have earned through the date of death or permanent disability, including any bonus earned but not
yet paid, any and all options, rights or awards granted in conjunction with the Incentive plan would immediately vest and his dependants would be entitled to benefits, including medical and other benefits and use of a company automobile for a period
of one year.

Each of Messrs. Crisp, Forbes, and Cooper has agreed that, during the term of his agreement and for a period of
one year after termination, he will not (i) be employed by or associated with or own more than 5% of the outstanding securities of any entity that competes with us in the locations in which we operate, (ii) solicit any of our employees to
terminate their employment, or (iii) accept employment with or payments from any of our clients or customers who did business with us while he was employed by us.

Under their respective agreements, the compensation committee has discretion to establish the methodology for determining annual bonuses. Due to its decision not to award bonuses based on the economic
conditions, the compensation committee has not yet established a methodology for determining annual bonuses.

The respective
agreements of Messrs. Crisp and Forbes acknowledge their existing interests in other business ventures described under Item 13 of this report on page 20 and their right to engage in other such businesses that would comply with the terms of the
covenant applicable to transactions with affiliates in the indenture governing our senior secured notes.



11



---

Potential Payments upon Termination or Change of Control (1)



|                                              |  |                                                                    |  |                      |    |  |                      |    |    |                                     |  |   |                                                                               |  |  |                              |               |  |  |    |         | 
|--------------------------------------------- |  | ------------------------------------------------------------------ |  | -------------------- | -- |  | -------------------- | -- | -- | ----------------------------------- |  | - | ----------------------------------------------------------------------------- |  |  | ---------------------------- | ------------- |  |  | -- | ------- | 
|Name and principal position                   |  |                                                                    |  | VoluntaryTermination |    |  | Terminationfor Cause |    |    | Terminationby 
Companywithout Cause |  |   | Change in Control withTermination for
GoodReason by Executive orWithout Cause |  |  | Death andPermanentDisability |              
|John E. Crisp

President & Chief Executive    |  | Compensation: Severance                                            |  | $                    |   |  |                      | $  |   |                                     |  |   | 664,384                                                                       |  |  | $                            | 1,734,375     |  |  | $  | 123,288 | 
|Officer                                       |  | Acceleration of Unvested                                           |  |                      |    |  |                      |    |    |                                     |  |   |                                                                               |  |  |                              |               |  |  |    |         | 
|                                              |  | Stock Options                                                      |  | $                    |   |  |                      | $  |   |                                     |  | $ |                                                                              |  |  | $                            |              |  |  | $  |        | 
|                                              |  | Benefits and Perquisites: Insurance continuation 280G Tax Gross Up |  | $$                   |  |  |                      | $$ |  |                                     |  | $ | 17,809                                                                       |  |  | $$                           | 40,208633,114 |  |  | $$ | 13,271 | 
|                                              |  |                                                                    |  |                      |    |  |                      |    |    |                                     |  |   |                                                                               |  |  |                              |               |  |  |    |         | 
|                                              |  |                                                                    |  | $                    |   |  |                      | $  |   |                                     |  | $ | 682,193                                                                       |  |  | $                            | 2,407,697     |  |  | $  | 136,559 | 
|Charles C. Forbes
 Executive Vice
President & |  | Compensation: Severance                                            |  | $                    |   |  |                      | $  |   |                                     |  |   | 664,384                                                                       |  |  | $                            | 1,734,375     |  |  | $  | 123,288 | 
|Chief Operating Officer                       |  | Acceleration of Unvested                                           |  |                      |    |  |                      |    |    |                                     |  |   |                                                                               |  |  |                              |               |  |  |    |         | 
|                                              |  | Stock Options                                                      |  | $                    |   |  |                      | $  |   |                                     |  | $ |                                                                              |  |  | $                            |              |  |  | $  |        | 
|                                              |  | Benefits and Perquisites: Insurance continuation 280G Tax Gross Up |  | $$                   |  |  |                      | $$ |  |                                     |  | $ | 17,809                                                                       |  |  | $$                           | 40,208669,126 |  |  | $$ | 13,271 | 
|                                              |  |                                                                    |  |                      |    |  |                      |    |    |                                     |  |   |                                                                               |  |  |                              |               |  |  |    |         | 
|                                              |  |                                                                    |  | $                    |   |  |                      | $  |   |                                     |  | $ | 682,193                                                                       |  |  | $                            | 2,443,709     |  |  | $  | 136,559 | 
|L. Melvin Cooper
 Senior Vice President &     |  | Compensation: Severance                                            |  | $                    |   |  |                      | $  |   |                                     |  |   | 332,192                                                                       |  |  | $                            | 750,000       |  |  | $  | 61,647  | 
|Chief Financial Officer                       |  | Acceleration of Unvested                                           |  |                      |    |  |                      |    |    |                                     |  |   |                                                                               |  |  |                              |               |  |  |    |         | 
|                                              |  | Stock Options                                                      |  | $                    |   |  |                      | $  |   |                                     |  | $ | 356,250                                                                       |  |  | $                            | 356,250       |  |  | $  | 356,250 | 
|                                              |  | Benefits and Perquisites:
Insurance continuation 280G Tax Gross Up |  | $$                   |  |  |                      | $$ |  |                                     |  | $ | 17,809                                                                       |  |  | $$                           | 40,208404,340 |  |  | $$ | 13,271 | 
|                                              |  |                                                                    |  |                      |    |  |                      |    |    |                                     |  |   |                                                                               |  |  |                              |               |  |  |    |         | 
|                                              |  |                                                                    |  | $                    |   |  |                      | $  |   |                                     |  | $ | 706,251                                                                       |  |  | $                            | 1,550,798     |  |  | $  | 431,168 | 



|(1) | Calculated as of December 31, 2010
|--- | ----------------------------------

Compensation Committee Report

The compensation committee has
reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on the review and discussions referenced above, the compensation committee recommended to the board of
directors that the Compensation Discussion and Analysis referred to above be included in this report.

This foregoing report
is given by the following members of the compensation committee:

Dale W. Bossert,

Travis H. Burris,

William W. Sherrill

Compensation Committee Interlocks and Insider Participation

All members of the compensation committee are independent directors, and none of them are present or past employees of ours. Except as set
forth in the following sentences, no member of the compensation committee has had any relationship with us requiring disclosure under Item 404 of Regulation S-K of the Exchange Act and none of our executive officers has served on the board of
directors or compensation committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers served on our board or compensation committee. As disclosed in Item 13 of this report, Mr. Burris has a
noncontrolling interest in Resonant Technology Partners, a computer



12



---

networking group that provides services to the Company. The Forbes Group recognized expenses of approximately $0.3 million, $0.2 million, and $0, and capital expenditures of approximately
$28,000, $0 and $0 for the year-ended December 31, 2010, 2009, and 2008, respectively, with respect to Resonant Technology Partners. Further, Mr. Crisp, our President and Chief Executive Officer, serves on the board of directors of Texas
Champion Bank for which Mr. Burris, the Chairman of our compensation committee, serves as President and Chief Executive Officer. However, Texas Champion Bank has a separate compensation committee and Mr. Crisp does not serve on that committee.
We have a business relationship with Texas Champion Bank and, as of December 31, 2010, 2009 and 2008, we had $11.0 million, and $7.2 million and $10.6 million, respectively, on deposit with this bank.

Officers Who Also Act As Directors

Our Named Executive Officers who serve as directors receive the same cash compensation as our other directors for their service as directors but do not receive any additional equity-based compensation.

