Document:

Transation of Unit Price Public Works Contract No. 424048860

 Exhibit 10.13 
 CONTRACT No. 424048860 
 This agreement is filed as a translation
from the original Spanish language version and is supplied solely 
 for informational purposes. The original version in
the Spanish language is the definitive agreement and is 
 the version that has legal force and effect. 

TABLE OF CONTENTS 
  

			
		 	STATEMENTS
	CLAUSES	 	
	ONE.	 	PURPOSE OF THE CONTRACT
	TWO.	 	CONTRACT AMOUNT
	THREE.	 	METHOD OF PAYMENT
	FOUR.	 	FINANCING SOURCES
	FIVE.	 	ASSIGNING COLLECTION RIGHTS
	SIX.	 	WITHHOLDINGS
	SEVEN.	 	FINANCING EXPENSES
	EIGHT.	 	EXCESS PAYMENTS
	NINE.	 	COST ADJUSTMENT
	TEN.	 	CONTRACTUAL PENALTIES
	ELEVEN.	 	PERFORMANCE PERIOD
	TWELVE.	 	TERM
	THIRTEEN.	 	EXTENSION TO THE COMPLETION DATE
	FOURTEEN.	 	WORK FOR ADDITIONAL AMOUNTS OR FOR ITEMS NOT ESTABLISHED IN THE ITEM CATALOGUE
	FIFTEEN.	 	CONTRACT AMENDMENTS
	SIXTEEN.	 	ACT OF GOD OR FORCE MAJEURE
	SEVENTEEN.	 	CONTRACT PERFORMANCE BOND AND GUARANTEE ON LATENT DEFECTS
	EIGHTEEN.	 	INSURANCE POLICIES
	NINETEEN.	 	AUTHORIZED REPRESENTATIVES
	TWENTY.	 	SUBCONTRACTING
	TWENTY-ONE.	 	CONTRACTOR RELATIONS WITH ITS WORKERS
	TWENTY-TWO.	 	LIABILITY OF THE PARTIES
	TWENTY-THREE.	 	ACCEPTANCE OF THE WORK
	TWENTY-FOUR.	 	SETTLEMENT AND CONTRACT COMPLETION
	TWENTY-FIVE.	 	CONTRACT SUSPENSION
	TWENTY-SIX.	 	EARLY TERMINATION OF THE CONTRACT
	TWENTY-SEVEN.	 	ADMINISTRATIVE RESCISSION OF THE CONTRACT
	TWENTY-EIGHT.	 	RESCISSION PROCEDURE
	TWENTY-NINE.	 	INFORMATION CONFIDENTIALITY
	THIRTY.	 	CLAIMS AND DISPUTES OF A TECHNICAL OR ADMINISTRATIVE NATURE
	THIRTY-ONE.	 	EXPERT DECISION
	THIRTY-TWO.	 	CONCILIATION
	THIRTY-THREE.	 	APPLICABLE LAW AND JURISDICTION
	THIRTY-FOUR.	 	CONTINUATION OF THE WORK
	THIRTY-FIVE.	 	TAX CLAUSE
	THIRTY-SIX.	 	TRAINING AND CONDUCT OF CONTRACTOR PERSONNEL
	THIRTY-SEVEN.	 	NOTIFICATIONS
	THIRTY-EIGHT.	 	PRIORITY OF DOCUMENTS
	THIRTY-NINE.	 	ATTACHMENTS TO THIS CONTRACT
	CLAUSE.	 	OTHER STIPULATIONS
	CLAUSE.	 	JOINT AND SEVERAL OBLIGATION

“WELL MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 

NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

			
	CLAUSE.	 	NATIONAL CONTENT PERCENTAGE
	CLAUSE.	 	LEGAL AND MATERIAL AVAILABILITY OF LOCATIONS FOR PERFORMING WORK
	CLAUSE.	 	ELECTRONIC LOG

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

 PEMEX 
 North Region Department 
 Office of the Manager of Well Maintenance and
Drilling, D.N. 
 Office of the Deputy Manager of Administration and Finance 

Superintendency of Material Resources 
  

			
	 Contractor Name:

MERCO INGENIERIA INDUSTRIAL, S.A. DE C.V. AND FORBES ENERGY SERVICES (JOINT PROPOSAL)
	  	 Management Centre:

2383814020821800

		
	 Tax Registry Number (RFC):
 MII030908KH4
 TAXPAYER IDENTIFICATION NUMBER: 98-0581100
	  	 Financial Entry:

314302515

		
	 Contract No.:

424048860
	  	 Contract Request:

5000008966

		
	 Contract Amount:

$234,256,757.01 MXP (two hundred and thirty-four million, two hundred and fifty-six thousand, seven hundred and fifty-seven pesos and 01/100 cents),
plus US$48,842,604.99 (forty-eight million, eight hundred and forty-two thousand, six hundred and four US dollars and 99/100 cents)
	  	 International Public Tender with TLC
  

18575051-027/08
  
 Tender: 027/08-TOUSPC-P

 UNIT PRICE PUBLIC WORKS CONTRACT, ENTERED
INTO BY AND BETWEEN PEMEX EXPLORACIÓN Y PRODUCCIÓN, WHO WILL BE CALLED PEP, REPRESENTED BY MARTIN TERRAZAS ROMERO, IN HIS CAPACITY AS MANAGER OF THE NORTH DIVISION, APPOINTED TO THE DEPARTMENT OF THE WELL DRILLING AND MAINTENANCE UNIT
OF PEMEX EXPLORACIÓN Y PRODUCCIÓN; AND MERCO INGENIERIA INDUSTRIAL S.A. DE C.V. AND FORBES ENERGY SERVICES LTD. (JOINT PROPOSAL), WHO WILL BE CALLED THE CONTRACTOR, REPRESENTED BY MR. JOSE ANDRES SUAREZ IN HIS CAPACITY AS GENERAL
ATTORNEY, REPRESENTATIVE AND AGENT OF BOTH COMPANIES, IN ACCORDANCE WITH THE FOLLOWING STATEMENTS AND CLAUSES: 
 S T A T
E M E N T S 
 I. PEP states that: 
  

	 	I.1.	It is a decentralized agency of the Federal Public Administration, with its own legal status and assets, and with the legal capacity to enter into this contract,
in accordance with the Constitutional Law of Petróleos Mexicanos and Subsidiary Agencies, published in the Official Journal of the Federation on July 16, 1992. 

 

	 	I.2.	Its representative has the powers to enter into this contract, which he proves through the Public Instrument No. 72,297 dated May 3, 2005
and executed in the presence of Notary Public 19 of the Federal District, Miguel Alessio Robles, which have not been revoked, amended or limited in any way on the signing date of this contract. 

 

	 	I.3.	It has the necessary authorizations to carry out the investment corresponding to the work hereunder, as recorded in the official investment authorization letter
No. 340-A-259 (PEG – Poza Rica Pidiregas Comprehensive Project) dated February 15, 2002. 

  

	 	I.4.	The work hereunder was awarded through the International Public Tender that was carried out in accordance with the Free Trade Agreements signed by the
United Mexican States number 18575051-027-08, based upon article 134 of the Political Constitution of the United Mexican States, articles 3 section II, 26 section I, 27 section I, 28, 30 section II subsection a) and article 34 of the Law of
Public Works and Related Services. 

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

	 	I.5.	Its head office for the purposes of this contract is the Administrative Building of the Office of the Manager of Well Drilling and Maintenance, North
Division: Interior del campo PEMEX; Colonia Herradura, Codigo Postal 93370; Poza Rica de Hidalgo, Veracruz and its Federal Tax Registry Number is PEP-920716-7XA. 

 II. The CONTRACTOR states that: 
  

	 	II.1.	MERCO INGENIERIA INDUSTRIAL S.A. DE C.V. is a legally established company with its own legal status, in accordance with the legal provisions of the United
Mexican States, as certified by the following Public Instruments 

  

	 	a)	Testimony from the public instrument 2,053 of September 5, 2003, executed in the presence of the Notary Public 115 of Reynosa,
Tamaulipas, Jacinto Flores Pena, which first testimony is duly registered at the Public Registry of Commerce of Reynosa, Tamaulipas, under number 775, volume 2-016, First Book dated October 1, 2003, in which the company’s
incorporation is recorded. 

  

	 	b)	Testimony from the public instrument 2,112 of February 10, 2004, executed in the presence of the Notary Public 115 of Reynosa,
Tamaulipas, Jacinto Flores Pena, which first testimony is duly registered at the Public Registry of Commerce of Reynosa, Tamaulipas, under number 775, volume 2-016, First Book dated March 2, 2003, in which the General Ordinary
Shareholders’ Meeting was notarized, in which the following, among other things, were agreed to: the resignation of the General Manager and Administrative Manager, the revocation of powers of attorney and amendment of Transitional Article Four
of the Articles of Incorporation referring to the limitation established for exercising the General Power of Attorney for Ownership Acts, ordering now that the power of attorney for ownership acts may be exercised individually by the sole director
under the broadest terms. 

  

	 	II.2.	Its representative has the powers to enter into this contract, as certified by Public Instrument No. 13163, dated July 11, 2008, which
first testimony was duly registered at the Public Registry of Commerce of Reynosa, Tamaulipas, under number 327, volume 2-007, First Book dated July 11, 2008, executed in the presence of the Notary Public 233 of Reynosa,
Tamaulipas, Alfonso Fuentes Garcia, which have not been revoked, amended or limited in any way on the signing date of this contract. 

  

	 	II.3.	It is Mexican and agrees, even when changing nationality, to continue to be considered as a Mexican as far as this contract is concerned, and to not invoke the
protection of any foreign government, under penalty of losing all rights arising from this contract to the benefit of the United Mexican States. 

  

	 	II.4.	At the time of entering into this contract, it is current in the payment of all its tax obligations, according to the provisions of article 32-D of the Tax Code
of the Federation and its RFC is MII30908KH4. 

  

	 	II.5.	FORBES ENERGY SERVICES, LTD. is a British company legally incorporated and existing in accordance with the legal provisions of England, Great Britain, as proven
by the Certificate of Incorporation, registered at the Company Register on April 11, 2008 under registration number 41727; Certificate of Deposit of Memorandum of Increase of Share Capital registered at the Companies House on April 15,
2008, under registration number 41727, and with the Certification issued by Evelou Mosley in her capacity as Secretary of the Company on May 22, 2008, which document is certified by the Notary Public of the City of Hamilton, Bermuda, Tonya L.
Marshall on July 8, 2008, which has its APOSTILLE issued by Leleath G. Bailey, Governor and Commander in Chief of the Bermudas under Certification No. 26,273. 

 

	 	II.6.	Its representative has the powers to enter into this contract, as certified by the notarization of the power of attorney that was executed abroad, performed
through public instrument number 14,072 dated September 23, 2008, executed in the presence of the Notary Public No. 6 of Poza Rica, Ver., Joao Gilberto Lopez Hernandez, which have not been revoked, amended or limited
in any way on the signing date of this contract. 

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

	 	II.7.	It is a legal entity of American nationality and agrees to be considered as a Mexican as far as this contract is concerned, and to not invoke the protection of
any foreign government, under penalty of losing all rights arising from this contract to the benefit of the United Mexican States. 

  

	 	II.8.	It does not have a permanent establishment in the country, and during the execution of this contract it does not intend to create one. However, if it were to be
created according to the applicable laws, it commits to giving notice to the Ministry of the Treasury and Public Credit, to the Tax Administration Service (SAT) and to PEP, and to comply with its tax obligations in the Mexican Republic and
that its Taxpayer Identification Number is 98-0581100. 

  

	 	II.9.	Its common address for the purposes of this contract is Cerro Azul No. 212 Colonia Petrolera, Reynosa, Tamaulipas C.P. 88680, Tel: (01-899) 920-2211,
Fax: (01-899) 920-2240. E-mail: mercoingenieria@grupomerco.com, jose.suarez@grupomerco.com. 

  

	 	II.10.	It has the legal capacity to enter into contracts and meets the technical and financial conditions to undertake the performance of the work hereunder, and has
the necessary experience for the efficient performance of said work. 

  

	 	II.11.	It is fully aware of the contents and requirements that are established by: (i) the Law of Public Works and Related Services and its Regulations;
(ii) the laws, regulations and other administrative provisions issued in the area of public works and related services; (iii) the Safety and Health Regulations of Petróleos Mexicanos and what applies from the Regulatory Framework of
Industrial Safety, Occupational Health, Environmental Protection and Energy Saving of Petróleos Mexicanos and Subsidiary Agencies; (iv) the work procedures, the construction specifications in force at PEP and the specific
specifications for the work, the project, the execution program, the monthly amounts of the work arising therefrom; and (v) the item catalogue, which as attachments duly signed by the parties, form an integral part of this contract.

  

	 	II.12.	It has properly inspected the site where the work hereunder will be carried out, in order to consider all factors that take part in its execution, and they are
in agreement with the technical specifications that PEP provided it and all documents that form a part thereof. 

  

	 	II.13.	It meets all necessary legal requirements to enter into this contract, and does not fall under any of the scenarios set forth in articles 51 and 78 of the Law of
Public Works and Related Services. 

  

	 	II.14.	Based upon the provisions of article 36 of the Law of Public Works and Related Services, they submitted a joint proposal within International Public Tender
Number 18575051-027/08 as covered under the Purchasing Chapters of the Public Sector of the Free Trade Agreements signed by the Mexican Government with different countries, and based upon aforementioned provision and article 50 of the
Regulations of the Law of Public Works and Related Services, they did enter into a private agreement for the joint proposal dated July 17, 2008, which forms an integral part of this contract as attachment Format DT-17, whereby
they jointly and severally undertake to execute the work under the terms of this contract. For the purposes of this agreement in principle and consistent with the agreement of the joint proposal, the companies awarded with this instrument have
designated MERCO INGENIERIA INDUSTRIAL, S.A. DE C.V. as a common representative. 

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

 Taking the above statements into consideration, the parties agree to be bound in
accordance with the following: 
 C L A U S E S 

 

			
	ONE	 	 PURPOSE OF THE CONTRACT. PEP requires and the CONTRACTOR undertakes to perform, in accordance with this contract and its
attachments, the complete work for the “WELL MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE NORTH REGION” (PACKAGE I).
  

It is expressly understood and agreed that the CONTRACTOR will not have any share in the hydrocarbons extracted or produced at any of the
development or exploratory wells hereunder, and that PEP will not give the CONTRACTOR a share in any compensation from the resulting production of the wells. The only right that the CONTRACTOR has is to receive the compensation
provided for in this contract, as a result of the execution of the work hereunder, which is not dependent or contingent upon any factor that is not the very compliance with its obligations under this contract.

 
 PEP will request that the CONTRACTOR execute the work through written
work orders.
  
 In compliance with the provisions of the second paragraph of
article 36 of the Law of Public Works and Related Services and article 50 of its Regulations, and under the terms of Clause Two of the Private Agreement dated July 17, 2008, presented in the Joint Proposal of
the companies: MERCO INGENIERIA INDUSTRIAL S.A. DE C.V. and FORBES ENERGY SERVICES LTD, the participation in the work hereunder for each member of the group will be according to the following:

 
 MERCO INGENIERIA INDUSTRIAL S.A. DE C.V. is under obligation to execute: the
administration, control and management of the contract in addition to:
  
 1.Infrastructure works (complete item 9.0 and sub-items).
  

2.Platforms (complete item 10.0 and sub-items).

 
 3.Construction of anchors (complete item
11.0 and sub-items).
  

4.Supplementary works (complete item 12.0 and sub-items).

 
 FORBES ENERGY SERVICES LTD is under obligation to execute: the operation and
engineering described in:
  

1.Interventions with contractor equipment (complete item 2.0 and sub-items).

 
 2.Interventions with PEP equipment and
contractor coordination (complete item 3.0 and sub-items).
  
 3.Share of daily rental of drilling equipment (complete item 4.0 and sub-items).
  

4.Monitoring system (complete item 5.0 and sub-items).

 
 5.Optional services (sub-items 6.1, 6.2,
6.5, 6.6, 6.7 and 6.8 from item 6.0).
  
 6.Hydraulic testing upon introducing the production equipment (item 8.0 and sub-items).

	  
 TWO
	 	  
 CONTRACT AMOUNT. The total amount of this contract is:
$234,256,757.01 MXP (two hundred and thirty-four million, two hundred and fifty-six thousand, seven hundred and fifty-seven pesos and 01/100 cents), plus US$48,842,604.99 (forty-eight million, eight hundred and forty-two thousand, six hundred and
four US dollars and 99/100 cents) plus the Value Added Tax.

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

			
	THREE	 	 METHOD OF PAYMENT. The CONTRACTOR will receive from PEP the amount resulting from applying the unit prices to
the amounts of work performed, as total payment for each item unit of work completed, executed according to the contract, construction specifications and quality standards.

 
 The amount to pay for the work hereunder will be calculated by preparing estimates
that will cover monthly periods and will be submitted by the CONTRACTOR to the site supervision office. They will be accompanied by the documentation that certifies the admissibility of their payment, within 6 (six) calendar days following
the cut-off date, which will be the last day of each month. If the estimates are not submitted in the aforementioned term, the corresponding estimate will be submitted on the following cut-off date, without giving rise to a claim for
expenses and/or financing costs from the CONTRACTOR. The site supervision office will have a period no longer than 15 (fifteen) calendar days to review and authorize the estimates, following the date that the corresponding estimates are
submitted to it.
  
 When analyzing and calculating the payment amounts, the
applicable fees and taxes shall be considered, under the terms of the tax laws. The CONTRACTOR will be solely responsible for the invoices meeting the administrative and tax requirements for their payment. Therefore, the delay in their
payment due to the lack of any of these, or due to their incorrect or late submission, will not be grounds to request the payment of financing expenses as referred to in article 55 of the Law of Public Works and Related Services.

 
 The parties who sign this contract in their capacity as CONTRACTORS, agree
that the company MERCO INGENIERIA S.A. DE C.V., in its capacity as Common Representative, will be the one to submit the invoices for each and every one of the payments arising from this contract. This is with the understanding that PEP will
not be liable for the manner in which the Common Representative distributes or divides the earnings or losses with respect to the amounts that it receives as a result of this contract.

 
 The submission date of the estimates to the site supervision office shall be recorded
in the log.
  
 Estimates for work performed shall be paid by PEP,
under its responsibility, within a period no longer than 20 (twenty) calendar days, from the date on which they have been authorized by the site supervision office. This date will be recorded in the log of the work and in the estimates
themselves.
  
 Payments to the CONTRACTOR will be done invariably by
an automatic bank deposit into account of the credit institution authorized to operate in the United Mexican States, selected by the CONTRACTOR, who shall notify PEP in writing directly at the Payment Window for the
North Region, located at Boulevard campo PEMEX s/n (to one side of the vehicle entrance #2) interior campo PEMEX Col. Herradura C.P. 93370, Poza Rica de Hgo. Ver, prior to the first of the payments that take place under this contract.

 
 The estimates and the settlement, even though they have been paid, will not be
considered full acceptance of the work, since PEP expressly reserves the right to file claims for missing or poorly performed work, and where appropriate, for the excess payment that has been made.

 
 The payment of the cost adjustments and financing cost will be done in the estimates
following the month on which the granted adjustment has been authorized, by applying to the amount of the aforementioned estimates the detailed increase corresponding to said factors for each type of adjustment. The latest adjustments that have been
authorized shall be applied. All adjustment factors granted shall accumulate.
  
 Payment of the authorized estimates of non-recoverable expenses that are duly proven will be done in accordance with the terms and conditions of the second paragraph of article 54 of the Law of Public
Works and Related Services. No additional cost will be applicable to the resulting amounts, whether for indirect costs, financing or profits.

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

			
		 	 Once the CONTRACTOR has received the payment, it will have 15 (fifteen) calendar days to dispute any aspect thereof. Once this
period has passed without any claim being filed, the payment will be considered definitively accepted and the CONTRACTOR will release PEP from any obligation related to said payment.

 
 Payments will be made in local currency at the exchange rate published by the Bank of
Mexico in the Official Journal of the Federation on the date on which said payments are made.

	  
 FOUR
	 	  
 FINANCING SOURCES. The CONTRACTOR acknowledges that
Petróleos Mexicanos, its Subsidiary Agencies or any financial institution and/or affiliate that it may designate for this purpose, may use the resources from financing, in order to finance the payments arising from this contract. The
CONTRACTOR knows and undertakes to inform its CONTRACTOR and/or subcontractors on a timely basis regarding the requirements related to the documentation required by the financing sources, in order to ensure compliance with the
provisions of this clause.
  
 The “Country of Origin Certificate for
Goods and/or Services”, submitted prior to the signing of this contract, is integrated into this contract as attachment “G-1”, with the understanding that PEP may request any clarification or
additional information from the CONTRACTOR regarding the certificate referred to in this clause during the validity of the contract. Likewise, in the event that the information considered in said certificate were to be amended during the
validity of this contract, the CONTRACTOR undertakes to notify PEP immediately after the CONTRACTOR is aware of the amendment, which will not mean that an amendment is made to this contract.

 
 The CONTRACTOR undertakes to submit the documentation required by the
financing sources, which shall be submitted in accordance with the requirements established in attachment “G” named “Documentation Required by Financing Sources”. To this end, it will follow the instructions and specific formats
in force that are contained within the “Instructions from Petróleos Mexicanos and its Subsidiary Agencies for the Submission of Documentation Required by the Financing Sources”, which was delivered to it prior to the signing of this
contract. The current instructions referred to in this clause, are also available on the following webpage of PEMEX: www.pemex.com/proveedores/documentación.

 
 The CONTRACTOR shall appear at the responsible department (“Financing
Module”) of PEP, before each payment event in order to provide the documentation required by the financing sources, which may apply. The responsible department (“Financing Module”) will issue the “Documentation Tracking
Receipt” and/or will affix the corresponding seal, which will become part of the support documentation that the CONTRACTOR must attach to each payment request that it submits under this contract.

 
 PEP will not be under obligation to issue or submit the “Documentation
Tracking Receipt” and/or corresponding seal when the CONTRACTOR does not submit the documentation required by the applicable financing sources, without just cause.

 
 PEP may request any modification, clarification or additional information from
the CONTRACTOR related to the documentation required by the financing sources.
  
 In the same manner, the CONTRACTOR accepts that for certain cases, the documentation required by the financing sources shall be submitted to the entity (agent bank, export credit agency, Corporate
Finance Office, etc.) that PEP may indicate on a timely basis.

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

			
	FIVE	 	 ASSIGNMENT OF COLLECTION RIGHTS. The CONTRACTOR may not assign the rights and obligations arising from this contract
either partially or fully in favour of any other individual or legal entity, except for the collection rights on the estimates for the work performed. In this case, the CONTRACTOR shall request consent from PEP in writing, who will
come to an appropriate decision within a term of 15 (fifteen) calendar days from the request submission. In the event that the aforementioned period has passed without PEP having given a response in writing to the request from the
CONTRACTOR, this request will be considered not accepted.
  
 If as a
result of the assignment of the collection rights requested by the CONTRACTOR, a delay in payment were to occur, the payment of financing expenses as referred to in article 55 of the Law of Public Works and Related Services will not apply.
Neither will the process of assigning collection rights grant the CONTRACTOR the right to request an extension to the completion date.

	  
 SIX
	 	  
 WITHHOLDINGS. The CONTRACTOR accepts that the
following withholdings will be performed on each of the estimates that are paid:

		 	  
 a).-FIVE
THOUSANDTHS of the amount of the work performed, which will be set aside for the Ministry of the Civil Service for the fees from the inspection service, supervision and control of the work, which PEP will deliver to the Treasury of the
Federation, in accordance with article 191 of the Federal Law of Fees.

	  
 SEVEN
	 	  
 FINANCING EXPENSES. In the case of non-compliance in the
payment of the estimates and cost adjustment, PEP at the request of the CONTRACTOR, shall pay financing expenses at a rate that will be equal to that set by the Revenue Law of the Federation in cases of late payment of tax credits.
Said expenses will begin to be generated when the parties have defined the amount to be paid and will be calculated on the unpaid amounts. They must be calculated by calendar days from the time they are calculated and until the date they are
actually made available to the CONTRACTOR, in accordance with article 55 of the Law of Public Works and Related Services.

	  
 EIGHT
	 	  
 EXCESS PAYMENTS. In the case of excess payments that the
CONTRACTOR has received, it shall return the excess amounts paid plus the corresponding interest, as indicated in clause six “WITHHOLDINGS” of this contract. The interest will be calculated on the excess amounts paid in each case
and will be calculated by calendar days, from the payment date to the date on which the amounts are actually made available to PEP.
  

It will not be considered an excess payment when the differences borne by the CONTRACTOR are offset in the following estimate, or in the
settlement, if said payment had not been identified previously.

	  
 NINE
	 	  
 COST ADJUSTMENT. The parties agree to the review and
adjustment of the costs that make up the unit prices of this contract, agreed upon in local currency, in accordance with article 56 of the Law of Public Works and Related Services and articles 105, 106 and 144 of its Regulations. Therefore, both
parties agree to take the itemized costs that are listed in Format DE-1 as the basis for performing the costs adjustments, which the CONTRACTOR attached in its proposal. According to article 105 from the Regulations of the Law of
Public Works and Related Services, within 60 (sixty) calendar days following the publication of the indices that are applicable to the period for said indices, the CONTRACTOR shall request the corresponding cost adjustment from PEP.
Once the above period has passed, the CONTRACTOR no longer has the right to claim the cost adjustment for the period in question.
  

Within 60 (sixty) calendar days following receipt of the request, PEP will issue the applicable decision in writing. Authorization of the cost
adjustment shall be done through the official decision letter that agrees upon the corresponding increase or decrease.

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

			
		 	 Adjustment of the costs that make up the agreed unit prices in local currency, which are part of the total direct costs, will be done
according to the express terms of articles 56, 57 section III and 58 of the Law of Public Works and Related Services, and articles 145, 146, 147, 152 and 153 of its Regulations.

 
 LOCAL CURRENCY.

 
 I.The adjustments will be calculated from
the date on which the increase or decrease has occurred in the cost of the inputs, with regard to the incomplete work, according to the execution schedule agreed upon in the Contract, or if there is a delay not attributable to the CONTRACTOR,
regarding the schedule that had been agreed upon.
  
 When
the delay is due to causes attributable to the CONTRACTOR, the cost adjustment will proceed exclusively for the incomplete work according to the schedule that had been agreed upon.

 
 The base indices that will serve for calculating the cost
adjustments in the Contract will be those that correspond to the date of the ceremony for submission and opening of proposals.
  

The original prices of the inputs shall be the prevailing prices at the time the proposals are submitted and opened, and may not be
modified or replaced by any variation that may occur between the date they are submitted and the last day of the adjustment month.
  

II.The cost increases or decreases of the inputs will be calculated based upon the Producer Price Indices for
Services that the Bank of Mexico publishes.
  
 When the
indices that the CONTRACTOR and PEP require are not found among those published by the Bank of Mexico, PEP will proceed to calculate them according to the prices that it investigates, using the guidelines and methodology issued
by the Bank of Mexico.
  
 In the specific case of labour,
the variation corresponding to the minimum wage of the corresponding Region will be used as the index, which is published by the National Minimum Wage Commission in the Official Journal of the Federation.

 
 III.The original prices of the Contract will
remain fixed until the completion of the contracted work. The adjustment will be applied exclusively to the direct costs, holding the indirect costs and original earnings constant during the performance of the Contract. The financing cost will be
subject to variations in the interest rate that the CONTRACTOR has considered in it its proposal; and
  

IV.All other guidelines that the Ministry of the Civil Service may issue in this regard.

 
 Review of the cost adjustments will be monthly, where the parties agree that the
authorized factors will remain fixed during this period. For calculation of the factor that will prevail during the monthly period, the indices corresponding to the calendar month are considered, for the month in which the validity of the factor
begins.
  
 Calculation of the cost adjustments will be subject to the
provisions of Section II of CHAPTER FIVE from the Regulations of the Law of Public Works and Related Services.
  
 When the cost adjustment moves upwards, the CONTRACTOR will be the one to initiate it. If it is downwards, PEP will be the one to do this.

 
 Within sixty (60) calendar days following the receipt of the request, PEP
will issue the applicable decision in writing. The authorization of the cost adjustment shall be made through the official decision document that agrees to the corresponding increase or decrease.

  
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		 	 The payment of the cost adjustments will be made on the estimates following the month in which the granted adjustment has been
authorized.
  
 The procedure used for updating prices consists of calculating
the sum of the terms formed by each of the proportions or incidents (expressed in decimals) in which the respective inputs take part, multiplied by the quotient formed by the relative current and prior inputs corresponding to the dates that
determine the update period. The cost adjustment procedure in local currency may not be modified during the contract term.
  
 The above procedure can be expressed in the following equation:
  

 

  
  

 

							
		 		 	Where:
				
		 		 	Pa =	  	Updated sum price.
		 		 	Po =	  	Contractual sum price that is to be updated.
		 		 	S =	  	Sum of the “n” terms.
		 		 	Zm =	  	Proportion or incident in which the input “m” takes part in the direct cost of the work.
		 		 	INm =	  	Is the relative cost input on the update for the input “m”
		 		 	IOm =	  	Is the relative cost input on the proposal submission and opening date.
		 		 	m =	  	Number of inputs that can go from 1 to “n”.
		 		 	Ffm =	  	Modified Financing Factor.
		 		 	Fo =	  	Original Financing Factor as a fraction.
		 		 	Ia =	  	Updated Interest Rate as a fraction.
		 		 	Io =	  	Original Interest Rate as a fraction.

  

			
		 	 The payment of the cost adjustments and financing cost will be done in the estimates following the month on which the granted adjustment
has been authorized, by applying to the amount of the aforementioned estimates the detailed increase corresponding to said factors for each type of adjustment. The latest adjustments that have been authorized shall be applied.

 
 DOLLARS:

 
 The adjustment of the costs that make up the agreed unit prices in dollars, which
take part in the total direct cost, will be done according to the express terms of article 33 section VI of the Law of Public Works and Related Services and article 153A of its Regulations.

 
 Review of the costs for the portion offered in Dollars shall be done through the
following procedure:
  
 I.The
adjustments will be calculated from the date on which the increase or decrease to the established index has taken place, with respect to the incomplete work, according to the execution schedule that had been agreed upon in the Contract, or in the
event that there is a delay not attributable to the CONTRACTOR, with respect to the schedule that had been agreed upon.
  

When the delay is due to causes attributable to the CONTRACTOR, the cost adjustment will proceed exclusively for the incomplete
work, according to the schedule that had been agreed upon.
  
 The date that will serve as a basis for calculating the cost adjustments for the dollar portion, will be the date corresponding to the proposal submission and opening
ceremony.

  
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		 	 The original prices in dollars shall be the prevailing prices at the time of the proposal submission and opening,
and may not be modified or replaced by any variation that occurs between their submission date and the last day of the adjustment period.
  

Review of the cost adjustments will be monthly
  

II.The increase or decrease in costs of inputs will be calculated for inputs other than foreign labour upon the
basis of the Producer Price Index PCUOMFG-OMFG, while foreign labour will be based upon the Average Weekly Earnings of Production Workers CES0500000030, both published by the Bureau of Labor Statistics of the US Department of Labor. For national
inputs other than labour, they will be based upon the Producer Price Index with Services excluding petroleum SP6, and for labour, the minimum wage published by the National Minimum Wage Commission in the Official Journal of the Federation of the
corresponding region, as well as the average monthly exchange rates for meeting obligations in foreign currency published by the Bank of Mexico.
  

III.The original prices of the Contract will remain fixed until the completion of the contracted work. The
adjustment will apply exclusively to the direct costs offered in dollars, with the excess cost factor remaining constant, and
  

IV.To all other guidelines that the Ministry of the Civil Service issues for this purpose.

 
 Within sixty (60) calendar days following the receipt of the request, PEP
will issue the applicable decision in writing. The authorization of the cost adjustment shall be made through the official decision document that agrees to the corresponding increase or decrease.

 
 When the cost adjustment moves upwards, the CONTRACTOR will be the one to
initiate it. If it is downwards, PEP will be the one to do this.
  

The payment of the cost adjustments will be made on the estimates following the month on which the granted adjustment has been authorized.

 
 The formalization of the cost adjustment shall be done through the official decision
letter that agrees upon the corresponding increase or decrease. Consequently, no agreement will be required.
  
 The cost adjustment procedure in Dollars may not be modified during the validity of the Contract.
  

The above procedure can be expressed in the following equation:
  

 

  

							
		 		 	 Where:
  
	 	
		 		 	 XD1 + XD2 + ZMN1 + ZMN2 = 1
  

		 		 	Fa = Update factor.
		 	  
 Foreign inputs offered in
Dollars

		 		 	  
 XD1 =
	 	  
 Proportion or incident by which the total of the foreign inputs
takes part in the direct cost of the work.

  
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 IaD1 =
	 	  
 The Producer Price Index PCUOMFG-OFMG that is published by the
Bureau of Labor Statistics on the update for the foreign inputs.

		 		 	  
 IoD1 =
	 	  
 The Producer Price Index PCUOMFG-OFMG that is published by the
Bureau of Labor Statistics on the proposal submission and opening date for foreign inputs.