Incentive Plan Awards

Outstanding Share-Based Awards and Option-Based Awards

The
following table sets forth for each Named Executive Officer all option-based and share-based awards outstanding at December 31, 2010.



|                                                                      |  |                                                               |         |     |                                                                 |  |         |                        |  |  |                  |  |  |                      |            |  |                                               |  |            |                                                        |  |   |                                                                |  |  |  |   |  |  |  |   | 
|--------------------------------------------------------------------- |  | ------------------------------------------------------------- | ------- | --- | --------------------------------------------------------------- |  | ------- | ---------------------- |  |  | ---------------- |  |  | -------------------- | ---------- |  | --------------------------------------------- |  | ---------- | ------------------------------------------------------ |  | - | -------------------------------------------------------------- |  |  |  | - |  |  |  | - | 
|                                                                      |  | Option-based Awards                                           |         |     | Share-based Awards                                              | 
|Name                                                                  |  | Number ofsecuritiesunderlyingunexercisedoptions(#)Exercisable |         |     | Number ofsecuritiesunderlyingunexercisedoptions(#)Unexercisable |  |         | Optionexerciseprice($) |  |  | Option grantdate |  |  | Optionexpirationdate |            |  | Value ofunexercisedin-the-moneyoptions (1)($) |  |            | Number ofshares 
orunitsof sharesthathave notvested(#) |  |   | Market
orpayout valueofshare-basedawards
thathave notvested($) | 
|John E. Crisp,
President & Chief Executive Officer                    |  |                                                               | 300,000 | (2) |                                                                 |  | 150,000 | (2)                    |  |  | 7.00             |  |  |                      | 05/29/2008 |  |                                               |  | 05/29/2018 |                                                        |  |   | 0                                                              |  |  |  |  |  |  |  |  | 
|Charles C. Forbes,
Executive Vice President & Chief Operating Officer |  |                                                               | 300,000 | (2) |                                                                 |  | 150,000 | (2)                    |  |  | 7.00             |  |  |                      | 05/29/2008 |  |                                               |  | 05/29/2018 |                                                        |  |   | 0                                                              |  |  |  |  |  |  |  |  | 
|L. Melvin Cooper,                                                     |  |                                                               |        |     |                                                                 |  | 475,000 | (3)                    |  |  | 0.65             |  |  |                      | 08/24/2010 |  |                                               |  | 08/24/2020 |                                                        |  | $ | 356,250                                                        |  |  |  |  |  |  |  |  | 
|Senior Vice President & Chief Financial Officer                       |  |                                                               | 300,000 | (2) |                                                                 |  | 150,000 | (2)                    |  |  | 7.00             |  |  |                      | 05/29/2008 |  |                                               |  | 05/29/2018 |                                                        |  |   | 0                                                              |  |  |  |  |  |  |  |  | 



|(1) | These amounts are calculated based on the difference between the market value of the securities underlying the options at the end of the year (CDN$1.40), and the
exercise price of the options.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | These option-based awards were granted on May 29, 2008 and vest in three equal installments over a three year period.
|--- | ---------------------------------------------------------------------------------------------------------------------

|(3) | This option-based award was granted on August 24, 2010 and vests in four equal installments over a two year period.
|--- | -------------------------------------------------------------------------------------------------------------------

Options Exercised and Stock Vested

None of our Named Executive Officers exercised any of their exercisable options during fiscal 2010 nor did any of our named executive officers vest in any stock awards during fiscal 2010.

Value Vested or Earned During the Year

The following table sets forth for each Named Executive Officer the value vested or earned on all option-based awards, share-based awards, and non-equity incentive plan compensation during the financial
year ending December 31, 2010.



|                                                                      |  |                   |            |  |                                                     |  |   |                                                   |  |  |                                                                        |  |  |  |   | 
|--------------------------------------------------------------------- |  | ----------------- | ---------- |  | --------------------------------------------------- |  | - | ------------------------------------------------- |  |  | ---------------------------------------------------------------------- |  |  |  | - | 
|Name                                                                  |  | Option grant date |            |  | Option-based awards 
Valuevested duringthe
year($) |  |   | Share-based awards Valuevested duringthe year($) |  |  | Non-equityincentive 
plancompensation Value 
earnedduring the year($) | 
|John E. Crisp,
President & Chief Executive Officer                    |  |                   | 05/29/2008 |  |                                                     |  |  |                                                   |  |  |                                                                       |  |  |  |  | 
|Charles C. Forbes,
Executive Vice President & Chief Operating Officer |  |                   | 05/29/2008 |  |                                                     |  |  |                                                   |  |  |                                                                       |  |  |  |  | 
|L. Melvin Cooper, Senior Vice President & Chief Financial Officer     |  |                   | 05/29/2008 |  |                                                     |  |  |                                                   |  |  |                                                                       |  |  |  |  | 



13



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Incentive Compensation Plan

In connection with the Bermuda Reorganization, the board of directors adopted and the Companys sole shareholder at the time approved the Incentive Plan. The Incentive Plan is an unfunded plan that
provides for the granting of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, and other stock-based incentive compensation, collectively referred to as the Awards, to employees, directors and
consultants of the Company or an affiliate. The board of directors believes that the Incentive Plan strengthens the Companys ability to attract, retain, and reward employees, directors, and consultants by enabling such persons to acquire or
increase a proprietary interest in the Company, strengthening the mutuality of interests between such persons and the Companys shareholders, and providing such persons with performance incentives to expend their maximum efforts in the creation
of shareholder value. The Incentive Plan provides for a reserve equal to 5,220,000 Common Shares. In August 2010, the compensation committee granted options to purchase a total of 2,540,000 common shares to employees and directors. As of
April 26, 2011, there are no shares available for future grants under this plan. The compensation committee has determined to have the options outstanding under the Incentive Plan proportionately reduced by a factor of ten after the Share
Consolidation has been effected. After the Conversion, which we expect to occur immediately after the Share Consolidation, the Incentive Plan will continue in effect as the Incentive Plan of Forbes Texas.

The following table provides information as of December 31, 2010, regarding compensation plans (including individual compensation
arrangements) under which equity securities are authorized for issuance:



|                                                       |  |                                                                                         |           |  |                                                                           |   |      |                                                                                                                                          |  |  |   | 
|------------------------------------------------------ |  | --------------------------------------------------------------------------------------- | --------- |  | ------------------------------------------------------------------------- | - | ---- | ---------------------------------------------------------------------------------------------------------------------------------------- |  |  | - | 
|Plan category                                          |  | Number of securities to beissuedupon exercise ofoutstanding options,warrants and rights |           |  | Weighted-average exercise price ofoutstanding options, 
warrantsandrights |   |      | Number of securitiesremaining available for futureissuance under
equitycompensation plans(excluding securities shown in thefirst column) | 
|Equity compensation plans approved by shareholders(1)  |  |                                                                                         | 5,220,000 |  |                                                                           | $ | 3.91 |                                                                                                                                          |  |  |  | 
|Equity compensation plans not approved by shareholders |  |                                                                                         |          |  |                                                                           |   |     |                                                                                                                                          |  |  |  | 
|                                                       |  |                                                                                         |          
|Total                                                  |  |                                                                                         | 5,220,000 |  |                                                                           | $ | 3.91 |                                                                                                                                          |  |  |  | 



|(1) | Consists of common shares issued or remaining available for issuance under our Incentive Compensation Plan.
|--- | -----------------------------------------------------------------------------------------------------------

Summary of the Incentive Plan

The following is a summary of the principal features of the Incentive Plan. This summary, however, does not purport to be a complete description of all provisions of the Incentive Plan. The following
description is qualified in its entirety by reference to the Incentive Plan.

Purpose of the Incentive Plan

In order to attract, retain and motivate employees, directors, and consultants who perform substantial services for or
on behalf of the Company or an affiliate, the board of directors adopted the Incentive Plan, pursuant to which Awards consisting of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, and other
stock-based incentive compensation may be granted to such persons.

Shares Subject to the Incentive Plan

Awards covering 5,220,000 Common Shares may be issued to eligible employees, directors, and consultants. Shares
subject to the Incentive Plan include authorized and unissued shares, as well as previously issued shares that have been reacquired by the Company. The total number of shares authorized under the Incentive Plan will be subject to increase or
decrease in order to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, or exchange of Common Shares or other similar event, and will be increased proportionately upon any increase in the
total number of Common Shares issued without the Companys receipt of consideration. If any Award granted under the Incentive Plan expires, terminates or is canceled for any reason without having been exercised in full, or if any Common Shares
issued in connection with an Award are repurchased by the Company, the corresponding number of Common Shares will again be available for Awards under the Incentive Plan. Awards may be granted under the Incentive Plan at any time prior to the 10th
anniversary of the date on which the shareholders shall have approved the Incentive Plan, as long as the total number of Common Shares that may be issued pursuant to Awards granted does not exceed the limitations of the Incentive Plan.