		 		 	  
 XD2 =
	 	  
 Proportion or incident by which the total of the foreign inputs
takes part in the direct cost of the work quoted in dollars.

		 		 	  
 IaD2 =
	 	  
 The Average Weekly Earnings of Production Workers CES0500000030
that is published by the Bureau of Labor Statistics on the update for the foreign labour quoted in dollars.

		 		 	  
 IoD2 =
	 	  
 The Average Weekly Earnings of Production Workers CES0500000030
that is published by the Bureau of Labor Statistics on the proposal submission and opening date for the foreign labour quoted in dollars.

		 	  
 National inputs offered in
Dollars

		 		 	  
 ZMN1 =
	 	  
 Proportion or incidence by which the total national inputs, other
than labour, take part in the direct cost of the work quoted in dollars.

		 		 	  
 IaMN1 =
	 	  
 Is the National Producer Price Index with services excluding
petroleum SP6, which the Bank of Mexico publishes on the update for the national inputs, other than labour, in the direct cost of the work offered in dollars.

		 		 	  
 IoMN1 =
	 	  
 Is the National Producer Price Index with services excluding
petroleum SP6, which the Bank of Mexico publishes on the proposal submission and opening date for the national inputs, other than labour, in the direct cost of the work offered in dollars.

		 		 	  
 ZMN2 =
	 	  
 Proportion or incidence by which the total national labour, takes
part in the direct cost of the work quoted in dollars.

		 		 	  
 IaMN2 =
	 	  
 Is the minimum wage of the Region that corresponds to the
performance of the work, which is published by the National Minimum Wage Commission in the Official Journal on the update for national labour in the direct cost of the work offered in dollars.

		 		 	  
 IaMN2 =
	 	  
 Is the minimum wage of the Region that corresponds to the
performance of the work, which is published by the National Minimum Wage Commission in the Official Journal on the proposal submission and opening date for national labour in the direct cost of the work offered in dollars.

		 		 	  
 TCaMN =
	 	  
 The average exchange rate for settling obligations in foreign
currency from the month of the update, which is obtained from the following webpage: www.banxico.org.mx on the following path: Exchange Rate Market > Exchange Rates > Average exchange rates of the period > Publication date in the Official
Journal of the Federation.

		 		 	  
 TCoMN =
	 	  
 The average exchange rate for settling obligations in foreign
currency on the month of the proposal submission and opening.

		 	  
 The maximum overall cumulative adjustment percentage
that may be granted for the portion offered in dollars is 3% annualized. In other words, no more than 3% may be granted for each period of twelve (12) months or its monthly equivalent.

  
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		 	 The lower of the following will be applied: the result produced by the formula, and the result from multiplying the number of months
included between the proposal submission and opening date and the update month by 0.25%, divided by 100.
  
 (0.25% x N) / 100; where N = Number of months counted from the month following that of the proposal submission and opening date, and up to and including the update month.

 
 NOTES:

 
 If during the validity of the contract, the agreed indices in the specific equation
were to no longer be published, the parties will use those that the Bank of Mexico and the U.S. Bureau of Labor Statistics establish as equivalent for national and foreign inputs respectively, provided that more advantageous conditions are not
granted by this substitution with respect to the originally agreed indices.
  

In the event that with the use of the equivalent indices it is detected that more advantageous conditions are being granted to the CONTRACTOR, the
last authorized factor will be granted, which will prevail for the rest of the contract.
  
 None of the cost adjustment procedures may be modified during the term of the Contract.

	  
 NINE
	 	  
 CONTRACTUAL PENALTIES.

 
 The parties to this contract agree that in the event there are delays in the
performance of the work due to causes attributable to the CONTRACTOR, PEP will apply the following contractual penalties:
  

 

							
		 		 	1.0	  	FOR EACH DAY OF DELAY
				
		 		 	1.1	  	If during the well intervention, the CONTRACTOR is delayed in the period established for this, in accordance with Attachment “B” of the contract, it will be subject to
the application of a contractual penalty consisting of the amount equivalent to one percent (1%) of the cost of the intervention that it is carrying out, specified in Attachment “DE-10” of this contract, for each day of delay or prorated
fraction of delay.
				
		 		 	2.0	  	Penalty for equipment delays and/or shutdowns
				
		 		 	2.1	  	Delay in transportation. In the case of transportation services of the repair equipment, when the Contractor does not arrive at the assigned location within the time
agreed according to items 1.2 to 1.5 of ATTACHMENT “B” due to causes attributable to the same, PEP will penalize the CONTRACTOR US$ 350.00 for each hour of delay or fraction of standby time.
				
		 		 	2.2	  	Delay of Operations. If the CONTRACTOR does not commence operations at the scheduled time due to causes attributable to the same, it will be penalized US$ 350.00 for each
hour or fraction of delay.
				
		 		 	2.3	  	Shutdown of Contractor Equipment. In the event that the operation of the well repair equipment is suspended due to causes attributable to the CONTRACTOR, it will be
penalized US$ 350.00 for each hour or fraction of shutdown of the equipment when it operates on a daily rate.
				
		 		 	2.4	  	Shutdown of PEP Equipment. In the event that the operation of the well repair equipment owned by PEP is suspended due to causes attributable to the CONTRACTOR, it will be
penalized $350.00 for each hour or fraction of the equipment shutdown.

  
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		 	 The penalties will be applied on the estimates that the CONTRACTOR generates. If it is not possible to apply the established
penalties in any of the above cases, the CONTRACTOR is under obligation to deliver to PEP the amount corresponding to said penalties through a certified cheque, otherwise the performance bond will be exercised.

 
 If PEP decides to demand compliance with this contract in accordance with
article 1846 of the Federal Civil Code, applicable by extension, the CONTRACTOR shall submit the express consent from the surety institution regarding the guarantees of this contract, where it indicates the period granted to comply with the
obligation.
  
 The contractual penalties established in this clause may in no
case be greater than the amount of the performance bond in their entirety.
  

The application of said penalties will not take place when the delay or interruption comes from an act of God or force majeure event or any other cause
not attributable to the CONTRACTOR.
  
 The penalties for delay in the
performance of the work agreed to in this clause, or any other contractual penalty that must be applied in relation to this contract, will be applied against the estimates that the CONTRACTOR submits to PEP and that PEP pays to
the company MERCO INGENIERIA INDUSTRIAL S.A. DE C.V., by virtue of its appointment as Common Representative, regardless of which of the parties is responsible for the delay in the performance of the work and/or any other breach of
contract, according to the parts of the works that each company is under obligation to perform as referred to in clause one of this contract, with the understanding that PEP will not be responsible for the manner in which the Common
Representative applies the penalties and/or distributes the payments that it receives as a result of this contract.

		
	ELEVEN	 	PERFORMANCE PERIOD. The CONTRACTOR undertakes to perform the work hereunder in 730 calendar days from September 26, 2008 and to complete it no
later than September 25, 2010, in accordance with the stipulations agreed to in the contract and its attachments.
		
	TWELVE	 	TERM. This contract will be valid from the date of its signing and until the legal act is formalized through which the rights and obligations of the parties are ended in
their entirety.
		
	THIRTEEN	 	 EXTENSION TO THE COMPLETION DATE. The completion date indicated in the clause named “PERFORMANCE PERIOD”, may be
extended, without the performance period of the contract being modified in this regard, by adjusting the execution schedule, only when the following events occur:
  

(a) If any duly proven act of God or force majeure event occurs, the completion date of the performance period will be extended by a period of time equal
to that of the suspension caused by the same, provided an annotation is made in the log and the CONTRACTOR submits its extension request in writing to PEP along with the corresponding support documentation, which shall be done prior to
the notice of completion of the work. If said request is not submitted by the CONTRACTOR and said annotation is not performed, no extension will be granted. PEP shall give its decision regarding the extension request within 30 (thirty)
calendar days following the submission of the request. If it does not do so, the request will be considered accepted. In the event the extension is accepted, an agreement in writing shall be formalized, with the updated execution schedule being
established;
  
 (b) If the work or any part thereof cannot move forward or
are delayed due to any act or omission of PEP or another CONTRACTOR working on the site, without involving the CONTRACTOR or any of its subcontractors, the completion date of the execution schedule will be extended, for the
period of time whereby the work or part thereof is thus suspended, provided an annotation is made on the log and the CONTRACTOR submits its extension request in writing to PEP along with the corresponding support documentation, within
the performance period. If

  
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		 	 said request is not submitted by the CONTRACTOR and said annotation is not performed, no extension will be granted. In the event that it
is proven that the event is attributable to PEP, it shall give its decision regarding the extension request within 30 (thirty) calendar days following the submission of the request. If it does not do so, the request will be considered accepted. In
the event the extension is accepted, this shall be formalized through the corresponding support certificate; and
  
 (c) In the event that PEP orders the suspension of work, it shall proceed in accordance with the clause named “CONTRACT SUSPENSION”.

		
	FOURTEEN	 	 WORK FOR ADDITIONAL AMOUNTS OR FOR ITEMS NOT ESTABLISHED IN THE ITEM CATALOGUE. If during the contract period, PEP
requires the performance of additional amounts of work or work for items not established in the item catalogue, or the CONTRACTOR realizes the need to carry them out, the latter may only perform said work once it has written authorization
or through an annotation on the log by the site supervisor, except in cases of an emergency where it is not possible to wait for his authorization.
  

In the event that the scenarios established in this clause were to occur, the CONTRACTOR, once the work is performed, may prepare its estimates and
submit them to the site supervisor on the following estimate. PEP may authorize the payment of the estimates for the work performed.
  

In the case of additional amounts, these will be paid at the unit prices originally agreed to in this contract. In the case of items not established in
the item catalogue, their unit prices shall be reconciled and authorized prior to their payment, pursuant to the provisions of articles 76, 77, 78 and other applicable articles of the Regulations of the Law of Public Works and Related
Services.

		
	FIFTEEN	 	CONTRACT AMENDMENTS. The amount and/or period of the contract may be amended for duly proven reasons, and through an agreement in writing, under the terms of article 59 of
the Law of Public Works and Related Services and articles 69 and 80 of its Regulations.
		
	SIXTEEN	 	 ACT OF GOD OR FORCE MAJEURE. An act of God or force majeure are understood to be natural phenomena or acts committed by persons
that are beyond the control of either of the parties and that take place without there being fault or negligence on the part of the parties. These events are unavoidable, unforeseeable, or cannot be avoided even when they are foreseen, which prevent
the affected party from performing its obligations in accordance with this contract. Among others, the following events are considered to be acts of God or force majeure: strikes and labour disturbances (provided they have not given rise or
contributed to them), riots, quarantines, epidemics, wars (declared or not), blockades, civil disturbances, insurrections, fires (when they have not given rise or contributed to them) and storms.

 
 In the event of suspension of work arising from an act of God or force majeure, the
provisions of the clauses named “EXTENSION TO THE COMPLETION DATE” and “CONTRACT SUSPENSION” will be observed.
  

In the event of early termination of work arising from an act of God or force majeure, the provisions of the clause named “EARLY TERMINATION OF
THE CONTRACT” of this contract will be observed.

		
	SEVENTEEN	 	 CONTRACT PERFORMANCE BOND AND WARRANTY FOR LATENT DEFECTS.

 
 CONTRACT PERFORMANCE BOND.

 
 The CONTRACTOR, in order to guarantee compliance with the obligations arising
from this contract, delivered to PEP prior to signing of the contract, a bond policy for 10% (ten percent) of the contract amount, issued by an authorized surety institution, in favour of PEP.

  
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		 	The CONTRACTOR expressly states:
			
		 	(A)	  	Its intent to waive the right for compensation as granted by the applicable substantive legislation, in the event there are credits in its favour owed by PEP. It therefore
gives its express consent so that the granted guarantee may take effect in the event of a breach of the obligations arising from this contract, as well as any other balance in favour of PEP.
			
		 	(B)	  	Its consent to the bond being paid independently of any type of appeal being filed to the administrative or non-judicial courts.
			
		 	(C)	  	Its consent for the bond that guarantees contract performance to remain in force during the substantiation of all judicial or arbitration proceedings and the respective appeals that
are filed in relation to the contract, until the final decision is given that orders execution by the governing authority or court.
			
		 	(D)	  	Its consent to be bound jointly with its surety in the case of a claim, and based upon the power that it is granted by article 118 bis of the Federal Law of Surety Institutions,
that the exception of judicial consideration will only be justified if a sealed copy of the lawsuit is produced. In this lawsuit it must state that by exercising the principal action, the debtor indicates this contract as being the document for the
basis of this action, and that there is a relationship between the benefits claimed and the facts that support the non-admissibility of the claim. It expressly waives any other meaning that may be given to the exception of judicial consideration or
enforceability of the bond policy that is subject to a judicial or administrative dispute between the parties of this contract. Likewise, in this scenario, the surety institution will enter the payment of the applicable amount on the business day
immediately following the expiry of the thirty-day period granted by article 93 of the Federal Law of Surety Institutions to decide on the admissibility of the claim.
			
		 	(E)	  	Its acceptance of the performance bond staying in force until the guaranteed obligations have been fulfilled in their entirety to the satisfaction of PEP, with the
understanding that the agreement for its release shall be granted through a document signed by PEP.
			
		 	(F)	  	Its consent to the surety settling 50% of the amount guaranteed in the bond to PEP in the event that it does not submit the warranty on defects, latent defects and any other
liability under the terms of the provisions of the Law of Public Works and Related Services and of this contract.
			
		 	(G)	  	 Its consent to the claim that is submitted to the surety due to breach of contract, being duly integrated with the following
documentation:
  
 1. Written claim to the surety institution.

 
 2. Copy of the bond policy and its amending documents, where applicable.

 
 3. Copy of the guaranteed contract and its attachments, where applicable.

 
 4. Copy of the notification document to the debtor for its breach of
contract.
  
 5. Quantification of the breach of
contract.

			
		 	(H)	  	Its consent to the surety paying the maximum guaranteed amount to PEP in the event that the work hereunder is not usable or available by PEP, notwithstanding the fact
the corresponding progress certificate had been issued. This is with the understanding that any exception arising from the investment and/or partial or total application of the advance payment and/or payment of estimates will not be valid for the
purpose of determining the enforceability of the entire amount guaranteed in the bond. This is because, according to the purpose of this contract, the obligation of investing and/or applying the advance payment and the payment of estimates is
indivisible, since its purpose is a performance of work that can be useful or available to PEP only when it is fulfilled in its entirety. Consequently, any application of funds and/or partial or full investment of the advance payment and/or
payment of estimates received by the CONTRACTOR that does not bring about useful and available work to PEP in accordance with the purpose of this contract, will be ineffective for establishing any exception that attempts to lessen the
enforceability of the total guaranteed amount.

  
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		 	(I)	  	Its consent to remove and take away the equipment or goods hereunder, in the event they are not useable or exploitable, when so required by PEP. 
		
		 	 In the event of any modification to the amount or period agreed to in this contract and/or its attachments, the
CONTRACTOR undertakes to deliver to PEP within fifteen (15) calendar days following the formalization of the respective amending agreement, the amending document for the originally granted guarantee, according to the terms
established in this contract, where the obligations of this contract and the corresponding agreement are guaranteed. In the event that the CONTRACTOR does not comply with this delivery, PEP may decide to enforce the administrative
rescission of the contract. The amending document shall contain the stipulation that it is joint, several and inseparable from the bond initially submitted by the CONTRACTOR.

 
 Provided the contract is being complied with under the agreed terms, the guarantee
shall be replaced by another equivalent to 10% (ten percent) of the amount of the work not yet performed, including amounts related to cost adjustments and agreements in said sum, if any, except for what is provided for in the second paragraph of
article 61 of the Regulations of the Law of Public Works and Related Services, which will be submitted within 15 (fifteen) calendar days from the date on which the CONTRACTOR is notified in writing of the authorized investment.

 
 WARRANTY ON LATENT DEFECTS.

 
 Once the work is completed, or accepted (where applicable) under the terms of article
138 of the Regulations of the Law of Public Works and Related Services, the CONTRACTOR will be liable for the defects arising therefrom, from latent defects and any other liability that it has incurred, under the terms indicated in this
contract and in the applicable legislation.
  
 The work will be guaranteed
for a period of 12 (twelve) months for compliance with the obligations referred to in the above paragraph. Therefore, prior to accepting the work, the CONTRACTOR, at its own choosing, shall create a bond for the equivalent of 10% (ten
percent) of the total exercised amount of the work; submit a standby letter of credit for the equivalent of 5% (five percent) of the total exercised amount of the work, or provide liquid funds for an amount equivalent to 5% (five percent) of the
same amount in trusts especially created for this purpose. This warranty will be released once the twelve months have elapsed, starting from the date of the physical certificate of acceptance of the work, provided that no liability has arisen
against the CONTRACTOR during that period.
  