14



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Administration

The Incentive Plan will be administered by the compensation committee of the board of directors (the compensation committee in its
capacity as administrator of the Incentive Plan is referred to herein as the Plan Administrator). The board of directors has designated the compensation committee as the Plan Administrator of the Incentive Plan. The Plan Administrator is vested with
full and final authority to administer and interpret the Incentive Plan and to make all determinations necessary or advisable for the administration of the Incentive Plan. Subject to the terms of the Incentive Plan, the Plan Administrator will
determine who will receive Awards, the time or times at which Awards will be granted, the type of Awards to be granted, the number of Common Shares covered by each Award, vesting schedules and other limitations on the vesting of the Awards, and such
other terms and conditions of each Award as are not inconsistent with the provisions of the Incentive Plan.

Participation in the Incentive Plan

Employees, directors, and consultants of the Company who are selected by the Plan Administrator will be eligible for participation in the Incentive Plan.

Agreements Evidencing Awards

Awards will be evidenced by award agreements, referred to as Award Agreements, in such form as the Plan Administrator approves and containing such terms and conditions, including the substance of
the Incentive Plan, and such other terms and provisions as are not inconsistent with the Incentive Plan. Award Agreements need not be identical.

Options

Types of Options

The types of stock options, or Options, that may be granted under the Incentive Plan include (i) options that meet the requirements
of Section 422 of the U.S. Code, or Incentive Stock Options, and (ii) stock options that do not qualify as Incentive Stock Options, or Nonstatutory Stock Options. Incentive Stock Options may be granted only to employees; however,
Nonstatutory Stock Options may be granted to employees, directors or consultants of the Company. The exercise price per share for Common Shares subject to an Option will be determined by the Plan Administrator at the date of grant, provided that the
exercise price for any Option shall not be less than 100% of the fair market value of the Common Shares at the date of grant, as determined by the board of directors, or, if greater, the par value of such Common Shares, and if the participant
receiving an Incentive Stock Option owns more than 10% of the total combined voting power of all classes of shares of the Company and its affiliates, as described in Section 422(b)(6) of the U.S. Code, then the exercise price of any Incentive
Stock Option granted to such participant shall not be less than 110% of the fair market value or, if greater, the par value of the Common Shares at the date of grant. Fair market value on any date shall be determined by the board of directors, in
its sole discretion, on the basis of available prices for the Common Shares on an established stock exchange or national market system of the United States or, if not so reported, the average of the high and low bids or, in the absence of an
established market, any other good faith valuation method that complies with the requirements of U.S. Code Section 409A. Notwithstanding the foregoing, if the Common Shares are traded on the TSX on the determination date, the fair market value
shall be the volume weighted average trading price for the five trading days immediately preceding the determination date.

Payment on Exercise

No Common Shares will be issued upon the exercise of an Option unless notice of exercise is received by the Company and the Common Shares are paid for in full. Payment for Common Shares purchased upon the
exercise of an Option may, subject to the terms of the applicable Award Agreement, be made in cash or by wire transfer or check, by execution of a promissory note, to the extent permitted by and in accordance with applicable law by withholding
shares that would otherwise be issued upon exercise of the Option, referred to as a cashless exercise, or by delivery of Common Shares then owned by the participant at the time of the exercise of the Option, provided that the participant shall have
held such shares for a period of six months prior to such exercise (or such shorter or longer period of time as is necessary for the Company to avoid a charge to earnings).

Term of Options

The term of each Option will be such period as may be
determined by the Plan Administrator, provided that in no event will the term of any Option exceed a period of ten years (or, in the case of an Incentive Stock Option granted to an employee who owns more than 10% of the total combined voting power
of all classes of shares of the Company and its affiliates, five years). The Plan



15



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Administrator shall determine on the date of grant what conditions shall apply to the exercise of an Option granted under the Incentive Plan in the event the participant shall cease to be
employed or retained as a director or consultant by the Company or its affiliates for any reason, including by reason of death or disability, or a termination for cause, and such conditions will be described in the applicable Award Agreement.

Restricted Stock Awards

Grant of Restricted Stock

Restricted Stock may be granted alone or in
addition to other Awards granted pursuant to the Plan. Each Award of Restricted Stock will be evidenced by an Award Agreement that will describe the price to be paid for the shares, which shall be no less than the par value of such shares, and the
restrictions applicable to the shares received thereunder.

Effect of Restrictions

Restricted Stock may be subject to such restrictions as may be provided under the applicable Award Agreement. The Plan Administrator may
accelerate the lapse of all or a portion of the restrictions on an Award of Restricted Stock at any time. Upon the lapse of the restrictions on Restricted Stock, the Plan Administrator shall cause a share certificate to be delivered to the
participant with respect to such shares, free of all restrictions under the Plan.

Stock Appreciation Rights

Grant of Stock Appreciation Rights

Stock appreciation rights, or SARs, may be granted alone or in addition to other Awards, or may be granted in tandem with Options. SARs are rights to be paid an amount equal to no more than 100% of the
difference between the fair market value or, if greater, par value of a specified number of Common Shares on the date on which the SARs are granted and the fair market value of such Common Shares on the date on which the SARs are exercised. This
amount may be paid in cash or Common Shares, as described in the applicable Award Agreement.

Ownership Rights

SARs do not generally provide voting, dividend, or other rights associated with share ownership.

Term of SARs

The term of each SAR will be such period as may be determined by the Plan Administrator. The Plan Administrator shall determine on the date of grant what conditions shall apply to the exercise of a SAR
granted under the Incentive Plan in the event the participant shall cease to be employed or retained as a director or consultant by the Company or its affiliates for any reason, including by reason of death or disability, or a termination for cause,
and such conditions will be described in the applicable Award Agreement. If a SAR is granted in tandem with an Option, the SAR will have the same term and will be exercisable at the same time as the Option. If a SAR is granted in tandem with an
Incentive Stock Option, the SAR may be exercised only at a time when the fair market value of the Common Shares exceeds the exercise price of the Incentive Stock Option.

Other Share-Based Incentive Awards

The Plan Administrator may grant
other forms of Awards based upon, payable in, or otherwise related to, in whole or in part, Common Shares. The types of Awards that may be issued may include, but shall not be limited to, restricted stock units, dividend equivalent rights, and
performance-based compensation. These Awards may constitute nonqualified deferred compensation under U.S. Code Section 409A and, thus, the terms of the Awards must comply with the provisions of that Section.

Restricted Stock Units

Grant of Restricted Stock Units

Restricted Stock Units may be granted
alone or in addition to other Awards granted pursuant to the Incentive Plan. Restricted Stock Units are rights to be paid cash or shares based upon the value of the Companys Common Shares at the time the Award vests. The transfer of cash or
shares may be made upon vesting or at a later time specified in the Award Agreement. Each Award of Restricted Stock Units will be evidenced by an Award Agreement that will describe the price to be paid for the shares, which shall be no less than the
par value of such shares, and the restrictions applicable to the units received thereunder.



16



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Ownership Rights

Restricted Stock Units do not generally provide voting, dividend, or other rights associated with stock ownership.

Effect of Restrictions

The Restricted Stock Units may be subject to such restrictions as may be provided under the applicable Award Agreement. The Plan Administrator may accelerate the lapse of all or a portion of the
restrictions on the Restricted Stock Units at any time. Upon the lapse of the restrictions on Restricted Stock Units, or at such later time as is specified in the applicable Award Agreement, the Plan Administrator shall cause a share certificate to
be delivered to the participant with respect to such shares.

Dividend Equivalent Rights

Dividend Equivalent Rights, or DERs, may be granted alone or in addition to other Awards granted pursuant to the Incentive Plan. DERs are
rights to be paid an amount based upon the dividends declared on a set number of Common Shares on one or more specified declaration dates during the term of the right. This amount may be paid in cash or Common Shares, as described in the applicable
Award Agreement.

Performance-Based Compensation

Awards of performance-based compensation may be granted alone or in addition to other Awards granted pursuant to the Incentive Plan. An
Award of performance-based compensation is based upon the attainment of performance goals, such as an increase in the per share value of the Common Shares, and shall be subject to such other conditions and restrictions as are described in the
applicable Award Agreement. This amount may be paid in cash or Common Shares, as described in the applicable Award Agreement.