 When the quality
warranty is created through a bond policy, it shall be issued by an authorized surety institution, and shall be issued in strict adherence to the Format DI-4 presented in the bidding guidelines of this contract.

 
 When the quality warranty is created through a standby letter of credit, it shall be
confirmed or issued by a banking institution authorized to operate in Mexico, and shall be issued in strict adherence to the quality warrantee format issued by the Risks and Insurance Management of this contract.

 
 When the warranty is created through the contribution of liquid funds in a trust, the
latter shall be managed by a trust institution authorized to operate in the Mexican Republic. The Trust shall include the following aspects: it shall be irrevocable; shall be made out to PEP as the beneficiary; and the resources under the
trust shall be invested in fixed income instruments.
  
 If the warranty on
defects, latent defects in the work and any other liability was established through a bond, it will be released in accordance with the provisions of the bond policy that is granted under the terms of article 68 of the Regulations of the Law of
Public Works and Related Services.

  
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		 	 The CONTRACTOR, where applicable, may withdraw its contributions into the trust and the respective earnings, after twelve months
have passed from the date of acceptance of the work. The bond or letter of credit will be automatically cancelled in the same period of time, as the case may be. In the event that an irrevocable letter of credit has been issued, the
CONTRACTOR will proceed with its immediate cancellation.
  
 The rights
of PEP will be preserved to demand the payment of amounts that are not paid from the compensation that in its opinion are applicable, once the guarantees are exercised according to this clause.

 
 If prior to the execution of the applicable guarantees, the CONTRACTOR states
its desire to pay the guaranteed amount directly, said payment shall be received by PEP. In this case, the corresponding guarantees shall be released.

		
	EIGHTEEN	 	 INSURANCE POLICIES. The CONTRACTOR shall have insurance policies for Construction All Risks and/or Assembly during the
physical execution of the works (including, where applicable, performance tests), issued by an insurance company legally authorized for this purpose by the United Mexican States. It will deliver to PEP, prior to the start date of the physical
execution of the works, a copy and original of the documents that prove payment of the premiums for comparison and to be later returned.
  

In the case of any accident that occurs during the term of the policy, the Contractor will be solely responsible for filing any claim to its insurers,
completely documented. Any and all deductibles applicable to the aforementioned insurance policy will invariably be assumed by the Contractor.
  

If the aforementioned insurance policies are not delivered to PEP the day prior to the start date of the physical execution of the works at the
very latest, PEP will be authorized to not allow the Contractor to execute the works hereunder, and this will not release the Contractor from its full responsibility as far as the Execution Schedule originally agreed to for the performance of
the contract purpose.
  
 In the case of any amendment to this contract that
affects the insurance policies, the Contractor shall deliver the respective policy or endorsement prior to the formalization of the amendment.
  

The Contractor will be solely responsible for taking out the insurance limits, terms, conditions and scope of the coverage, as well as the deductibles and
exclusions, which it deems appropriate based upon its risk analyses. Therefore, PEP will not be responsible for the sufficiency or insufficiency of the insurance conditions that the insurance policy may have.

 
 OTHER INSURANCE

 
 The Contractor will be solely responsible for having any other insurance policy at
its cost, which it deems necessary according to the nature and complexity of the contract scope.

		
	NINETEEN	 	 AUTHORIZED REPRESENTATIVES. PEP, prior to commencement of the work, will designate the site supervisor, who will perform the
functions established in article 53 of the Law of Public Works and Related Services, and article 84 of its Regulations. Through this site supervisor, it will give the CONTRACTOR instructions in writing that it deems pertinent related to its
performance, in the agreed manner and with the modifications that PEP may order.
  
 Supervision is the technical assistance provided by the site supervisor’s office, with the functions that are indicated in this regard under article 86 of the Regulations of the Law of Public Works
and Related Services, independently of those that may be agreed to in the supervision contract, where applicable. When supervision is performed by third parties, the site supervisor may install this after commencement of the
work.

  
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		 	 For its part, the CONTRACTOR is under obligation to have a construction superintendent for the entire time the work is performed,
who shall know the project and the terms of reference and have the power to hear and receive all types of notifications related to the work, even those of a personal nature. He will also have sufficient powers to make decisions in all that relates
to contract compliance, under the terms established in article 87 of the Regulations of the Law of Public Works and Related Services.
  

Before commencing work, the CONTRACTOR is under obligation to designate and maintain during the term of the contract, a manager over industrial
safety, occupational health and environmental protection, as well as a coordinator. They shall know the project, as well as the industrial safety, occupational health and environmental protection standards and procedures established by PEP,
as well as the provisions in those areas contained in Attachment “S” “Safety, occupational health and environmental protection obligations of the Suppliers or Contractors that
perform activities at the facilities of PEMEX Exploración y Producción”.
  

The construction superintendent of the CONTRACTOR, as referred to in this clause, may not act as a manager over industrial safety, occupational
health and environmental protection of the CONTRACTOR.
  
 At any time
and with sufficient grounds, PEP may request that any of the CONTRACTOR’S representatives be changed, and the latter is under obligation to designate another person who meets the corresponding requirements.

		
	TWENTY	 	 SUBCONTRACTING. In the event that the CONTRACTOR needs to subcontract any part of the work or when it purchases materials
or equipment that include their installation on the site, which have not been included in its proposal as work to be subcontracted, it shall request authorization from PEP 05 (FIVE) calendar days in advance to the scheduled commencement of
the work it intends to subcontract. It shall indicate: (i) the name of the possible subcontractor in question; (ii) the part of the work to be subcontracted; and (iii) sufficient information so that PEP is able to evaluate the technical
capability of the possible subcontractor. Likewise, PEP will be entitled to request from the CONTRACTOR any information in addition to that delivered by the latter, in order to authorize the subcontracting in question. PEP will
have a period of 05 (FIVE) calendar days from the date of receipt of the notification, or from the date of receipt of the additional information requested, to accept or reject the execution of said contract in writing. In the event that the
aforementioned period has passed without PEP having accepted or rejected the request from the CONTRACTOR in writing, it will be deemed not accepted.
  

In the event that the CONTRACTOR wishes to replace a subcontractor, it shall request authorization from PEP under the terms indicated in
this clause. This will not be grounds for increasing the agreed prices or the execution period.
  
 The parties agree that the CONTRACTOR will be strictly prohibited from subcontracting the work hereunder in its entirety.

 
 Notwithstanding any subcontracting, the CONTRACTOR is and will be solely
liable for the quality and the proper and timely execution of the work in accordance with this contract. The subcontractors will not have any action or right to exercise against PEP whatsoever.

		
	TWENTY-ONE	 	CONTRACTOR RELATIONS WITH ITS WORKERS. As employer and manager of the personnel that it uses in order to perform the work hereunder, the CONTRACTOR will be solely
liable for the obligations arising from the legal provisions and other labour and social security legislation towards its workers. For this reason, the CONTRACTOR agrees to be liable for all claims that its workers or third parties may file
against it or against PEP, including personnel from its authorized subcontractors who take part in the contracted work with or for PEP. In the event that PEP is involved, it will be under obligation to hold PEP harmless
from any trial or liability arising from the performance of the work hereunder. It will likewise compensate PEP whenever the latter may so request in writing, for any amount that it should pay in this regard, including the payment of
lawyers’ fees.

  
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	TWENTY-TWO	 	 LIABILITY OF THE PARTIES. The CONTRACTOR will be solely liable for the performance of the work and will be subject to all
laws, regulations and legislation of the governing authorities in the area of construction, safety, use of public roads, ecological and environmental protection that govern federal, state or municipal boundaries. It will also be subject to the
safety and health provisions of PEP for carrying out the work established in Attachment “S” “Safety, occupational health and environmental protection obligations of the Suppliers or Contractors that perform
activities at the facilities of PEMEX Exploración y Producción” of this contract and to the instructions given by PEP in this regard, for which it undertakes to know the respective standards and regulations that apply
according to the work hereunder.
  
 For work that has not been performed
according to the stipulations of this contract or to the orders from PEP that are given in writing, PEP will order their immediate demolition, repair or replacement with additional work that may be necessary, which the
CONTRACTOR will complete at its own expense, without having any right to additional compensation whatsoever. In this case, PEP, if it deems appropriate, may order the total or partial suspension of contracted work, as long as said
additional work is not performed. This will not be grounds for increasing the amount or time period indicated in this contract for its completion.
  

If the CONTRACTOR performs work for a value higher than what has been contracted, independently of the liability that it incurs for performing
excess work, will not be entitled to claim any payment whatsoever, nor any modification of the period for performing the work.
  

The parties acknowledge that liability for breach of their contractual obligations may not exceed the total amount of the contract, without prejudice to
the application of late penalties established in this instrument.
  
 In cases
of fire, explosion, surface rupture or loss of control of any well, PEP will coordinate the operations until the well is completely under control, and the CONTRACTOR is under obligation to assist PEP in the control operations, and will
provide the equipment, materials and services included and required to control the well, and where applicable, for drilling a relief well or wells. The expenses and costs arising from the above will be borne by PEP.

 
 PEP will be solely liable for environmental damages arising as a result of the
activities related to hydrocarbons under the terms of article 3 of the Regulations of the Regulatory Law from Article 27 of the Constitution in the Area of Petroleum. Therefore, in no case will the CONTRACTOR be deemed liable for the loss of
hydrocarbons, for general production losses or for damages caused to third parties or the environment as a result of PEP’S own operation. Consequently, it will release the CONTRACTOR from any obligation for any claims arising from
seepage or any other uncontrolled flow of oil, gas, water or any other substance that comes from the subsoil.
  
 PEP will be responsible for the general administration of the project, as well as for providing the basic drilling schedules, designing and defining the seating depth of the casing pipe, deciding
upon the core cutting intervals, defining the production equipment, selecting the discontinuous intervals, defining the production testing and generally selecting and requesting the performance of any of the optional work from the CONTRACTOR,
and where applicable defining the capping of abandoned wells.
  
 The
CONTRACTOR will be liable for any contamination, including its control and removal, that originates on the ground surface or in the sea due to leaks, spills or dumping of gas, fuels, lubricants, engine oils, drilling fluids, completion and
drilling cuts, pipe grease, solvents, ballasts, sediment, garbage, sewage or any other liquid or solid of any nature in the possession and control of the CONTRACTOR.

 
 The CONTRACTOR will not be liable for damage or a loss to any formation,
strata or reserve under the surface, with the understanding that the CONTRACTOR is under the obligation that

  
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		 	 when performing the work, it will use the best available international practices, the proper, advanced and safe technologies, and the
fluids used will meet the appropriate physicochemical, geological and filtering properties.
  
 The CONTRACTOR pledges that the handling, use and disposal of any substance, waste, particle or contaminating material, including any form of energy, will be carried out in accordance with the
GENERAL LAW FOR COMPLETE WASTE PREVENTION AND MANAGEMENT and other applicable provisions.
  
 Notwithstanding the foregoing, the damages that either of the parties may cause to the other and/or third parties due to their negligence, misconduct or bad faith, with be borne by the party that causes
them. When said damages arise without negligence, misconduct or bad faith from either of the parties, each of them will bear their own costs without a right to compensation.

 
 It is agreed that under no circumstance will the parties be liable to each other for
indirect damages of any nature, punitive damages or non-immediate consequential damages, including those arising from fire, explosion, surface rupture or loss of control of any well.

 
 When one of the parties causes damage and the affected party demands the repair of
said damage from the party that did not cause it, and this has been given by a judicial or administrative decision, the party that caused it shall pay the amounts that the defendant may have incurred as a result of the actions, complaints, lawsuits,
claims, trials, proceedings, taxes, costs and direct and immediate expenses, including lawyers’ fees and legal costs, regulated at the corresponding fee.
  

The risks, conservation and cleanliness of the work up to the time of its delivery will be the responsibility of the CONTRACTOR, as well as
compliance with what is stated in articles 90 and 91 of the Regulations of the Law of Public Works and Related Services.

		
	TWENTY-THREE	 	 ACCEPTANCE OF THE WORK. The acceptance of the work will be done in accordance with article 64 of the Law of Public Works and
Related Services, and articles 135, 136, 137 and 138 of its Regulations. Acceptance of the work will be recorded in the corresponding certificate.
  

Once the work hereunder has been concluded, the complete acceptance of said work will proceed. For the purposes of the foregoing, the CONTRACTOR
will notify PEP in writing or through a record that is made on the log, of the full completion of the work, indicating that all of this work is completed in accordance with the terms of reference of this contract. Within fifteen (15) calendar
days following the date of receipt of the aforementioned notification, the resident service supervisor will verify that the work is properly concluded, and must prepare the corresponding support certificate.

 
 If during verification of the work, the site supervisor’s office observes
deficiencies in the performance and completion thereof, or decides that it has not been performed according to the contract terms of reference, it will request in writing that the CONTRACTOR repair or correct it, so that it may be performed
pursuant to the provisions established in this contract. In this scenario, the agreed verification period of the work in the contract may be extended for the period of time agreed upon by the parties to correct the deficiencies. The foregoing is
without prejudice to PEP deciding to rescind the contract.
  
 When
defects or latent defects appear within the year following the completion date that is established in the acceptance certificate, in the work performed or goods provided for executing the purpose of this contract, PEP will request their
immediate repair or replacement, which the CONTRACTOR will complete without any entitlement to compensation. If the CONTRACTOR should not attend to the requirements of PEP within the stipulated period, the latter may entrust the
repair or replacement to third parties or do it directly, under the terms of the applicable legal provisions, at the expense of the CONTRACTOR.

  
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		 	If the CONTRACTOR should not attend to the defects and latent defects in the work performed or goods provided for executing the purpose of this contract, at the order of
PEP within the requested period, PEP will exercise the warranty granted by the CONTRACTOR, for the period of 12 (twelve) months once the work is concluded, as referred to in the corresponding paragraph of the clause named
“CONTRACT PERFORMANCE BOND AND WARRANTY ON LATENT DEFECTS” of this contract.
		
	TWENTY-FOUR	 	SETTLEMENT AND CONTRACT COMPLETION. Having physically accepted the work, PEP through the site supervision office, and the CONTRACTOR, shall prepare the
settlement of the work within a term of 60 (sixty) calendar days, wherein credits in favour and against each of the parties will be recorded, describing the general item that gave rise to them and the resulting balance, under the terms of article 64
of the Law of Public Works and Related Services, and articles 139 to 143 of its Regulations. The document where the settlement of the work is recorded will form part of this document and shall at least contain the stipulations of article 141 of the
Regulations of the Law of Public Works and Related Services.
		
	TWENTY-FIVE	 	 CONTRACT SUSPENSION. PEP has the power to suspend temporarily, in whole or in part, the work contracted in any state in
which it is found, on justified grounds or of general interest, and may decide on the temporary nature of the suspension, which may not be extended or be indefinite, without this implying the termination of the contract. For this reason, PEP
will notify the CONTRACTOR, stating the causes bringing this about, the date it will start and the probable resumption of work, as well as the actions that it must consider with regard to personnel and construction equipment. In all cases of
suspension, the site supervisor’s office will prepare a support certificate that will contain at least what is indicated in article 117 of the Regulations of the Law of Public Works and Related Services.

 
 The completion date will be extended proportionately to the period that includes the
suspension, without modifying the agreed performance period. The deficient supply of materials and permanent installation equipment by the CONTRACTOR will not be grounds for suspending the work, when said supply is the responsibility of the
CONTRACTOR.
  
 When the suspension of work is decided due to causes
attributable to PEP, the CONTRACTOR may request the payment of non-recoverable expenses from the time of notification that terminates the suspension, provided these are reasonable, duly proven and related directly to this contract, as
stated in article 62 of the Law of Public Works and Related Services, and are generated during the suspension. These expenses will be limited to the provisions of article 116 of the Law of Public Works and Related Services.

 
 If during the validity of this contract there are suspensions of work, which periods
are reduced and difficult to quantify, the parties may agree that the periods be grouped on a monthly basis and formalized by signing a single support certificate, which will be prepared on the first day of the month following the month on which
these suspensions had taken place.
  
 When the suspensions arise from an act
of God or force majeure, there will be no liability whatsoever to the parties. They must only sign an agreement where it acknowledges the period of the suspension and the dates for restarting and ending the work, without modifying the execution
period established in the contract. Therefore, only the payment of non-recoverable expenses indicated in the second paragraph of article 119 of the Regulations of the Law of Public Works and Related Services will proceed.

 
 When the continuation of services is made impossible by the act of God or force
majeure, the CONTRACTOR may choose to not carry them out. In this scenario, it shall observe the provisions of the clause named “EARLY TERMINATION OF THE CONTRACT” of this agreement in principle.

		
	TWENTY-SIX	 	EARLY TERMINATION OF THE CONTRACT. PEP may terminate this contract early through a written notice given to the CONTRACTOR for this purpose, pursuant to the
terms of articles 60 and 62 of the Law of Public Works and Related Services and articles 120, 121, 122 and 123 of its Regulations.

  
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	TWENTY-SEVEN	 	ADMINISTRATIVE RESCISSION OF THE CONTRACT. PEP may rescind this contract administratively, in the event that the CONTRACTOR breaches its obligations in the
following cases:
			
		 	1).-	  	If the CONTRACTOR, due to causes attributable to it, does not commence the work hereunder within fifteen calendar days following the agreed date without just cause, pursuant
to the Law of Public Works and Related Services and its Regulations.
			
		 	2).-	  	If the CONTRACTOR interrupts the performance of work without just cause, or refuses to correct any part thereof, which had been detected as defective by
PEP.
			
		 	3).-	  	If the CONTRACTOR does not perform the work in accordance with the stipulations of this contract, or without just cause does not observe the orders given by the site
supervisor or by the supervisor.
			
		 	4).-	  	If the CONTRACTOR does not comply with the work orders due to a lack of materials, labour or construction equipment, and in the judgment of PEP it may hinder the
satisfactory completion of the work within the stipulated period or stage. This will not mean a delay in the performance of the work order, and will therefore not be considered a breach of this contract and grounds for its rescission, when the delay
takes place due to the lack of information with regard to plans, specifications and quality standards, physically turning over the work areas and the timely delivery of materials and permanent installation equipment, licenses, permits that
PEP must provide or furnish, as well as when PEP had ordered the suspension of the work.
			
		 	5).-	  	If the CONTRACTOR is declared to be under bankruptcy proceedings under the terms of the Bankruptcy Proceedings Law.
			
		 	6).-	  	If the CONTRACTOR subcontracts part of the work hereunder, without having the written authorization of PEP.
			
		 	7).-	  	If the CONTRACTOR assigns the collection rights arising from this contract, without the written authorization of PEP.
			
		 	8).-	  	If the CONTRACTOR does not provide the necessary means and information to PEP and the departments that have the power to intervene for the inspection, oversight and
supervision of the services.
			
		 	9).-	  	If the CONTRACTOR fails to keep the guarantees current during the execution time of the work, or in the event that other guarantees are required due to the amendments to the
contract (endorsements), these guarantees are not delivered, or when delivered they do not meet the conditions stipulated in the contract and the applicable standards.
			
		 	10).-	  	The disclosure of confidential information to third parties that PEP has provided to the CONTRACTOR.
			
		 	11).-	  	The violation of professional secrecy or disclosure of confidential information to third parties that PEP has provided to the CONTRACTOR.
			
		 	12).-	  	If the CONTRACTOR does not meet any of its obligations established in the clause named “Financing Sources”.
			
		 	13).-	  	Due to a repeat breach of any of the obligations contained in the “S” Attachment. For the purposes of this cause for rescission, a repeat breach will be understood as lack
of compliance by two or more events, or two or more times for the same event, whether or not it is a question of obligations referring to time periods.

  
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		 	14).-	  	When as a result of carrying out the contract, the CONTRACTOR causes the death of one or more people, due to its lack of foresight, negligence or failure to comply with any
of the requirements or obligations established in the “S” Attachment, or due to a breach of other contract obligations or provisions in the area of Environmental Safety and Health.
			
		 	15).-	  	If as a result of the performance of the work, the death of a worker of the CONTRACTOR or PEP is caused, or of a third party due to the causes attributable to the
CONTRACTOR due to its lack of foresight, negligence or failure to comply with the contract obligations or the safety provisions.
			
		 	16).-	  	When the CONTRACTOR causes an accident by failing to comply with the general requirements stated in the following points: II.9; II.10 or II.11.5 of Attachment
“S”.
			
		 	17).-	  	When carrying out the contract, the CONTRACTOR commits environmental crimes by failing to comply with any of the requirements of the “S” attachment, other contract
obligations or provisions in the area of Environmental Safety and Health.
			
		 	18).-	  	If the CONTRACTOR, being a foreigner, invokes the protection of its government in relation to the contract.
			
		 	19).-	  	If the CONTRACTOR’S workers call a strike or stoppage of work, because it has not properly paid its wages and other labour benefits.
			
		 	20).-	  	For any illegal conduct attributable to the workers of the CONTRACTOR that damage the assets of PEP, without prejudice to a decision from the Public Ministry of the
Federation to a report filed by PEP for these acts.
			
		 	21).-	  	In general, due to the CONTRACTOR’S breach of any of the obligations arising from this contract and its attachments, or the laws, agreements, regulations and other
applicable obligations;
		 	  
 When it is PEP who decides to rescind the
contract, said rescission will be fully legal by operation of law and without the need for a court declaration. Completion of the procedure that is established in the following clause will be sufficient. When it is the CONTRACTOR who decides
to rescind the contract, it will need to go to the corresponding lower court and obtain the respective declaration.
  
 In the case of a contract rescission due to causes attributable to the CONTRACTOR, once the respective decision has been issued, PEP will abstain from paying the amounts resulting from
services rendered that are not yet settled, until the appropriate settlement is executed, as a precaution and from the time said rescission commences. This shall be done within 30 (thirty) calendar days from the date on which this decision is
communicated, in order to proceed to exercise the guarantees. The cost overrun for work not yet performed that is delayed, shall be provided for in the settlement, as well as all that concerns the recovery of materials and equipment that have been
delivered to it, where appropriate.
  
 Once PEP has notified of the
commencement of the contract rescission procedure, PEP will proceed to take immediate possession of the work performed to take charge of the property and the respective facilities and to suspend the work. With or without the presence of the
CONTRACTOR, the site supervisor will prepare a support certificate of the status of the work, which shall at least contain what is stated in article 130 of the Regulations of the Law of Public Works and Related Services. This certificate will
serve as a basis for the corresponding settlement. The support certificate will be prepared in the presence of a Notary Public.

  
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		 	 PEP may, along with the CONTRACTOR, reconcile the balances arising from the rescission in order to preserve the interests
of the parties within the settlement. PEP may record in the settlement the acceptance of the work that the CONTRACTOR has performed until the rescission of this contract, as well as the equipment and materials that had been installed on site
or are in the process of manufacturing, provided they are subject to use within the incomplete work, and must in all cases adhere to sections I, II, III and IV of article 132 of the Regulations of the Law of Public Works and Related
Services.
  
 When the contract is rescinded due to causes attributable to
PEP, it will pay for the work performed, as well as the non-recoverable expenses, provided these are reasonable, duly proven and related directly to this contract, as stated in article 62 of the Law of Public Works and Related
Services.
  
 The cost overrun is the difference between the amount that it
would represent for PEP to conclude the pending work with another CONTRACTOR and the cost of the unperformed work at the time this contract is rescinded. In order to determine the cost overrun and its amount, PEP will proceed
according to the instructions of article 134 of the Regulations of the Law of Public Works and Related Services.
  
 In the event that the contract is rescinded under the terms of this clause, PEP may choose between applying the contractual penalties or the cost overrun as referred to in the above paragraph,
under the terms of section II of article 62 of the Law of Public Works and Related Services.
  
 The CONTRACTOR will be under obligation to return all documentation to PEP that PEP had delivered to it for performing the work, within a period of 10 (ten) calendar days, from the
commencement of the respective procedure.

		
	TWENTY-EIGHT	 	 RESCISSION PROCEDURE. If PEP deems that the CONTRACTOR has violated any of the grounds for rescission that are
stated in this contract, it will proceed as follows:
  
 1.The rescission procedure will begin from the time that the CONTRACTOR is notified of the breach of contract that it has incurred, so that within a term of 15 (fifteen) business days, it may
provide an explanation as it is entitled and provide the proof that it deems appropriate;
  

2.Once the term has passed as referred to in the above point, a decision will be made in consideration of the
arguments and proof that had been presented; and
  
 3.The decision to (not) rescind the contract shall have a proper basis and grounds and be duly communicated to the CONTRACTOR within 15 (fifteen) business days following the date on which it has
given its answer.
  
 In the event that PEP decides to rescind the
contract, said rescission will take effect from the notification date of the respective decision, so it may proceed according to section II of article 62 of the Regulations of the Law of Public Works and Related Services, without the need for a
court ruling.
  
 The CONTRACTOR acknowledges and accepts that the
public servant that is signing this contract in the name and on the behalf of PEP, or the public servant that has the powers to do so, will be the ones who, where applicable, perform each and every one of the processes related to the
administrative rescission procedure of this contract, and indicate the following by way of illustration but not limitation: determining the beginning of the administrative rescission procedure, processing all of the stages of the same and for
deciding upon its administrative rescission, and other actions that may be necessary for the administrative rescission procedure.

		
	TWENTY-NINE	 	INFORMATION CONFIDENTIALITY. All drawings, plans, specifications, designs, data, reports, studies or other documents or information of any nature, in any form, that are
developed by the CONTRACTOR or by any of its subcontractors, or provided to the CONTRACTOR by PEP, in relation to the performance of the work hereunder, will be the exclusive property of PEP.

  
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		 	 The CONTRACTOR grants PEP a permanent, transferable, non-exclusive license that is free of fees to use all concepts,
products, processes (patentable or not), material protected by copyright (including but not limited to: documents, specifications, calculations, maps, drafts, notes, reports, data, models, samples, plans, designs and software) and information that
is the property of the CONTRACTOR, once the performance of the work established in this contract has commenced, and is used by the CONTRACTOR or provided or delivered to PEP by the CONTRACTOR during the provision of the
work hereunder.
  
 All concepts, products, processes (patentable or not),
material subject to protection or protected by copyright (including but not limited to: documents, specifications, calculations, maps, drafts, notes, reports, data, models, samples, plans, designs and software) or information that is the exclusive
property of PEP that had been developed, produced or put into practice for the first time by the CONTRACTOR or any of its employees as a result of the performance of the work hereunder, will be the property of PEP once it is
created, whether it was delivered to PEP or not at the time it was created. Where applicable, it must be delivered to PEP when it so requires.
  

If PEP so requires in writing, the CONTRACTOR shall do all that is necessary in favour of PEP and in the manner that the latter
indicates, to obtain patents or copyrights on any part of the result of the work, provided this part is patentable or may be subject to copyrights. This is with the understanding that the patents, copyrights or any other exclusive right that arises
from this contract will invariably be created in favour of PEP.
  
 The
CONTRACTOR guarantees that said information will be disclosed to its employees only to the extent that they need to know, and that it will not make any announcement, take any photographs or provide information to any member of the public,
press, business entity or any other official body, unless it has obtained the prior written consent from PEP.
  
 For the purpose of compliance with the above obligations, the CONTRACTOR agrees to take all necessary measures to ensure that its personnel will keep said information in the strictest of
confidence, which include but are not limited to: establishing procedures in consultation with PEP to ensure the confidentiality of said information, and taking the necessary measures to prevent its disclosure to any unauthorized party. It
also agrees to remedy any unauthorized disclosure, including but not limited to requiring the execution of confidentiality agreements for its employees and instituting security measures.

 
 Notwithstanding the foregoing, this confidentiality obligation will not apply to the
information of that nature that was known previously by the CONTRACTOR, or that was made available to it on an unrestricted and non-confidential basis, whether it is or may become generally available to the public in a manner other than the
erroneous dissemination of the CONTRACTOR personnel.
  
 Likewise, both
parties acknowledge and accept to consider all information (technical, legal, administrative, accounting, financial, etc.) that is documented in any support material as confidential, which has been developed and is directly or indirectly related to
the award procedure, or during the performance of the work, as well as all information or documentation that causes any claim or technical dispute.
  

The confidentiality obligations contained in this clause will remain in effect for a period of twelve (12) years from the completion or rescission
date hereof.

		
	THIRTY	 	CLAIMS AND DISPUTES OF A TECHNICAL OR ADMINISTRATIVE NATURE. Should any claim or dispute of a technical or administrative nature arise related to the interpretation or
execution of the contract, the CONTRACTOR may make its written claim to the site supervisor within 10 (ten) calendar days of the occurrence of the difference, so that the latter may make a decision on the difference existing between
the parties. If it does not make its claim within the period indicated in this paragraph, the CONTRACTOR waives its right to any latter claim for the difference in question.

  
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		 	 The CONTRACTOR, for each difference, may only file one claim to the site supervisor, and for its disagreement with the decision
to the claim, a technical or administrative dispute under the terms of this clause.
  
 In order to reach a decision on the claim, the site supervisor will perform the pertinent consultations and will bring together the necessary elements and/or documents. The site resident will have a
period of 10 (ten) calendar days from the receipt of the request made by the CONTRACTOR to issue his decision in writing and make it known, establishing the contractual basis for his decision.

 
 Once having received the decision from the site supervisor’s office, the
CONTRACTOR will have a period of three (3) calendar days to notify of its rejection. Otherwise it will be deemed as accepted.
  

If the CONTRACTOR accepts the final decision, the site supervisor will proceed to issue the corresponding document, and where applicable, will
proceed with the formalization of the corresponding agreement.
  
 If the
decision from the site supervisor is not accepted by the CONTRACTOR, it may request that the claim be reviewed as a dispute of a technical or administrative nature.

 
 If the CONTRACTOR chooses to have the claim reviewed as a dispute of a
technical or administrative nature, it will discuss the same aspects that gave rise to its claim, and therefore may not add additional, supplementary or complementary petitions, rectify defects, make corrections or replacements to the original
claim.
  
 The dispute procedure of a technical or administrative nature will
be carried out in the following manner:
  
 The CONTRACTOR shall submit
it in writing to PEP, with a copy to the site supervisor, indicating the disputed topics, within 3 (three) calendar days following the date on which the CONTRACTOR had received the final decision of the site supervisor,
regarding the resolution of the claim.
  
 The request that the
CONTRACTOR may make in this regard shall indicate whether it is a dispute of a technical or administrative nature that is subject to resolution, and will contain the following as a minimum:

 
 a) Itemized description of the facts under dispute, listing them specifically with
the documentation that proves them;
  
 b) Clear and precise indication of its
intentions, stating the arguments and contractual and legal provisions that support its claim;
  
 c) Documentation verifying the facts upon which its dispute is based, duly organized and identified by the attachment number.

 
 The Office of the Deputy Manager of Contract Services D.N. of P.E.P. may
decide for itself on the dispute of a technical or administrative nature which has been exercised by the CONTRACTOR, or delegate this power to the department that it deems pertinent, in which case it will notify the CONTRACTOR of the
name of the designated department, sending a copy to the site supervisor.

  
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		 	 The Office of the Deputy Manager of Contract Services D.N. of P.E.P. or where applicable, the designated department, will verify
that the dispute has been submitted in due time and form, otherwise it will reject it. If the dispute is not rejected, the Office of the Deputy Manager of Contract Services D.N. of P.E.P., or where applicable, the designated department, will
notify the CONTRACTOR of the commencement of the dispute procedure, who will have 10 (ten) business days to submit any documents or allegations that it deems necessary, which it had not submitted with its request. The Office of the Deputy
Manager of Contract Services D.N. of P.E.P., or where applicable, the designated department, will proceed to analyze and study the topic in dispute and will summon the CONTRACTOR in writing within a period of 3 (three) days from
the submission of the dispute, to initiate clarifications.
  
 During the
clarifications, the parties will meet as many times as necessary and the assigned department shall notify the CONTRACTOR of its decision within 30 (thirty) calendar days following its commencement.

 
 If the CONTRACTOR accepts the decision on the dispute of a technical or
administrative nature, the Office of the Deputy Manager of Contract Services D.N. of P.E.P., or where applicable, the designated department, will notify the site supervisor, who will issue the corresponding change order, and where appropriate
will proceed with the formalization of the respective agreement, thus concluding the procedure for the resolution of claims and disputes of a technical or administrative nature with legal effects on the parties.

		
	THIRTY-ONE	 	EXPERT DECISION. In the event that any technical dispute should remain between the parties, which decision has not been accepted by the CONTRACTOR and is related to
the execution, compliance or non-compliance with the Technical Specifications established for achieving the purpose of this Contract, the parties agree to submit the dispute in question to an Expert Decision. For this, each of them will select one
of the experts listed in the Expert List attached to this Contract, for submitting said dispute for its analysis and resolution. If said Experts come to an agreement regarding their resolutions, said agreement will be final and binding upon the
parties. In this stage, PEP and the CONTRACTOR shall cover the costs of the Expert that they have selected, regardless of whether they have or haven’t come to an agreement. In the event that the two Experts selected by the parties
in the first stage do not come to an agreement regarding their resolutions, both Experts will choose a third one by mutual agreement from the Expert List attached to this Contract, who shall resolve the technical dispute. The resolution of this last
Expert will be final and binding upon the parties and all of the costs that have been generated in this regard will be covered by PEP and the CONTRACTOR in equal parts.
		