Other Provisions of the Incentive Plan

Amendment or Termination of the Incentive Plan

The board of directors may,
at any time, suspend or terminate the Incentive Plan. The board of directors may also at any time, without shareholder approval, add to, repeal, or otherwise amend any of the terms of the Plan or any Awards and, without limiting the generality of
the foregoing, may make the following changes, deletions, revisions, or amendments, referred to as amendments herein: (a) any amendment to the vesting provisions of the Plan or any Award; (b) any amendment to the termination provisions of
the Plan or any Award, provided that such amendment does not entail an extension beyond the expiry date of the Award or extend the term of the Plan beyond its expiration date; (c) any amendment to the persons eligible to receive Awards or
otherwise relating to the eligibility of anyone to receive Awards, other than an amendment that would have the potential of broadening or increasing insider participation (which amendment shall require shareholder approval); (d) any amendment
with respect to the method or manner of exercise of any Award; (e) any amendment of a housekeeping nature; and (f) any other amendment that under the rules of the TSX (or such other stock exchange on which the Shares may be
listed) does not require shareholder approval; provided that no such addition, repeal, or amendment shall in any manner materially adversely affect the rights of any participant under any Award previously granted under the Incentive Plan without
such participants consent. Without the approval of the shareholders, however, the board of directors may not amend the Incentive Plan to increase the number of shares reserved for issuance as Incentive Stock Options under the Incentive Plan
(other than pursuant to capitalization adjustments set forth in the Incentive Plan), modify the class of individuals eligible to receive Incentive Stock Options under the Incentive Plan, or change the identity of the granting company or the shares
to be issued upon the exercise of Incentive Stock Options.

Notwithstanding the foregoing, and absent any action by the board
of directors to terminate the Incentive Plan prior to such date, no Award will be granted under the Incentive Plan after the tenth anniversary of its effective date or, if later, the tenth anniversary of any action by the board of directors or
approval of shareholders to (i) increase the number of shares reserved for issuance under the Incentive Plan, (ii) modify the class of persons eligible to receive Awards under the Incentive Plan, or (iii) change the identity of the
granting company or the shares issued upon exercise of Incentive Stock Options.

Change in Control Benefits

Unless the Plan Administrator determines otherwise, upon or following a Change in Control of the Company, as
such term is defined in the Incentive Plan, Awards shall accelerate and all restrictions shall immediately lapse. In addition, Options that remain unexercised on the effective date of the Change in Control may be immediately forfeited or, if the
Company is not the surviving company, all outstanding Options and SARs may be substituted or assumed by the surviving company. Pursuant to the Incentive Plan, a Change in Control is generally deemed to have occurred upon (i) the sale, transfer,
or other conveyance of all or



17



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substantially all of the Companys assets, (ii) the acquisition of beneficial ownership, directly or indirectly, by a person of securities representing 50% or more of the total voting
power of the Companys voting shares, or (iii) the occurrence of an event that would be required to be reported by the Company in Item 1 of a Current Report of a Form 8-K under the U.S. Securities Act (such as the replacement of2/ 3 of the members of the board of directors during a 24-month period, unless such replacement was approved by a vote
of at least2/ 3 of the directors then still in office who either were directors
at the beginning of such 24-month period or whose election or nomination for election was previously approved). Notwithstanding the foregoing, with respect to an Award that is treated as nonqualified deferred compensation subject to U.S. Code
Section 409A, a Change in Control is deemed to occur upon (i) the sale, transfer or other conveyance of all or substantially all of the Companys assets, (ii) the acquisition of beneficial ownership, directly or indirectly, by a
person of securities representing more than 50% of the total voting power of the Companys voting shares, or (iii) the replacement of1/ 2 of the members of the board of directors during a 12-month period, unless such replacement was approved by a vote
of at least1/ 2 of the directors then still in office who either were directors
at the beginning of such 12-month period or whose election or nomination for election was previously approved.

Awards Not
Transferable

An Award granted under the Incentive Plan may, by its terms, be non-transferable by the holder thereof and as
such may not be sold, assigned, pledged, mortgaged, or otherwise transferred or disposed of other than by will or the laws of descent and distribution. During the lifetime of the holder of an Award, such Awards are exercisable only by him or her.

Restrictions on Issuance of Shares

The Company is not obligated to sell or issue any Common Shares upon the exercise of any Award granted under the Incentive Plan unless, among other requirements, the shares with respect to which such
Award is being exercised are registered under applicable federal and state securities laws, or the issuance of the shares is exempt from such registration, and the issuance otherwise complies with applicable law. If the Common Shares to be issued
upon the exercise of any Award granted under the Incentive Plan are intended to be issued by the Company in reliance upon the exemptions from the registration requirements of applicable federal and state securities laws, the participant, if so
requested by the Company, shall furnish to the Company such evidence and representations as may be requested, including an opinion of counsel satisfactory to the Company. The Plan Administrator may impose such other restrictions on the ownership and
transfer of Common Shares issued pursuant to the Incentive Plan as it deems appropriate.

Pension and Retirement Plans

We do not have in place any pension or retirement plan with the exception of a 401(k) retirement plan for
substantially all of its employees based on certain eligibility requirements. We may provide profit sharing contributions to the plan at the discretion of management. No such discretionary contributions have been made since inception of the plan.

Director Compensation

The following table details the compensation received by each Director, other than Named Executive Officers, in 2010.



|                    |  |               |        |  |                      |  |   |                       |  |  |                                          |  |  |                 |        |  |                          |  |   |          |  |  |   |  |  |   |        | 
|------------------- |  | ------------- | ------ |  | -------------------- |  | - | --------------------- |  |  | ---------------------------------------- |  |  | --------------- | ------ |  | ------------------------ |  | - | -------- |  |  | - |  |  | - | ------ | 
|Name                |  | Feesearned($) |        |  | Share-basedawards($) |  |   | Option-basedawards($) |  |  | Non-equityincentive 
plancompensation($) |  |  | Pensionvalue($) |        |  | All othercompensation($) |  |   | Total($) | 
|Dale W. Bossert     |  | $             | 44,000 |  |                      |  |  |                       |  |  |                                         |  |  | $               | 40,500 |  |                          |  |  |          |  |  |  |  |  | $ | 84,500 | 
|Travis H. Burris    |  | $             | 44,000 |  |                      |  |  |                       |  |  |                                         |  |  | $               | 40,500 |  |                          |  |  |          |  |  |  |  |  | $ | 84,500 | 
|Janet L. Forbes     |  | $             | 33,996 |  |                      |  |  |                       |  |  |                                         |  |  |                 |       |  |                          |  |  |          |  |  |  |  |  | $ | 33,996 | 
|William W. Sherrill |  | $             | 44,000 |  |                      |  |  |                       |  |  |                                         |  |  | $               | 40,500 |  |                          |  |  |          |  |  |  |  |  | $ | 84,500 | 

Each director,
including Messrs. Crisp and Forbes, whose compensation is set forth in the Summary Compensation Table, receives an annual retainer of $25,000 and each committee chair receives an additional annual retainer of $2,000. Each director receives $1,000
per meeting plus expenses for attendance at any board meeting or any committee meeting.

Narrative Discussion

Each director, including Messrs. Crisp and Forbes, whose compensation is set forth in the Summary Compensation Table,
receives an annual retainer of $25,000 and each committee chair receives an additional annual retainer of $2,000. Each director receives $1,000 per meeting plus expenses for attendance at any board meeting or any committee meeting.



18



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On August 24, 2010, the compensation committee resolved to grant each of the directors
who did not participate in the founding of the Company (Messrs Bossert, Burris and Sherrill) an option to purchase 75,000 shares at an exercise price of $0.65 per share. The options have a ten year life and vest in four equal installments over two
years.