	THIRTY-TWO	 	 CONCILIATION. The CONTRACTOR will be entitled to file a complaint to the Ministry of the Civil Service, if it deems that
PEP has breached the terms and conditions agreed to in the contract. The conciliation procedure will be substantiated in terms of the provisions of articles 89 to 91 of the Law of Public Works and Related Services.

In the event that the parties come to conciliation, the respective agreement will be binding upon them and their compliance may be demanded by the
corresponding legal channel. Otherwise their rights will remain intact, so that they may exercise them at the respective lower court.

		
	THIRTY-THREE	 	APPLICABLE LAW AND JURISDICTION. This contract will be governed by the Federal Laws of the United Mexican States and other provisions that arise therefrom that are in force.
In the event that any dispute should arise that is related to this contract, the parties expressly agree to submit to the jurisdiction of the Federal Courts of Poza Rica de Hgo. Ver. Therefore, the CONTRACTOR irrevocably waives any
jurisdiction that may pertain to it due to its present or future domicile, or for any cause.
		
	THIRTY-FOUR	 	CONTINUATION OF THE WORK. Unless there is provision that states otherwise in this contract, or there is a written order issued by PEP, the CONTRACTOR shall
continue with the services and comply with its obligations pursuant to this contract, notwithstanding the fact that proceeding(s) have been initiated for resolving claims and disputes of a technical or administrative nature, or disputes according to
this contract.

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

			
	 THIRTY-FIVE
	  	TAX CLAUSE. Each of the parties will comply with the pertinent tax obligations, and will pay each and every one of the contributions and other tax charges that they are
obligated to pay during the term, execution and fulfillment of this contract and its attachments, pursuant to the federal, state and municipal law of the United Mexican States and the United States of America. The foregoing is without prejudice to
the withholdings that PEP is obligated to pay according to the laws in this area.
		
	 THIRTY-SIX
	  	 TRAINING AND CONDUCT OF THE CONTRACTOR PERSONNEL. All CONTRACTOR personnel who perform any activity within PEP
facilities as a result of the performance of the work hereunder will be bound to comply with the Industrial Safety, Occupational Health and Environmental Protection provisions indicated in Attachment “S” “Safety, occupational
health and environmental protection obligations of the Suppliers or Contractors that perform activities at the facilities of PEMEX Exploración y Producción”, without prejudice to the other legal provisions that the
CONTRACTOR is under obligation to meet, as well as those that PEP may issue following the signing of this Contract.
  

Likewise, the CONTRACTOR is under obligation to prove to PEP, prior to the commencement of the work, that the personnel who will perform the
work have received training by a duly authorized company in the last 12 (twelve) months, according to the provisions of the Federal Labour Law, in the areas that are related to the work to be performed, as well as in the areas of Industrial Safety,
Occupational Health and Environmental Protection.
  
 In the event that the
CONTRACTOR does not reliably prove to the satisfaction of PEP that its personnel have received training in the areas of Industrial Safety, Occupational Health and Environmental Protection, it may not enter PEP’S facilities,
and therefore any delay in the work execution schedule arising from this breach of contract will not be grounds for deferring the commencement date of the same or extending the contract execution period.

 
 The CONTRACTOR will take all measures to prevent illegal, seditious or
objectionable behaviour by the personnel under its charge, in order to maintain discipline among the personnel who perform the work, whether or not they are in any of the facilities of PEP.

		
	 THIRTY-SEVEN
	  	 NOTIFICATIONS. The parties undertake to communicate in writing all information that is generated as a result of compliance and
execution of this contract, pursuant to the following:
  
 Communications to
PEP:
  
 Communications regarding technical issues shall be delivered
personally to the site supervisor or the person that he may designate, personally or through any other means of messaging that ensures its receipt at the following address: Boulevard Gonzalez Ortega S/N, a un costado de Bomberos C.P. 93370, Poza
Rica, Veracruz.
  
 Communications of an administrative nature shall be
delivered personally, or by any other means of messaging that ensures its receipt, to the authorized representative of PEP, the Contract Site Supervision Office of the Drilling Operations Unit of Poza Rica-Altamira, at the address indicated
hereafter, sending a copy to the site supervisor and/or PEP supervisor located at Boulevard Gonzalez Ortega S/N, a un costado de Bomberos C.P. 93370, Poza Rica, Veracruz.

 
 Communications to the CONTRACTOR:

 
 Communications regarding technical issues shall be delivered personally to the
construction supervisor, or may be sent through any other means of messaging that ensures its receipt at the address indicated in number II.9 of the statement section of this contract.

 
 Communications of a legal or administrative nature may be delivered personally to the
legal representative of the CONTRACTOR, or be sent by any other means of messaging that ensures their receipt, to the address indicated in number II.9 of the statement section of this contract.

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

					
	 THIRTY-EIGHT
	  	PRIORITY OF DOCUMENTS. For the purpose of interpreting this contract and in the event that there are contradictions between the different documents that make it
up, the provisions contained in the contract will prevail over those contained in its attachments. In the event there are contradictions between attachments, the attachments that are made up of documents that form part of the bidding conditions will
prevail over the attachments that are made up of documents that form part of the CONTRACTOR’S proposal.
		
	 THIRTY-NINE
	  	ATTACHMENTS TO THIS CONTRACT. The attachments that are signed in agreement by both parties are added hereto and form an integral part of this contract, which are
stated below:
			
		  	Attachment A	  	PLANS AND THEIR LIST.
		  	Attachment B	  	GENERAL SPECIFICATIONS AND INDIVIDUAL SPECIFICATIONS OF THE PROJECT
		  	Attachment B-1	  	STANDARDS
		  	Attachment DE-10	  	ITEM CATALOGUE
		  	Attachment DE-10A	  	UNIT PRICE CATALOGUE
		  	Attachment DT-12	  	CALENDAR SCHEDULE FOR GENERAL EXECUTION OF THE WORK
		  	Attachment DT-3	  	LIST OF MACHINERY AND/OR EQUIPMENT AND THEIR PHYSICAL LOCATION
		  	Attachment DT-10	  	LIST OF INPUTS THAT TAKE PART IN THE INTEGRATION OF THE PROPOSAL
		  	Attachment DSP	  	PERMANENTLY INSTALLED MATERIALS AND EQUIPMENT THAT PEP WILL PROVIDE
		  	Attachment “E”	  	MACHINERY AND/OR EQUIPMENT THAT PEP WILL PROVIDE (DIFFERENT THAN WHAT IS PERMANENTLY INSTALLED)
		  	Attachment G	  	DOCUMENTATION REQUIRED BY THE FINANCING SOURCES.
		  	Attachment G-1	  	CERTIFICATE ON THE COUNTRY OF ORIGIN OF THE GOODS AND/OR SERVICES.
		  	Attachment S	  	OBLIGATIONS IN SAFETY, OCCUPATIONAL HEALTH AND ENVIRONMENTAL PROTECTION FOR THE SUPPLIERS OR CONTRACTORS THAT PERFORM ACTIVITIES AT THE FACILITIES OF PEMEX EXPLORACIÓN Y
PRODUCCIÓN.
		  	Attachment BEO	  	TERMS AND CONDITIONS OF THE ELECTRONIC LOG
		  	Attachment DT-17	  	PRIVATE AGREEMENT FOR A JOINT PROPOSAL
		
	 FORTY
	  	OTHER STIPULATIONS. When the work hereunder is performed within the facilities of PEP, the CONTRACTOR undertakes to give preference to the
personnel proposed by the Petroleum Workers Union of the Mexican Republic or however it may be called in the future, for the performance of the same, under equal conditions and without prejudice to the rights that third parties may have according to
the law.
		
	 FORTY-ONE
	  	JOINT AND SEVERAL OBLIGATION. Each of the parties that sign this contract in their capacity as CONTRACTORS, jointly and severally assume the obligations
of the other signing parties under said capacity. They likewise state that the joint proposal agreement that is attached hereto as “Format DT-17: Private Agreement for Joint Participation” forms an integral part of the
same.
		
	 FORTY-TWO
	  	 NATIONAL CONTENT PERCENTAGE. The CONTRACTOR is under obligation to comply with a national content
percentage of 5% on the contract amount, determined according to what is indicated in the bidding guidelines that gave rise to this contract. In no case may the CONTRACTOR decrease this national content percentage, without the
prior consent of PEP in writing, which will only be given in the case where said percentage is not lower than 5%.
  
 Any substitution of equipment, materials and/or suppliers for those originally proposed by the CONTRACTOR for the purposes of meeting the national content percentage, in accordance with this
Clause, shall be authorized by PEP, provided said substitution does not mean changing the amount or the period of the contract, and complies with the specifications of the same and the execution schedule.

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

			
		  	 PEP will conduct the verification of compliance with the national content percentage established in this clause, once the
CONTRACTOR has provided the entirety of the purchase orders for the permanently installed equipment and materials listed in Attachment DT-10. In addition, the CONTRACTOR shall submit to PEP the country of origin declaration for
said permanently installed equipment and materials. Said document shall comply with the format and terms of completion indicated in Attachment DT-10.
  

The CONTRACTOR’S failure to comply with any of the obligations referred to in this clause will be grounds for rescission of this statement of
intent.

		
	 FORTY-THREE
	  	LEGAL AND MATERIAL AVAILABILITY OF LOCATIONS FOR PERFORMING WORK. The performance of the work shall start on the date indicated in the EXECUTION PERIOD clause, and
to this effect PEP will legally and materially make available to the CONTRACTOR in a timely manner the property(ies) on which the work must be performed. PEP’S failure to comply with this obligation will extend the originally
agreed date by an equal period of time for the completion of the work. The delivery shall be stated in writing.
		
	 FORTY-FOUR
	  	 ELECTRONIC LOG. The parties, under the terms of the last paragraph of section XIII or article 46 of the Law of Public
Works and Related Services, agree that the preparation, control and tracking of the site log for this contract will be kept through the software program named “Electronic Log of the Oil Industry”. To this end, it will be subject to the
rules, mechanisms and procedures established in the attachment “BEO” – Terms and Conditions of Use of the Electronic Log.
  

Consistent with the above, the parties agree that all references in this contract to the term “Log” will be understood as being made to the
software program named “Electronic Log of the Oil Industry”.

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

			
	 FORTY-FIVE
	  	 DEBT RECOVERY.
  

The CONTRACTOR gives its authorization so that any amount from prior or current debts, unpaid advance payments, breaches of contract or application
of penalties arising from any contract, agreement or legal act entered into with PEP may be deducted from the estimates and settlements of this contract, based upon articles 1832 and 2188 of the Federal Civil Code, with the supplementary
application of the Law of Public Works and Related Services, as per article 13 of the same.
  
 This contract is signed in agreement in Poza Rica de Hidalgo, Ver. in three copies, on September 3, 2008.

 Authorized by: 
 CONTRACTOR 

MERCO INGENIERIA INDUSTRIAL S.A. DE C.V. 
 FORBES ENERGY SERVICES LTD. 
 /s/ Jose Andres Suarez Canales

 JOSE ANDRES SUAREZ CANALES 
 GENERAL ATTORNEY AND 
 AGENT REPRESENTATIVE 

PEMEX EXPLORACIÓN Y PRODUCCIÓN 
 /s/ Martin Terrazas Romero 
 MARTIN TERRAZAS ROMERO 

MANAGER OF THE NORTH DIVISION, APPOINTED TO THE DEPARTMENT OF THE WELL DRILLING AND MAINTENANCE UNIT OF PEMEX EXPLORACIÓN Y
PRODUCCIÓN 

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 CONTRACT No. 424048860 
  

 Reviewed by: 

 

			
	 Technical
  

/s/ Luis Angel Ayala Gomez
 LUIS ANGEL AYALA GOMEZ
 OFFICE MANAGER

OFFICE OF THE DEPUTY MANAGER OF
 CONTRACT SERVICES, D.N.
	 	 Technical
  

/s/ Arturo Alfredo Musalem Solis
 ARTURO ALFREDO MUSALEM SOLIS
 OFFICE MANAGER

OFFICE OF THE DEPUTY MANAGER OF
 ADMINISTRATION AND FINANCE, D.N.

 Prepared by:

 /s/ Hugo Amaya Enderle 
 HUGO AMAYA ENDERLE 
 SUPERINTENDENT OF MATERIAL RESOURCES, D.N.

 Legal Review 
 /s/ Eduardo Montesinos Martinez 
 EDUARDO MONTESINOS
MARTINEZ 
 OFFICE OF THE DEPUTY MANAGER OF 
 LEGAL SERVICES, NORTHEAST REGION, POZA RICA 
 THIS SHEET FORMS A PART OF
CONTRACT NUMBER: 424048860, SIGNED ON SEPTEMBER 26, 2008, 
 WHICH CONSISTS OF 34 (THIRTY-FOUR) SHEETS OF PAPER.

  
 “WELL
MAINTENANCE AND REPAIR WORK, AT THE POZA RICA – ALTAMIRA ASSET OF THE 
 NORTH REGION” PACKAGE I 

 This agreement is filed as a translation from the original Spanish language version and

 is supplied solely for informational purposes. The original version in the Spanish 

language is the definitive agreement and is the version that has legal force and effect. 

Agreement No. 1 (One) Inclusion of Project and New Concepts with Additional Increase 

of Contract Amount No. 424048860 
 Merco Ingeniería Industrial S.A. de C.V. and Forbes Energy Services LTD. 

PEMEX 

EXPLORACIÓN Y PRODUCCIÓN 
 Alternate Direction North Region 
 Manager’s Office for Well Drilling and
Maintenance, North Division 
 Material Resources D.N. 
 Follow-up and Control of Supply Contracts 
 Agreement No. 1 (One) on Inclusion of New
Concepts with Additional Increase of the Unit-Price Government Construction Contract Amount No. 424048860 entered into by and between PEMEX – Exploración y Producción, a public decentralized entity of the federal government,
hereinafter referred to as “PEP”, represented by Mr. Benito Criollo Herrada, Manager for Well Drilling and Maintenance, North Division of the Well Drilling and Maintenance Unit, party of the first part, and Merco Ingeniería
Industrial S.A. de C.V. and Forbes Energy Services LTD, hereinafter referred to as “Contractor”, the first respectively represented by Mr. Luis Lauro Moreno Ricart as Sole Administrator, and the latter by Mr. José
Andrés Suárez Canales as Special Agent, party of the second part, pursuant to the following background, representations and clauses: 
 - BACKGROUND - 
 I.- On September 26, 2008 as a result of an international public bid
made pursuant to the Free Trade Agreements signed by the United Mexican States number 18575051-027-08 and pursuant to articles 134 of the Political Constitution of the United Mexican States, 3 paragraph II, 26 paragraph I, 27 paragraph I, 28, 30
paragraph II a) and 34 of the Law of Public Works and related Services, the parties entered into the aforementioned contract to perform services related to: “Well Repair and Maintenance Works in the Poza Rica-Altamira Comprehensive Asset of the
North Region” (Package I). 
 II.- The contract amounts to $234,256,757.01 pesos (two hundred thirty four million two hundred fifty six
thousand seven hundred and fifty seven Mexican pesos 01/100 Mexican Currency) plus US$48,842,604.99 (forty eight million eight hundred forty two thousand six hundred four U.S. dollars 99/100) plus Value Added Tax and a 730 (seven hundred and thirty)
calendar day performance term from September 26, 2008 consequently until September 25, 2010. 