Incentive Plan Awards

Outstanding Share-Based Awards and Option-Based Awards

The following table
sets forth for each Director, other than Named Executive Officers who are directors, all option-based and share-based awards outstanding at December 31, 2010.



|                    |  |                                                               |        |     |                                                                 |  |        |                        |  |  |                      |  |  |                                              |            |  |                                                          |  |        |                                                                   |  |  |   |  |  |  |   | 
|------------------- |  | ------------------------------------------------------------- | ------ | --- | --------------------------------------------------------------- |  | ------ | ---------------------- |  |  | -------------------- |  |  | -------------------------------------------- | ---------- |  | -------------------------------------------------------- |  | ------ | ----------------------------------------------------------------- |  |  | - |  |  |  | - | 
|                    |  | Option-based Awards                                           |        |     | Share-based Awards                                              | 
|Name                |  | Number ofsecuritiesunderlyingunexercisedoptions(#)Exercisable |        |     | Number ofsecuritiesunderlyingunexercisedoptions(#)Unexercisable |  |        | Optionexerciseprice($) |  |  | Optionexpirationdate |  |  | Value
ofunexercisedin-the-moneyoptions(1)($) |            |  | Number ofshares or unitsof shares thathave not vested(#) |  |        | Market
orpayout value 
ofshare-basedawards
thathave not vested($) | 
|Dale W. Bossert     |  |                                                               | 50,000 | (2) |                                                                 |  | 25,000 | (2)                    |  |  | 7.00                 |  |  |                                              | 05/29/2018 |  |                                                          |  |       |                                                                   |  |  |  |  |  |  |  | 
|                    |  |                                                               |       |     |                                                                 |  | 75,000 | (3)                    |  |  | 0.65                 |  |  |                                              | 08/24/2020 |  |                                                          |  | 56,250 |                                                                   |  |  |  |  |  |  |  | 
|Travis H. Burris    |  |                                                               | 50,000 | (2) |                                                                 |  | 25,000 | (2)                    |  |  | 7.00                 |  |  |                                              | 05/29/2018 |  |                                                          |  |       |                                                                   |  |  |  |  |  |  |  | 
|                    |  |                                                               |       |     |                                                                 |  | 75,000 | (3)                    |  |  | 0.65                 |  |  |                                              | 08/24/2020 |  |                                                          |  | 56,250 |                                                                   |  |  |  |  |  |  |  | 
|Janet L. Forbes     |  |                                                               | 50,000 | (2) |                                                                 |  | 25,000 | (2)                    |  |  | 7.00                 |  |  |                                              | 05/29/2018 |  |                                                          |  |       |                                                                   |  |  |  |  |  |  |  | 
|William W. Sherrill |  |                                                               | 50,000 | (2) |                                                                 |  | 25,000 | (2)                    |  |  | 7.00                 |  |  |                                              | 05/29/2018 |  |                                                          |  |       |                                                                   |  |  |  |  |  |  |  | 
|                    |  |                                                               |       |     |                                                                 |  | 75,000 | (3)                    |  |  | 0.65                 |  |  |                                              | 08/24/2020 |  |                                                          |  | 56,250 |                                                                   |  |  |  |  |  |  |  | 



|(1) | These amounts are calculated based on the difference between the market value of the securities underlying the options at December 31, 2010 (CDN$1.40), and the
exercise price of the options.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | These option-based awards were granted on May 29, 2008.
|--- | -------------------------------------------------------

|(3) | These option-based awards were granted on August 24, 2010.
|--- | ----------------------------------------------------------

Value Vested or Earned During the Year

The following table sets forth for
each Director the value vested or earned on all option-based and share-based awards, and non-equity incentive plan compensation during the financial year ending December 31, 2010.



|                    |  |                  |           |     |                                                     |  |   |                                                    |  |  |                                                                       |  |  |  |   | 
|------------------- |  | ---------------- | --------- | --- | --------------------------------------------------- |  | - | -------------------------------------------------- |  |  | --------------------------------------------------------------------- |  |  |  | - | 
|Name                |  | Optiongrant date |           |     | Option-based awards Valuevested during the year($) |  |   | Share-based awards Valuevested during the year($) |  |  | Non-equity incentive
plancompensation Value earnedduring the year($) | 
|Dale W. Bossert     |  |                  | 5/29/2008 | (1) |                                                     |  | 0 |                                                    |  |  |                                                                      |  |  |  |  | 
|                    |  |                  | 8/24/2010 | (2) |                                                     |  | 0 |                                                    |  |  |                                                                      |  |  |  |  | 
|Travis H. Burris    |  |                  | 5/29/2008 | (1) |                                                     |  | 0 |                                                    |  |  |                                                                      |  |  |  |  | 
|                    |  |                  | 8/24/2010 | (2) |                                                     |  | 0 |                                                    |  |  |                                                                      |  |  |  |  | 
|Janet L. Forbes     |  |                  | 5/29/2008 | (1) |                                                     |  | 0 |                                                    |  |  |                                                                      |  |  |  |  | 
|William W. Sherrill |  |                  | 5/29/2008 | (1) |                                                     |  | 0 |                                                    |  |  |                                                                      |  |  |  |  | 
|                    |  |                  | 8/24/2010 | (2) |                                                     |  | 0 |                                                    |  |  |                                                                      |  |  |  |  | 



|(1) | These options granted to each of our directors that did not participate in the founding of the Company vest in three equal installments over a three year period.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | These options granted to each of our non-employee directors vest in four equal installments over a two year period.
|--- | -------------------------------------------------------------------------------------------------------------------



19



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|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

The following table sets forth certain information regarding the beneficial ownership of our voting securities as of April 26, 2011:



| |  |  | each person who is known to us to be the beneficial owner of more than 5% of our voting securities;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | each of our directors; and
| | - |  | --------------------------



| |  |  | each of our executive officers and all of our executive officers and directors as a group.
| | - |  | ------------------------------------------------------------------------------------------

Unless otherwise indicated, each person named below has an address in care of our principal executive offices and has sole power to vote
and dispose of the shares of voting securities beneficially owned by them, subject to community property laws where applicable.



|                                                            |  |                                    |            |     |                                                 |  |      |  
|----------------------------------------------------------- |  | ---------------------------------- | ---------- | --- | ----------------------------------------------- |  | ---- | -
|Name                                                        |  | Common 
SharesBeneficiallyOwned(*) |            |     | Percentage ofCommon 
SharesBeneficiallyOwned(%) | 
|Executive Officers and Directors:                           |  |                                    |            |     |                                                 |  |      |  
|John E. Crisp                                               |  |                                    | 10,154,700 | (1) |                                                 |  | 10.1 | %
|Charles C. Forbes                                           |  |                                    | 10,584,850 | (1) |                                                 |  | 10.5 | %
|L. Melvin Cooper.                                           |  |                                    | 623,750    | (2) |                                                 |  | *    |  
|Dale W. Bossert                                             |  |                                    | 107,950    | (3) |                                                 |  | *    |  
|Travis H. Burris                                            |  |                                    | 314,100    | (3) |                                                 |  | *    |  
|Janet L. Forbes                                             |  |                                    | 9,358,000  | (4) |                                                 |  | 9.3  | %
|William W. Sherrill                                         |  |                                    | 93,750     | (5) |                                                 |  | *    |  
|All directors and executive officers as a group (7 persons) |  |                                    | 31,233,100 | (6) |                                                 |  | 31.1 | %
|                                                            |  |                                   
|Other 5% Stockholders:                                      |  |                                    |            |     |                                                 |  |      |  
|The West Face Group                                         |  |                                    | 19,735,872 |     |                                                 |  | 19.6 | %
|The Modern Group Ltd.                                       |  |                                    | 5,311,000  | (8) |                                                 |  | 5.3  | %



|* | Indicates beneficial ownership of less than 1% of the total outstanding common stock. Beneficial ownership is a term broadly defined by the SEC in Rule
13d-3 under the Securities Exchange Act of 1934, as amended and includes more than typical forms of stock ownership, that is, stock held in the persons name. The term also includes what is referred to as indirect ownership, meaning
ownership of shares as to which a person has or shares investment or voting power. For purposes of this table, a person or group of persons is deemed to have beneficial ownership of any shares as of April 26, 2011 if that such person or
group has the right to acquire within 60 days after such date.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) | Includes 450,000 Common Shares issuable upon exercise of options.
|--- | -----------------------------------------------------------------

|(2) | Includes 568,750 Common Shares issuable upon exercise of options.
|--- | -----------------------------------------------------------------

|(3) | Includes 93,750 Common Shares issuable upon exercise of options.
|--- | ----------------------------------------------------------------

|(4) | Includes 75,000 Common Shares issuable upon exercise of options.
|--- | ----------------------------------------------------------------

|(5) | Includes 93,750 Common Shares issuable upon exercise of options.
|--- | ----------------------------------------------------------------

|(6) | Includes 1,825,000 Common Shares issuable upon exercise of options.
|--- | -------------------------------------------------------------------

|(7) | Includes 4,730,100 Common Shares collectively owned by the West Face Group as reported to the Company by the West Face Group on April 11, 2011 and 15,005,772
Common Shares currently issuable upon the conversion of the 588,059 Series B Preferred Shares currently held by the West Face Group. Each Series B Preferred Share is convertible, as of April 26, 2011, at the option of the holder into 36 common
shares, provided that no holder is entitled to effect such a conversion if it would result in such holder (and affiliates) beneficially owning 20% or more of the number of common shares outstanding immediately after giving effect to the conversion.
Therefore, the maximum number of common shares into which the Series B Preferred Shares owned by the West Face Group could convert is 15,005,772, assuming the numbers reported to by the West Face Group on, April 11, 2011 remains accurate. The
West Face Group consists of West Face Long Term Opportunities Limited Partnership, West Face Long Term Opportunities (USA) Limited Partnership and West Face Long Term Opportunities Master Fund L.P.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Based on information derived from insider reporting filings on the System for Electronic Disclosure by Insiders as of April 26, 2011, available at www.sedi.com.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