  
 1 

 III.- The parties signed the following attachments as part of the original contract: 

 

			
	Exhibit A	  	BLUEPRINTS AND THEIR RELATIONSHIP
		
	Exhibit B	  	GENERAL AND PARTICULAR SPECIFICATIONS OF THE PROJECT
		
	EXHIBIT B-1	  	NORMS
		
	EXHIBIT DE-10	  	CATALOG OF CONCEPTS
		
	EXHIBIT DE-10A	  	UNIT PRICE CATALOG
		
	EXHIBIT DT-12	  	CALENDAR PROGRAM FOR GENERAL EXECUTION OF THE WORKS
		
	EXHIBIT DT-3	  	LIST OF MACHINERY AND/OR EQUIPMENT AND THEIR PHYSICAL LOCATION
		
	EXHIBIT DT-10	  	LIST OF ITEMS USED TO FORM THE PROPOSAL
		
	EXHIBIT DSP	  	MATERIALS AND PERMANENT INSTALLATION EQUIPMENT SUPPLIED BY PEP
		
	EXHIBIT “E”	  	MACHINERY AND EQUIPMENT TO BE SUPPLIED BY PEP (DIFFERENT FROM THOSE RELATED TO PERMANENT INSTALLATION)
		
	EXHIBIT G	  	DOCUMENTS REQUIRED BY FINANCIAL SOURCES
		
	EXHIBIT G-1	  	CERTIFICATE REGARDING LAND OF ORIGIN OF GOODS AND/OR SERVICES
		
	EXHIBIT S	  	SAFETY, WORK HEALTH AND ENVIRONMENTAL PROTECTION OBLIGATIONS OF SUPPLIERS OR CONTRACTORS PERFORMING ACTIVITIES IN PEMEX EXPLORACIÓN Y PRODUCCIÓN
FACILITIES
		
	EXHIBIT BEO	  	TERMS AND CONDITIONS OF USE FOR ELECTRONIC LOGBOOK
		
	EXHIBIT DT-17	  	COMMON PROPOSAL PRIVATE AGREEMENT

 IV.- According to its
purpose, the contract is performed in the Poza Rica-Altamira Comprehensive Asset of PEP’s North Region; however in Exhibit “B” within the chapter “Scope” a possibility was established to perform the same in PEP’s North
Region Assets. 
 V.- By means of official communication No. 203-21600-1067-2009 dated September 28, 2009 and a Technical Opinion, the
Assistant Manager’s Service Office for the North Division Contract requests the Superintendent’s Office for Material Resources, North Division, to draft an agreement including new concepts regarding an amount increase, as well as the
Tertiary Oil Project of the Gulf, to contract number 424048860. The latter is pursuant to the following justification contained in the technical opinion: 
 By means of official communication 999-21000-2600-449-2009, the Residence of Contracts of the Operating Unit for Gulf Tertiary Oil Drilling based on the scope chapter of the contract that specifies that
works subject matter of the same shall be performed in PEP’s Assets of the North Region, requested the Assistant Manager’s Office for Contract Services, North Division, to perform actions to enter into an agreement to Include the Tertiary
Gulf Oil Project by increasing the contract amount of contract No. 424048860 with duration until September 25, 2010; the purpose of the latter is to contribute to meet the 2009 and 2010 Well Repair Program of the Tertiary Gulf Oil
Comprehensive Asset. 

  
 2 

 Likewise, by means of communications 208-21000-21600-1376/2008 and 208-21000-218000-1-0655-2009, the
Contract Office of the Poza Rica- Altamira Drilling Operation Unit, due to its needs and to operation programs, requested the Assistant Manager’s Office for Contract Services, North Division, to take all steps to enter into an agreement
including new concepts (works with steel line units and rod equipment, respectively) into contract no. 424048860 in order to contribute in a timely and more efficient manner to the development and compliance with operation works and programs.

 I. TECHNICAL ASPECT 
 Inclusion of
the Gulf Tertiary Oil Project 
 The following items are within the works performed under contract no. 424048860 and required to be included in
the Tertiary Gulf Oil Project: 
  

	 	•	 	 Major repairs 

  

	 	•	 	 Minor repairs 

  

	 	•	 	 Pneumatic pumping conversion 

  

	 	•	 	 Mechanical pumping conversion 

  

	 	•	 	 Rehabilitation of pneumatic pumping 

  

	 	•	 	 Rehabilitation of mechanical pumping 

  

	 	•	 	 Water injector conversion 

  

	 	•	 	 Change of flowing rig 

  

	 	•	 	 Well improvement identification 

  

	 	•	 	 Infrastructure works (reconditioning of paths and platforms) 

 The need to include the Tertiary Gulf Oil Project is based on the need to cover a substantial increase to PEP’s operation contracts; the latter is shown in the existing project portfolio. The
following chart shows the operation contract for the Tertiary Gulf Oil Comprehensive Asset that covers 4,071 major repairs and 17,777 minor repairs from 2009 to 2023. 
  

																																																																	
	 ATG Comprehensive
Asset
	  	2009	 	  	2010	 	  	2011	 	  	2012	 	  	2013	 	  	2014	 	  	2015	 	  	2016	 	  	2017	 	  	2018	 	  	2019	 	  	2020	 	  	2021	 	  	2022	 	  	2023	 	  	TOTAL	 
	 Major repairs
	  	 	501	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	300	  	  	 	4,701	  
	 Minor repairs
	  	 	274	  	  	 	1,396	  	  	 	1,294	  	  	 	1,127	  	  	 	1,193	  	  	 	1,224	  	  	 	1,226	  	  	 	1,168	  	  	 	1,130	  	  	 	1,216	  	  	 	1,099	  	  	 	1,270	  	  	 	1,235	  	  	 	1,245	  	  	 	1,080	  	  	 	17,177	  
		  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 
	 TOTAL
	  	 	775	  	  	 	1,696	  	  	 	1,594	  	  	 	1,427	  	  	 	1,493	  	  	 	1,524	  	  	 	1,526	  	  	 	1,468	  	  	 	1,430	  	  	 	1,516	  	  	 	1,399	  	  	 	1,570	  	  	 	1,535	  	  	 	1,545	  	  	 	1,380	  	  	 	21,878	  
		  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 

  
 3 

 Thereafter and based on the need to replace and increase production fees of the North Region for this year
in the Tertiary Gulf Oil Comprehensive Asset, 775 well repairs were programmed, 501 major and 274 minor repairs among them, and to perform that work volume 34 repair equipment units were programmed; and since PEP does not have sufficient
infrastructure to take care of that volume, operation fronts to work on the Tertiary Gulf Oil Comprehensive Asset are programmed to be formed as follows: 
  

					
	 SCHEME
	  	EQUIPMENT	 
	 Management
	  	 	8	  
	 Contract 424047834

(Replacement Bid I Contract 424047834)

(Replacement Bid II Contract 424047834)
	  	 
  
  
	14
 (7

(7
	  
 ) 

) 

		
	 Contract 424048860
	  	 	6	  
	 Contract 424048861
	  	 	6	  
		  	 	 	 
	 Total
	  	 	34	  
		  	 	 	 

 This contract shall contribute with an average of 18 monthly interventions in wells located in locations of the ATG
Comprehensive Asset and be performed by operating 6 well repair equipment units, thus contributing with 18% of the total interventions to be performed in this Asset in 2009 and 2010 respectively. This contract currently operates with 4 repair
equipment units in the Poza Rica – Altamira Comprehensive Asset, and the 6 equipment units contemplated to work in the ATG Comprehensive Asset are independent from them. 
 By including the Tertiary Gulf Oil Project, an insertion is necessary in the third paragraph of point 3.5 of exhibit “B” General Work Specifications in order to agree with Contractor on the
possibility to request additional equipment as follows: 
 It reads: 
 “Pursuant to operation requirements of the Yearly Intervention and Investment Program, PEP may request CONTRACTOR 1 (one) up to 2 (two) additional well repair equipment units to total 7 (seven)
equipment units supplied by Contractor, either together or in a separate manner, and this shall be informed to CONTRACTOR and the latter shall supply the same no later than 60 days thereafter”. 

It should read: 
 “Pursuant to operation
requirements of the Yearly Intervention and Investment Program, PEP may request CONTRACTOR 1 (one) up to 2 (two) additional well repair equipment units to total 6 (six) equipment units supplied by Contractor, either together or in a separate manner,
and this shall be informed to CONTRACTOR and the latter shall supply the same no later than 60 days thereafter”. However, in the event it is required due to operation requirements, PEP may, by common consent with contractor, request him
additional equipment besides the aforementioned equipment units. 

  
 4 

 Works with Steel Line Units 

Work concepts that UOPRA has to include in the aforementioned contract are mechanical operation works with steel line units for land
oil wells in their repair, maintenance, termination and/or non-equipment operation stage, using mechanical tools in 2  3/8”, 2  7/8”, 3  1/2” and 4  1/2” production rigs in wells of the North Region, since said work concepts are necessary to contribute to meet PEP’s operation programs. 

The purpose of performing these works is to give support to oil well repair and maintenance operations where several mechanical operations have to be
worked out in production rigs that are securely operated and where performance of the same requires the use of sophisticated tools in different diameters and technical specifications depending on the rig to be operated. 

The incorporation of works with steel line units to contract no. 424048860 results from the need to meet a 27% increase in well repair operations
programmed for this year’s POT-I with respect to the former year, since PEP does not have sufficient units to meet mechanical operations resulting from repair works currently performed by UOPRA with a total of 20 equipment units, because it
only has 7 steel line units, not being sufficient to comply with this program. 
 AIPRA 

 

 

 In the same way in which there was an increase in this year’s programmed activities, there is an increase to the
following years. This may be observed in the current project portfolio as shown in Chart 1. That is why it is important to have steel line works, since they will help to meet operation programs in subsequent years. 

It should be noted that performing works with a steel line unit aims to strengthen the strategic plans of the Poza Rica-Altamira and the Gulf Tertiary
Oil Comprehensive 

  
 5 

 
Assets and timely meet the established commitments and goals by avoiding waiting periods in well repair, maintenance and termination operations currently being suffered for a lack of the required
steel line units, and thereupon a timely intervention that allows optimization and continuity to well repair activities, among other primary activities aimed at maintaining hydrocarbon production standards. 

Works with steel line units shall contribute a good degree to the success of repair, maintenance and completion works of North Region Wells and thus
contribute to meet Operation Programs, since as stated hereinabove, waiting times are to be avoided, being the same non-productive times that do not generate value to the project. 
 The contract currently has a $28’264,360.79 pesos (twenty eight million two hundred sixty four thousand three hundred and sixty pesos 79/100 Mexican currency) fiscal year plus US$7’365,711.53
(seven million three hundred sixty five thousand seven hundred eleven US dollars 53/100) highlighting that there is a sufficient amount to guarantee continuity of operation programs of the Poza Rica-Altamira Comprehensive Asset in an efficient and
secure manner. 
 In order to comply and provide continuity to PEP’s operation contract regarding oil well repair and maintenance work in
the North Region, it is requested to include the Gulf Tertiary Oil Project into contract no. 424048860 with an increase amounting to US$24’999,998.33 (twenty four million nine hundred ninety nine thousand nine hundred ninety eight US dollars
33/100). This amount covers programmed works to be performed in the ATG Comprehensive Asset in 2009 and is covered by budget projects shown in chart no. 2. It is worth mentioning that due to budget provisions, the amount regarding works to be
performed in 2010 could not be obtained and will be pending. 
  

																			
	 YEAR
	  	ITEM	  	FUND	  	FUNCTIONAL AREA	  	COST CENTER	  	FINANCIAL
POSITION	  	US$
AMOUNT	 
	2009	  	 	11D	  	  	GULF TERTIARY OIL PROJECT	  	FEX	  	11DP0000BP527900	  	2251000022538140	  	314302515	  	 	10,000,000	  
	2009	  	 	11D	  	  	GULF TERTIARY OIL PROJECT	  	PEF	  	11DD9E00PD127908	  	2251000022538140	  	314302515	  	 	15,000,000	  

 CHART NO. 2

  

					
	 DESCRIPTION
	  	AMOUNT	 
	Amount increase in national currency	  	$	41’043,200.00 pesos	  
	Dollar homologated total at the exchange rate of the date of opening of proposals 10.2608	  	US$	4’000,000.00	  
	Amount increase in US dollars	  	US$	21’000,000.00	  
		  	 	 	 
	TOTAL	  	US$	25’000,000.00	  
		  	 	 	 

  
 6 

 As a result of the above, Contract 16 (sixteen) New Concepts is included and this may be observed in Exhibit
DE-10,1 attached to this opinion and the contract amount is extended to $41’043,200.00 Mexican Currency (forty one million forty three thousand two hundred pesos 00/100 Mexican Currency) plus US$21’000,000.00 (twenty one million US dollars
00/100), resulting in a new contract amount of $275’299,957.01 Mexican Currency (two hundred seventy five million two hundred ninety nine thousand nine hundred fifty seven pesos 01/100 Mexican Currency) plus US$69’842,604.99 (sixty nine
million eight hundred forty two thousand six hundred four US dollars 99/100) representing a 17.52% increase in Mexican Currency and 42.99% in USD of the original contracted amount. 
 The drafting hereof does no imply affecting any conditions with respect to the nature and essential features of the original contract purpose, on the contrary, by including said concepts the originally
contracted works shall be performed in an efficient and safe manner. 
 VI.- The Area of Cost Engineering of the Superintendent’s Office
for Material Resources North Division by means of an Economic Opinion dated November 5, 2009, with a prior economic analysis of the concepts added to the contract, considers admissible the insertion of new concepts since the same meet the
required economic conditions and are convenient to the interests of PEMEX EXPLORACIÓN – PRODUCCIÓN to perform the work concepts described herein. 
 VII.- For work performance in the Tertiary Gulf Oil Comprehensive Asset there is sufficient budget under the Comprehensive Tertiary Gulf Oil conceptual project by means of financial position 314302515,
and Cost Center 2251000022538140. 
 Representations 
 PEP represents that: 
 Mr. Benito Criollo Herrada as Manager of Oil Drilling
and Maintenance North Division of the Well Drilling and Maintenance Unit represents to be legally capable to enter into this agreement on behalf and representation of PEP, evidencing his legal capacity and authority with a true copy of public deed
number 130,023 dated May 29, 2009 granted by notary public 103 of Mexico City, Federal District, Mr. Armando Gálvez Pérez Aragón. 
 Contractor represents that: 
 1. Luis Lauro Moreno Ricart evidences his legal
capacity and authority as Sole Administrator of Merco Ingeniería Industrial, S.A. de C.V. with a true copy of public deed number 2,053 dated September 5, 2003 granted by notary public 115 of the City of Reynosa, Tamaulipas,
Mr. Jacinto Flores Peña, recorded before the Public Registry of Commerce of Reynosa, Tamaulipas under number 775, volume 2-016, commerce section dated October 1, 2003 and it has not been revoked, modified or limited at all.

  
 7 

 2. José Andrés Suárez Canales evidences his legal capacity and
authority as Special Attorney-at-Law of Forbes Energy Services LTD by means of Notary Certification number 12394 dated October 6, 2009 before Mr. A. Ramsés Capitanachi López, notary public no. 7 of the Seventh Notary
Circumscription of the State of Veracruz; and that instrument is duly recorded before the Poza Rica, Veracruz Public Registry of Real Estate Property and Commerce under electronic commercial folio No. 7322*7 dated October 22, 2009.

 Based on the above and pursuant to the Fourteenth and Fifteenth Contract Clauses, article 59 of the Public Works Law, and 69
to 80 of its Regulations, and considering that the execution hereof does not imply a substantial change to the original project, nor changes the purpose of the project, nor affects conditions related to the nature and material characteristics of the
contract’s purpose and that are maintained as originally agreed upon, nor is it executed to avoid in any manner whatsoever compliance with the Law and Treaties, the parties agree upon the following: 

CLAUSES 
 First: Work
performance in the Tertiary Gulf Oil Operation Unit 
 PEP and Contractor shall perform the works provided hereunder in the Tertiary Gulf
Oil Comprehensive Asset located in Pemex Exploración y Producción North Region, prevailing the prices originally agreed upon, and therefore Contractor shall not effect any additional charge for work performance, since they all have the
same nature and scope as originally contracted. 
 Second: Inclusion of New Concepts with Additional Amount Increase. 

Pursuant to Background points V, VI and VII hereof, the parties shall include 16 (sixteen) New Concepts regarding extraordinary items under numbers: 6.9,
15.1, 15.2, 15.3, 15.4, 15.5, 15.6, 15.7, 15.8 15.9, 15.10, 15.11, 15.12, 15.13, 15.14 and 15.15, as explained in further detail in Exhibit “B” Additional that adds on Exhibit “B”, and Exhibit DE-10A-1 that complements Exhibit
DE-10A and that form part hereof. 
 Likewise, the parties shall increase the contract amount in $41,043,200.00 pesos national currency (forty
one million forty three thousand two hundred pesos 00/100 Mexican Currency) plus US$21’000,000.00 (twenty one million US dollars 00/100) that added to the originally agreed upon amount of $234,256,757.01 pesos (two hundred thirty four million
two hundred fifty six thousand seven hundred and fifty seven Mexican pesos 01/100 Mexican Currency) plus US$48,842,604.99 (forty eight million eight hundred forty two thousand six hundred four U.S. dollars 99/100) result in a new contract amount of
$275’299,957.01 Mexican Currency (two hundred seventy five 

  
 8 

 
million two hundred ninety nine thousand nine hundred fifty seven pesos 01/100 Mexican Currency) plus US$69’842,604.99 (sixty nine million eight hundred forty two thousand six hundred four
US dollars 99/100). 
 The increase percentage equals 17.52% in Mexican Currency plus 43% in USD with respect to the original contracted amount.