The Forbes Group enters into transactions with related parties in the normal course of conducting business.
Accounts receivablerelated parties and Accounts payablerelated parties result from transactions with related parties which the Company believes are on terms consistent with those available to third-party customers and from third-party
vendors.



20



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|Item 13. | Certain Relationships and Related Transactions
|-------- | ----------------------------------------------

Messrs. John E. Crisp and Charles C. Forbes Jr., executive officers and directors of FES Ltd, are also owners and managers of Alice Environmental Holdings, Ltd and indirect owners and managers of Alice
Environmental Services, LP, a wholly owned subsidiary of Alice Environmental Holdings, Ltd, collectively referred to as AES. The Forbes Group has entered into the following transactions with AES:



| |  |  | AES owns aircraft that the Forbes Group uses on a regular basis.
| | - |  | ----------------------------------------------------------------



| |  |  | The Forbes Group has also entered into long-term operating leases with AES for well service rigs, vacuum trucks and related equipment.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Forbes Group has entered into long-term real property leases, disposal well leases and disposal well operating agreements with AES.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------

In October 2008, the Forbes Group entered into a five year, operating lease agreement with AES to lease ten
workover rigs and related support equipment. The gross lease amount of this agreement is approximately $15.2 million with monthly payments of approximately $0.3 million. The Forbes Group has the option to purchase the equipment at the end of the
term for a purchase price of approximately $5.3 million.

In October 2010, the Forbes Group entered into an operating lease
agreement effective January 2010 with AES to lease certain well servicing equipment, including trucks, tanks, swab units and other equipment. Previously this equipment was being rented month-to-month until certain conditions, which at this time have
been satisfied, were met, upon which the term became four years. The gross agreement amount is approximately $3.2 million with monthly payments of approximately $0.1 million. The Forbes Group has the option to purchase the equipment at the end of
the four year term for a purchase price of approximately $1.2 million.

The Forbes Group rents or leases twelve separate
properties from AES for separate parcels of land and buildings. Ten of the leases were entered into at various dates subsequent to December 31, 2006. Each lease has a five-year term with the Forbes Group having the option to extend from between
one and five years. Two of the leases are oral. Aggregate amounts paid for the twelve rentals and leases were $1.3 million, $1.3 million, and $0.9 million for the year-ended December 31, 2010, 2009 and 2008, respectively.

The Forbes Group entered into a waste water disposal operating agreement dated January 1, 2007, with AES pursuant to which AES
leases its rights in a certain well bore and receives payments in the form of a minimum fee of $5,000 per month plus $0.15 per barrel for any barrel injected over 50,000 barrels. Under this agreement, AES also receives a skim oil payment
of 20% of the amount realized by the Forbes Group for all oil and hydrocarbons removed from liquids injected into the premises. The agreement term is for three years and is renewable for successive three year terms as long as AES has rights to the
well.

The Forbes Group entered into a waste water disposal lease agreement dated April 1, 2007, with AES. Under the
agreement, the Forbes Group is entitled to use the leased land for the disposal of waste water for a term of five years with three successive three year renewal periods. The Forbes Group pays a monthly rental of $2,500 per month plus $.05 per barrel
for any barrel over 50,000 barrels of waste water injected per month. Additionally, the Forbes Group pays an amount equal to 10% of all oil or other hydrocarbons removed from liquids injected or any skim oil.

Other expenses related to the items discussed above, were approximately $2.0 million, $2.3 million and $1.5 million related to aircraft
and equipment rental, approximately $1.6 million, $1.2 million and $1.4 million related to disposal of waste water and approximately $0, $0 and $0.8 million related to other various expenses for the years-ended December 31, 2010, 2009, and 2008,
respectively.

For the year-ended December 31, 2010, 2009, and 2008 Forbes Group recognized revenue from AES of
approximately $0, $0 and $11,000, respectively, total expenses of approximately $9.3 million, $8.4 million and $5.5 million, respectively, and capital expenditures $0, $0, and $2.4 million respectively. Accounts payable to AES as of
December 31, 2010, 2009 and 2008, resulting from such transactions were approximately $0.4 million, $0.7 million and $0.1 million, respectively. The Forbes Group had no accounts receivable from AES as of December 31, 2010, 2009 and
2008, respectively.

Dorsal Services, Inc. is a trucking service provider that provides services to the Forbes Group.
Mr. Crisp, an executive officer and director of FES Ltd, is a partial owner of Dorsal Services, Inc. The Forbes Group recognized revenues of $9,000 $58,000, and $58,000 related to trucking services, equipment rental, and wash out activities;
expenses of approximately $0.8 million, $0.2 million and $1.4 million; and capital expenditures of approximately $38,000, $0, and $29,000 from transactions with Dorsal Services, Inc. for the years ended December 31, 2010, 2009, and 2008,
respectively. The Forbes Group had accounts receivable from Dorsal Services, Inc. of approximately $0.1 million, $0.2 million and $0.1 million as of December 31, 2010, 2009 and 2008, respectively resulting from such transactions. The
Forbes Group had accounts payable to Dorsal Services, Inc. of approximately $0.1 million, $0.1 million and $0.1 million as of December 31, 2010, 2009 and 2008, respectively, resulting from such transactions.



21



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Tasco Tool Services, Inc. is a down-hole tool company that is partially owned and managed by
a company that is owned by Messrs. Crisp and Forbes, both executive officers and directors of FES Ltd. Tasco rents and sells tools to the Forbes Group from time to time. The Forbes Group had revenues from Tasco of $4,000, $1,000 and $0 and
recognized expenses of approximately $0.1 million, $0.1 million and $0.3 million and capital expenditures of $0, $0.1 million, and $0.1 million related to transactions with Tasco for the years ended December 31, 2010, 2009, and 2008,
respectively. Accounts payable to Tasco as of December 31, 2010, 2009 and 2008 were $10,000, $20,000 and $40,000, respectively, resulting from these transactions.

FCJ Management LLC, or FCJ, is a limited liability company that leases land and facilities to the Forbes Group and is owned by Messrs. Crisp and Forbes and Robert Jenkins, a manager of one of the
subsidiaries of FES Ltd. The Forbes Group recognized expenses of $36,000, $23,000 and $18,000 for the year ended December 31, 2010, 2009 and 2008, respectively. No revenues have been recognized from FCJ for any period. The Forbes Group had no
accounts receivable from FCJ or accounts payable to FCJ as of December 31, 2010, 2009 and 2008, respectively.

C&F Partners is an entity that is owned by Messrs. Crisp and Forbes. The Forbes Group recognizes no revenues, expenses of
approximately $0.5 million, $0.5 million, and $0.1 million and no capital expenditures for the years ended December 31, 2010, 2009 and 2008, respectively. All expenses are related to aircraft rental. There were no accounts receivable, and
accounts payable were $45,000, $0 and $42,000 as of December 31, 2010, 2009 and 2008, respectively.

Resonant
Technology Partners is a computer networking group that provides services to the Forbes Group. Travis Burris, a director of the Forbes Group, has a noncontrolling interest in the computer networking company. The Forbes Group recognized expenses of
approximately $0.3 million, $0.2 million, and $0, and capital expenditures of approximately $28,000, $0 and $0 for the year-ended December 31, 2010, 2009, and 2008, respectively. The Forbes Group had accounts payable of approximately $0,
$34,000 and $0 as of December 31, 2010, 2009 and 2008, respectively.

Wolverine Construction, Inc is a
construction and site preparation services company that is owned by Daniel Crisp, a son of Mr. Crisp, an executive officer and director of FES Ltd. Mr. Crisps son is also a fulltime employee of The Forbes Group. The Forbes Group provided
additional services to customers in the fiscal year 2010 that was sub-contracted to Wolverine Construction, Inc. The Forbes Group recognized capital expenditures of approximately $0, $0.1 million and $0.1 million, revenues of approximately $0.1
million, $11,000 and $3,000 and expenses of approximately $12.2 million, $0.9 million and $0.2 million for the years ended December 31, 2010, 2009, and 2008, respectively. The Forbes Group had accounts receivable from Wolverine as of
December 31, 2010, 2009 and 2008 of approximately $0.1 million, $6,000 and $0, respectively. The Forbes Group had accounts payable due to Wolverine of approximately $7.5 million, $19,000 and $0 as of December 31, 2010, 2009 and
2008, respectively.

Testco Well Services LLC, or Testco, is a company that provides valve and gathering system testing
services to the Forbes Group. Messrs. Crisp and Forbes, executive officers and directors of FES Ltd, along with Daniel Crisp, a son of Mr. Crisp, are partial owners of Testco. The Forbes Group recognized revenues of approximately $4,000, $0 and $0.4
million, and expenses of approximately $7,000, $12,400 and $0 for the years ended December 31, 2010, 2009, and 2008, respectively. The Forbes Group had no accounts receivable from and no accounts payable to Testco as December 31, 2010,
2009 and 2008, respectively.

CJ Petroleum Service LLC, or CJ Petroleum is a company that owns saltwater disposal wells
and is owned by Messrs. Crisp and Forbes, Daniel Crisp and Pete Crisp, both sons of John Crisp, and Janet Forbes, a director of the FES Ltd. In 2010, we began paying CJ Petroleum to use their disposal wells. The Forbes group recognized no revenue,
expenses of approximately $0.2 million and no capital expenditures for the year ended December 31, 2010. We had no accounts receivable from CJ Petroleum as of December 31, 2010. We had accounts payable of $24,000 to CJ Petroleum as of
December 31, 2010.

LA Contractors Ltd. is a bulk material hauling company partially owned by Janet Forbes, a director of
FES Ltd., and Charles Forbes V, a son of both Charles Forbes, a director and executive officer of FES Ltd. and Janet Forbes, a director of FES Ltd. The Forbes Group recognized revenue of $0, $2,000 and $0, expenses of approximately $0.2 million,
$34,000, and $8,000 and capital expenditures of approximately $0.3 million, $26,000 and $24,000 for the year ended December 31, 2010, 2009, and 2008, respectively. We had no accounts receivable from LA Contractors as of December 31,
2010, 2009 and 2008, respectively. We had accounts payable to LA Contractors of $8,000, $3,000 and $0 as of December 31, 2010, 2009 and 2008, respectively.

Energy Fishing and Rentals, Inc., or EFR is a specialty oilfield tool company that is partially owned by Messrs. Crisp and Forbes. EFR rents and sells tools to the Forbes Group from time to time. The
Forbes Group recognized revenue of $1,000 from EFR for the year ended December 31, 2010, and recognized expenses of approximately $38,000, $38,000 and $41,000 and capital expenditures of $11,000, $0.3 million and $0 for the years ended
December 31, 2010, 2009 and 2008, respectively. We had no accounts receivable from EFR as of December 31, 2010, 2009 and 2008, respectively. Accounts payable to EFR as of December 31, 2010, 2009 and 2008 were $9,000, $18,000
and $0, respectively, resulting from these transactions.



22



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JITSU Services LLC, or JITSU, is a trucking service provider that, since October 2010,
provides services to the Forbes Group. Janet Forbes and Mr. Crisp are owners of JITSU. For the year-ended December 31, 2010, the Forbes Group recognized no revenues; expenses of approximately $0.1 million and no capital expenditures from
transactions with JITSU, Inc. At December 31, 2010, the company had no accounts receivable from or accounts payable to JITSU.

Texas Quality Gate Guard, LLC is an entity owned by Messrs. Crisp and Forbes that since October 2010 has provided security services to
the Forbes Group. For the year ended December 31, 2010, the Forbes Group recognized no revenues; expenses of approximately $0.1 million and no capital expenditures from transactions with Texas Quality Gate Guard, LLC. At December 31, 2010,
the company had no accounts receivable and accounts payable to Texas Quality Gate Guard, LLC of approximately $0.1 million.

Animas Holdings, LLC, or Animas, is a property and disposal company that is owned by Daniel and Pete Crisp, both sons of John Crisp and
Charles Forbes V, Cori Forbes and Christine Gamez, each a child of Charles Forbes and Janet Forbes. As of April 26, 2010, TES entered into a waste water disposal operating agreement with Animas whereby TES agrees to pay a monthly operational
fee of $4,000 per month, plus $0.08 per barrel over 50,000 barrel per month. Animas agrees to pay TES ten percent of all skim oil payments obtained from this waste water disposal. The Forbes Group also has an oral agreement with Animas for the
rental of two truck yards. The Company pays Animas $8,500 per month for the use of the two properties. For the year-ended December 31, 2010, the Forbes Group recognized no revenues; expenses of approximately $0.3 million and no capital
expenditures from transactions with Animas Holding, Inc. At December 31, 2010, the company had no accounts receivable or accounts payable to Animas.

TSWD, LLC, d/b/a Texas Saltwater Disposal Treatment, a company owned by Daniel Crisp, a son of John Crisp, provides saltwater disposal services to the Company. The Forbes group recognized no revenues and
expenses of approximately $400,000, $400,000, and $100,000 for the years ended December 31, 2010, 2009 and 2008, respectively, from this related party. There were no accounts receivable, and accounts payable were $20,000, $70,000, and $40,000 as of
December 2010, 2009, and 2008, respectively, from this related party.

The Forbes Group has a relationship with Texas Champion
Bank. Travis Burris, one of the directors, is also the President, Chief Executive Officer, and director of Texas Champion Bank. Mr. Crisp, our President and Chief Executive Officer, serves on the board of directors of Texas Champion Bank. As of
December 31, 2010, 2009, and 2008, the Forbes Group had $11.0 million, $7.2 million, and $10.6 million, respectively, on deposit with this bank.

Messrs. Crisp and Forbes are directors and shareholders of Brush Country Bank, an institution with which the Company conducts business. As of December 31, 2010, 2009 and 2008, the Forbes Group had
$3.3 million, $1.3 million and $1.8 million on deposit with this bank.

Daniel Crisp, a son of John E. Crisp, the
Chief Executive Officer of the Company, is employed as a manager by C.C. Forbes, LLC and TX Energy Services, LLC, both subsidiaries of the Company. Daniel Crisp received compensation of $145,639, $145,489 and $164,497 in 2010, 2009 and 2008,
respectively. We expect to pay Daniel Crisp a salary of $178,600 in 2011.

Marcus Crisp, a brother of John E. Crisp, is
employed as the West Texas Fluids Manager by C.C. Forbes, LLC and TX Energy Services, LLC, both subsidiaries of the Company. Mark Crisp received compensation of $122,892, $118,731 and $143,133 in 2010, 2009 and 2008, respectively. We expect to pay
Marcus Crisp a salary of $144,000 in 2011. In addition to these amounts, Marcus receives a monthly vehicle allowance.

We
believe all of the terms with the companies described above are comparable to terms that were and are available to us in arms-length transaction with non-related parties.

Review, Approval or Ratification of Transactions with Related Persons.

It
is the informal policy of the Company to have the disinterested members of its board of directors review and approve or ratify certain significant related party transactions. Further, the Company is required by its indentures to obtain the approval
of the disinterested board members when a related party transaction exceeds an aggregate consideration of $500,000 and an opinion regarding the fairness of such transaction from an outside firm when such a transaction exceeds an aggregate
consideration of $2.5 million. If we are successful in our attempt to list with NASDAQ, we will also be subject to and plan to comply with NASDAQ rules that require, among other things, the Companys audit committee or other independent body of
the board of directors to conduct, on an ongoing basis, an appropriate review and oversight of related party transactions for potential conflict of interest situations.



23



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The board, including all of the disinterested members thereof, has unanimously approved or
ratified the abovementioned transactions. Under both the bye-laws of Forbes Bermuda and the bylaws of Forbes Texas, a director who is interested in a contract or proposed contract must declare the nature of his or her interest in such contract. When
this interest is declared, unless disqualified by the chairman of the relevant board meeting, such director may vote and be counted for the purpose of determining quorum in respect of the contract or proposed contract in which such director has an
interest, provided that the transaction is approved by a majority of the disinterested members of the board.

Additionally,
the Company has a written Employee Code of Business Conduct and Ethics that requires that an employee obtain written approval of the President or the Chief Executive Officer prior to doing business on behalf of the Company with a member of that
employees family. As the employment of the son and brother of Mr. Crisp described above involved the President and Chief Executive Officer, the board of directors of the Company, including the disinterested members thereof, in conformance
with the Companys informal policy regarding significant related party transactions, took the step of unanimously ratifying and approving the employment of Mr. Crisps son and brother. Neither the Companys informal policy
regarding significant related party transactions nor its employee code of conduct has formal standards outlining the procedures or scope of review and approval of such related party transactions.



|Item 14. | Principal Accounting Fees and Services
|-------- | --------------------------------------

REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED DECEMBER 31, 2010

The
Audit Committee is composed of three non-employee directors and acts under a written charter adopted by the board of directors. The Audit Committee has the sole responsibility for the appointment and retention of the Companys registered
independent public accounting firm and the approval of all audit and engagement fees. The Audit Committee meets periodically with management, the consulting group assisting us with financial reporting and tax matters and the registered independent
public accounting firm regarding accounting policies and procedures, audit results and internal accounting controls. The internal auditors and the registered independent public accounting firm have free access to the Audit Committee, without
managements presence to discuss the scope and results of their audit work. Our management is primarily responsible for our financial statements and the quality and integrity of the reporting process, including establishing and maintaining the
systems of internal controls over financial reporting and assessing the effectiveness of those controls. Our registered independent public accounting firms (discussed below) are responsible for auditing those financial statements in accordance with
the standards of the Public Company Accounting Oversight Board (United States) and for expressing an opinion on the conformity of the financial statements with accounting principles generally accepted in the United States. On behalf of the board of
directors, the Audit Committee monitors our financial reporting processes, the independence and the performance of the registered independent public accounting firm, and the performance of the internal auditor function.

From January 1, 2008 to June 22, 2009, PricewaterhouseCoopers LLP, or PWC, served as our registered independent public
accounting firm. Effective June 23, 2009, we dismissed PWC as our registered independent public accounting firm and engaged BDO USA, LLP, or BDO. BDO has served as our registered public accounting firm since June 23, 2009.

Management has represented to the Audit Committee that our consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the registered independent public accounting firm. The Audit Committee has discussed with the registered
independent public accounting firm their evaluation of the accounting principles, practices and judgments applied by management, and the Audit Committee has discussed any items required to be communicated to it by the registered independent public
accounting firm in accordance with standards established by the American Institute of Certified Public Accountants.

In
fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2010, and matters related to Section 404 of the Sarbanes-Oxley Act of 2002 with the
Companys



24



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management and our internal auditors. The Audit Committee discussed with BDO the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended. In addition, the Audit Committee discussed with BDO their independence from the Company and its management, including letter and written disclosures respecting fiscal 2010, which are required by the Public Company Accounting
Oversight Board. Furthermore, the Audit Committee considered and determined that the auditors non-audit services to the Company were consistent with the guidelines established to ensure auditor independence.

Based on the reviews and discussions described above, the Audit Committee has recommended to our board of directors that our audited
financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2010.

Audit
Committee

Dale W. Bossert

Travis H. Burris

William W. Sherrill

The Audit Committee has retained BDO as the Companys independent registered public accounting firm for the fiscal year ending
December 31, 2011, subject to shareholder ratification.

Audit Fees

The following table sets forth the aggregate fees billed or expected to be billed to us by our registered public accounting firm, BDO for
fiscal years ended December 31, 2010 and 2009, respectively.



|                   |  |      |         |  |      |   |         | 
|------------------ |  | ---- | ------- |  | ---- | - | ------- | 
|                   |  | BDO  |        
|                   |  | 2010 |         |  | 2009 |  
|Audit Fees         |  | $    | 924,060 |  |      | $ | 797,280 | 
|Audit Related Fees |  |      |        |  |      |   |        | 
|Tax Fees           |  |      | 65,150  |  |      |   |        | 
|All Other Fees     |  |      |        |  |      |   |        | 
|Total Fees         |  | $    | 989,210 |  |      | $ | 797,280 | 

Audit fees for 2010
included $20,500 related to the offering of Series B Preferred Shares and $63,500 related to filings related to the Companys planned Texas conversion and common share consolidation. The services provided under the caption Tax Fees
for 2010 relate to certain compliance related services and tax advice to us. The audit committee considered whether the provision of the services related to the offerings described above and those reflected under Tax Fees above might
have affected BDOs independence with respect to their audit of our financial statements, and the audit committee believes that such services did not affect, and were compatible with, BDOs independence.

Audit Committee Pre-Approval Policies and Procedures

The audit committees policy provides that our independent registered public accounting firm, or the Audit Firm, may provide only those services pre-approved by the audit committee or its designated
representative. The audit committee annually reviews and pre-approves the audit, review, attest and permitted non-audit services to be provided during the next audit cycle by the Audit Firm. To the extent practicable, at the same meeting the audit
committee also reviews and approves a budget for each of such services. The term of any such pre-approval is for the period of the annual audit cycle, unless the audit committee specifically provides for a different period.

Services proposed to be provided by the Audit Firm that have not been pre-approved during the annual review and the fees for such
proposed services must be pre-approved by the audit committee or its designated representative. Additionally, fees for previously approved services that are expected to exceed the previously approved budget must also be pre-approved by the audit
committee or its designated representative.



25



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All requests or applications for the Audit Firm to provide services to us must be submitted
to the audit committee or its designated representative by the Audit Firm and the chief financial officer. It is our policy that if any of our employees or any representative of the Audit Firm becomes aware that any services are being, or have been,
provided by the Audit Firm to us without the requisite pre-approval, such individual must immediately notify the chief financial officer, who must promptly notify the chairman of the audit committee and appropriate members of senior management so
that prompt action may be taken to the extent deemed necessary or advisable.

The audit committee may form and delegate to one
or more representatives being composed of one or more of its members, the authority to grant specific pre-approvals under its policy with respect to audit, review, attest and permitted non-audit services, provided that any such grant of pre-approval
shall be reported to the full audit committee no later than its next scheduled meeting. The audit committee may not delegate to management its responsibilities to pre-approve services performed by the Audit Firm.



26



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|Item 15. | Exhibits, Financial Statement Schedules
|-------- | ---------------------------------------



|       |  |   |  |                                                                                                                                                          
|------ |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  |   |  | Description of Exhibits                                                                                                                                  
|       |  |  
|31.1*  |  |  |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).                                                                           
|       |  |  
|31.2*  |  |  |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).                                                                           
|       |  |  
|32.1*  |  |  |  | Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of
2002.
|       |  |  
|32.2*  |  |  |  | Certification of Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of
2002.



|* | Filed herewith.
|- | ---------------



27



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Amendment No. 1 to Annual Report on Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City of Alice, the State of Texas, on April 29, 2010.



FORBES ENERGY SERVICES LTD.By:

/s/    John E. CrispJohn E. CrispPresident and Chief Executive Officer




---

EXHIBIT INDEX



|       |  |   |  |                                                                                                                                                           
|------ |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  |   |  | Description of Exhibits                                                                                                                                   
|       |  |  
|31.1*  |  |  |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).                                                                            
|       |  |  
|31.2*  |  |  |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).                                                                            
|       |  |  
|32.1*  |  |  |  | Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|       |  |  
|32.2*  |  |  |  | Certification of Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



|* | Filed herewith.
|- | ---------------