 Third. Modified Total Amounts 
 As a consequence of the foregoing, the Second Clause is modified regarding the “Contract Amount” as follows: “The total amount hereof is $275’299,957.01 Mexican Currency (two hundred
seventy five million two hundred ninety nine thousand nine hundred fifty seven pesos 01/100 Mexican Currency) plus US$69’842,604.99 (sixty nine million eight hundred forty two thousand six hundred four US dollars 99/100) plus Value Added
Tax.” 
 Fourth: Changes to Contract Exhibits. 
 Exhibit B is modified.- General Specifications, in point A.1 to include the Tertiary Gulf Oil Comprehensive Asset within the contract scope under the terms and conditions agreed upon hereunder and in the
respective Contract. 
 Exhibit B is modified.- General Specifications, in point D.4, to agree upon contractor’s obligation to supply all
necessary personnel and equipment to perform the works in the Tertiary Gulf Oil Comprehensive Asset pursuant to descriptions and characteristics described in that exhibit. 
 Exhibit B is modified.- General Specifications, in point 3.5, third paragraph to add a new paragraph to read as follows: 
 “Pursuant to operation requirements of the Intervention and Investment Yearly Program, PEP may request CONTRACTOR 1(one) up to 2(two) additional well repair equipment units to total 6 (six)
equipment units supplied by Contractor, either together or in a separate manner, and this shall be informed to CONTRACTOR and the latter shall supply the same no later than 60 days thereafter”. However, in the event it is required due to
operation requirements, PEP may, by common consent with contractor, request additional equipment from him besides the aforementioned equipment units. 
 Fifth: Other provisions. 
 The parties agree that the works shall be preformed under
the terms and conditions provided hereunder and in contract 424048860 and its respective exhibits, and any references in the contract and exhibits to the Poza Rica-Altamira Comprehensive Asset by virtue hereof shall be deemed applicable to the Gulf
Tertiary Oil Comprehensive Asset. 

  
 9 

 Sixth: Exhibits. 
 As a consequence of the agreement contained in the Second Clause hereof, the Thirty Ninth Clause of the agreement is modified to include “Exhibit “B Additional” and Exhibit
DE-10A-1 that form part hereof. 
 Seventh: Endorsement as Collateral. 

Contractor in order to secure compliance with his obligations hereunder shall deliver to the Superintendent’s Office of Material Resources of the
Alternate Administration and Finance Manager’s Office of Well Drilling and Maintenance North Division with offices located in the Administrative Building of the Well Drilling and Maintenance Manager’s Office, North Division, ground floor,
colonia Herradura, C.P. 93370 of this city on the date of formalization hereof; an amount increase endorsement to surety bond(s) regarding due compliance originally provided in the Seventeenth Clause hereof regarding a
contract compliance guarantee and a hidden defect guarantee amounting to $4’104,320.00 Mexican Currency (four million one hundred and four thousand three hundred twenty pesos 00/100 Mexican Currency) plus US$2,100,000.00 (two million one
hundred thousand US dollars 00/100) equal to 10% of the amount increased hereunder and covering works performed in the Gulf Tertiary Oil Comprehensive Asset and other terms hereof, as well as a Risk Increase endorsement to the Insurance
Policy provided in the Eighteenth Clause covering works performed in the Gulf Tertiary Oil Comprehensive Asset, indicating that the same are joint and undividable from the original bond, delivered to guarantee compliance with the contract and
covering the terms hereof; in the understanding that the lack of timely submission of those documents shall allow PEP to suspend invoice payments regarding works performed in the Tertiary Gulf Oil Comprehensive Asset at the increased amount cost
that has been presented or is to be presented for collection until those policy endorsements are satisfactorily delivered. That suspension shall not generate payment of financial expenses since it is a cause attributable to Contractor and may be a
cause for rescission. 
 Eighth: Survival of provisions. 
 All clauses of contract no. 424048860 and their exhibits remain in effect, except as provided hereunder; any reference or provision in the contract or its exhibits that applies to the Poza Rica-Altamira
Comprehensive Asset of the Pemex Exploración y Producción North Region, shall be deemed applicable to the Tertiary Gulf Oil Comprehensive Asset. 
 Except for the aforementioned clauses that must be understood hereunder as surviving with no change, all provision of the contract and its exhibits, as well as the 730 (seven hundred and thirty) calendar
day time period for performance from September 26, 2008 and consequently ending on September 25, 2010. 

  
 10 

 After this instrument has been read by the contracting parties and being the same duly informed of its
content and scope, they sign it by common consent in 3 counterparts in the City of Poza Rica de Hidalgo, Veracruz, on December 4 2009. 
 On behalf of: 
  

			
	Merco Ingeniería Industrial, S.A. de C.V.	 	Forbes Energy Services LTD
		
	/s/ Luis Lauro Moreno Ricart	 	/s/ José Andrés Suárez Canales
	Luis Lauro Moreno Ricart	 	José Andrés Suárez Canales
	Sole Administrator	 	Special attorney-in-fact
	
	PEMEX Exploración y Producción
	
	/s/ Benito Criollo Herrada
	Benito Criollo Herrada
	 Manager of Well Drilling and Maintenance North Division

Of the Well Drilling and Maintenance Unit

	
	Revision:
		
	Administrative	 	Technical
		
	/s/ Hugo Amaya Enderle	 	/s/ Luis Angel Ayala Gómez
	Hugo Amaya Enderle	 	Luis Angel Ayala Gómez
	Acting secretary of the Alternate	 	Contract Services Alternate Manager
	Administration and Finance Manager’s Office	 	P.M.P., D.N.
	P.M.P., D.N.	 	

 This page forms part of Agreement No. 1 (ONE) of Contract No. 424048860 signed on December 4, 2009
that consists of 12 (twelve) pages. 
  

	
	Drafted by:
	
	/s/ Jorge Avendaño López
	Jorge Avendaño López
	Acting secretary of the Material Resources Superintendent’s Office
	P.M.P., D.N

  
 11 

	
	Legal review by:
	
	/s/ Lic. Eduardo Montesinos Martínez
	Lic. Eduardo Montesinos Martínez
	Legal Service Alternate Manager
	Poza Rica Northeast Region

 This page forms
part of Agreement No. 1 (ONE) of Contract No. 424048860 signed on December 4, 2009 that consists of 12 (twelve) pages. 

  
 12 

 PEMEX EXPLORACIÓN Y PRODUCCIÓN 

WELL DRILLING AND MAINTENANCE MANAGER’S OFFICE, D.N. 
 CONTRACT SERVICE ALTERNATE MANAGER’S OFFICE, D.N. 
 EXHIBIT B (ADDITIONAL)

 DESCRIPTION AND SCOPE OF CONCEPTS TO BE INCLUDED 
 Mechanical operations with steel line units include a process whereby special tools are lowered with steel line using different devices within the well, and include transportation of the same to the well
by PEP, installation time and dismantling of equipment, introduction into the well of rig operation and accessories; it includes surface pressure control equipment for 5,000 work psi (preventing device, lubricators, among others), well calibration
using adequate printing blocks according to the internal diameter of the well’s production rig to be operated and to PEP’s request, likewise, items to be included regarding works with steel line units also include sample taking and a final
report of the operation in printed and electronic mode. 
 For adequate performance of the works with steel lines, Contractor shall meet the
following PEP procedures: 
 Procedure to perform operations with steel line: PE-IE-OP-005-2008 

The works shall be performed with a transportable Steel Line Unit with internal combustion engine, transmission and torque converter, hydraulic winch and
mast, with 0.092” to 0.125” diameter stainless steel cable according to PEP’s requirement, with dashboard indicating weight and depth, with adequate dimensions to drive without restrictions in federal and state roads and easy access
to well locations where works will be performed. Moreover, works to be performed with rod equipment (simplified equipment) shall be wells with mechanical pumping production rigs. Those works consist of rod recovery and installation, as well as
changing pumps that have deficiencies in that rig; the purpose of the latter is that upon correcting said deficiency the well may continue and maintain its production level; it is noted that upon performing those works with simplified (rod)
equipment operation times will be optimized, since that equipment has less components, and this makes its movement and operation faster, as well as cheaper with respect to a conventional repair equipment. 

  
 13 

	ITEM 6.9.	WORK WITH SIMPLIFIED EQUIPMENT (ROD DEVICE) FOR RID INTRODUCTION AND RECOUP AND PUMP CHANGE 

 

	 	•	 	 Performance: this work requires a 375 HP transportable equipment installed in a 4 ax truck with internal combustion engine and electronic control for
8530 feet (2547 m) depths. The equipment is equipped with double drum winch, brake system cooled down by water with pneumatic clutch and impact device in the crown, telescopic mast of hydraulic operation, with 69 feet (21.04 m) height and 151,746
pound (68,892 Kg) loading capacity equipped with traveling pulley, crown and 6 line caparison, mechanical pump hanging rod device, continuing stairs to the crown, three-stage hydraulic jack, anti wind for mast fixing, hanging device and
“chango” exhaust line, hydro pneumatic control dashboard; weight, pressure and torque indicator, emergency and alarm stop. It includes 5000 psi pressure control equipment that consists of double 7  1/16” preventing device with 2  3/8” to 4  1/2” rams with 2  1/16” lateral exits, as well as a rod preventing device.

  

	 	•	 	 Process: Contractor shall perform the works in mechanical pump production gears, change the pumps with rod equipment, rod recoup and/or new rod kit
installation with 375 HP rod equipment under the program requested by PEP as stated in the work order. 

  

	 	•	 	 Verification: PEP’s supervisor shall verify compliance of the operation requested with the work order. 

 

	 	•	 	 Measurement: Payment units are calculated in days. 

  

	ITEM 15.1	 CALIBRATION FOR 2  3/8” TO 4  1/2” PIPELINES WHEN THE OBJECTIVE IS NOT MET 

  

	 	•	 	 Description: it is the steel line execution process, introduction and recoup of calibration systems for 2  3/8”-4  1/2” diameter pipelines with impression block, paraffin or
die-cutters; it includes inner depth (P.I.) verification, print making and 5,000 PSI pressure control equipment. When due to well conditions there is a resistance and an initiated Service is interrupted with a diameter and a new one has to be taken
down with a lower one, the depth charge shall be paid considering the maximum achieved, regardless of the number of runs into the well and of the calibrator diameters used for that purpose. 0° to 88° deviation well operations have to be
considered (case of horizontal wells). Likewise, with this item, in the event that due to well conditions it is not possible to reach the programmed depth in one of the other steel line work concepts and PEP decides to suspend the operation, payment
shall be made by meter according to the maximum depth attained by that operation. 

  

	 	•	 	 Performance: a winch operator and assistant are needed, as well as calibration tools (print block, paraffin stamper or cutter), weight bars, mechanical
scissors, flexible deviator joints (knees), movement joints (mobile), smaller tools like adaptors, flange connections and joints, Steel Line Unit, with mechanical and electronic depth system, surface tension-weight system, as well as operation
activities to be performed such as: installation, assembly, testing and uninstalling movements for adequate work performance. 

  
 14 

	 	•	 	 Verification: PEP’s supervisor shall verify compliance with the operation program according to the Work Order. 

 

	 	•	 	 Process: it is considered to perform pipeline calibration works, inner depth verification and seal printing at a given depth and under PEP’s
requested program as stated in the Work Order. 

  

	 	•	 	 Measurement unit: the amount to be estimated shall be by (meter) depending on the calibrated depth. 

 

	ITEM 15.2	SAMPLE RECOUP WITH BUCKET OR SAMPLE BARREL. 

  

	 	•	 	 Description: it is the fluid depth sample taking process with steel line unit and consists of sample taking with bucket or barrel samplers in the well.
It includes well calibration with a minimum
 1/8” diameter larger than the tool to be
introduced and 5,000 PSI pressure control equipment. 0° to 88° deviation well operations have to be considered (case of horizontal wells). Equipment and accessories have to be considered for this item and the same will have to be compatible
with PEP’s reservoir laboratory equipment and bottles according to the amount of samples requested by PEP. 

  

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter), weight bars, mechanical scissors,
flexible detour joints (knees) and moving (mobile) joints, minor tools like adapters, flange connections and joints, sample bucket or barrel that supports corrosive environment are needed, as well as 0.600 cc volume Steel Line Units with mode depth
recording system: mechanic and electronic, superficial tension-weight system, as well as activities to be performed in the operation such as: installation movements, assembling, testing and uninstalling for adequate work performance.

  

	 	•	 	 Process: Works are considered to be performed at a depth and under the registration program for deep sample taking according to the Work Order and
PEP’s needs. 

  

	 	•	 	 Verification: PEP’s supervisor shall verify the quality of the recovered sample, as well as compliance with the operation program according to the
Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.3	OPENING OR CLOSING OF SLIDING SHIRTS 

  

	 	•	 	 Description: it is the process of performing with steel line tool the introduction and recoup for shirt opening and closing, supplied by PEP. The goal
of shirt opening is to establish communication between production pipelines and the annular space. The closing shirt is to isolate that communication, including calibration and 5,000 PSI pressure control equipment. 0° to 88° deviation well
operations are to be considered (case of horizontal wells). 

  
 15 

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, together with operation
tools according to the type of shirt within the well (example, Otis type “B”, Camco, Baker shirt operator, etc.), weight bars, mechanical scissors, flexible detour joints (knees) and moving (mobile) joints, minor tools like adapters,
flange connections and joints, Steel Line Units with depth system mode: mechanic and electronic, superficial tension-weight system, as well as activities to be performed in the operation such as: installation movements, assembling, testing and
uninstalling for adequate work performance. 

  

	 	•	 	 Process: Works are considered to be performed with Steel Line Unit and accessories to perform opening and/or closing operation of sliding shirts that
allow communication or not between production pipelines and the annular space at the designated depth and under the program requested by PEP in the Work Order. 

 

	 	•	 	 Verification: PEP’s supervisor shall verify compliance with the operation program for the opening and/or closing operation of the sliding shirts
that allow communication or not between pipelines and the annular space according to requests contained in the Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.4.-	TO PLACE OR RETRIEVE MECHANICAL STOPPER. 

  

	 	•	 	 Description: it is the process of performing with steel line the introduction and placement of a mechanical stopper supplied by PEP within a production
pipeline to try to maintain all the rig with pressure, the middle tree valves or as an additional safety device while changing the middle tree valves by preventing devices or vice versa, including calibration and 5,000 PSI pressure control
equipment. 0° to 88° deviation well operations are to be considered (case of horizontal wells). 

  

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, together with the
respective accessories for stopper placement or recoup (mechanical lock, blind stopper with matching system, releaser and fisher as well as its respective matching extensions), depending on its type or brand (example, Otis, Camco MA and CA, Baker
FWG stopper, etc.), weight bars, mechanical scissors, flexible detour joints (knees) and moving (mobile) joints, minor tools like adapters, flange connections and joints, Steel Line Units with depth measurement system in mode as follows: mechanic
and electronic, superficial tension-weight system, as well as activities to be performed in the operation such as: installation movements, assembling, testing and uninstalling for adequate work performance. 

 

	 	•	 	 Process: Placement and recoup works of the mechanical stopper at a given depth are considered to be performed and under the program requested by PEP in
the Work Order. 

  
 16 

	 	•	 	 Verification. PEP’s supervisor shall verify compliance with the operation program for placement or recoup of the mechanical stopper according to
the request contained in the Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.5.-	TO PLACE OR RECOVER FOOT VALVE 

  

	 	•	 	 Description: it is the process of performing placement or recoup of foot or retention valves with steel line to allow a one way flow. Once placed in
its nipple, it does not allow any flow from outside into the inner part of the well. The foot valve shall be supplied by PEP, includes calibration and 5,000 PSI pressure control equipment. 0° to 88° deviation well operations are to be
considered (case of horizontal wells). 

  

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, together with the
respective accessories for foot valve placement or recoup (releaser and fisher), depending on its type or brand (example, Otis, Camco MA and CA, Baker FWG stopper, etc.), weight bars, mechanical scissors, flexible detour joints (knees) and moving
(mobile) joints, minor tools like adapters, flange connections and joints, Steel Line Units with depth measurement system in mode as follows: mechanic and electronic, superficial tension-weight system, as well as activities to be performed in the
operation such as: installation movements, assembling, testing and uninstalling for adequate work performance. 

  

	 	•	 	 Process: Placement and recoup works of the foot valve at a given depth are considered to be performed and under the program requested by PEP in the
Work Order. 

  

	 	•	 	 Verification. PEP’s supervisor shall verify compliance with the operation program for placement or recoup of the foot valve according to the
request contained in the Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.6.-	TO PLACE AND RECOUP PNEUMATIC PUMP VALVE. 

  

	 	•	 	 Description: it is the process of performing placement or recoup of Pneumatic Pump valves with steel line. The purpose is that these valves operate gas
injection into the production pipeline to lighten the column of oil and produce it to the surface. The Pneumatic Pump valve shall be supplied by PEP. Unit Line accessories include calibration and 5,000 PSI pressure control equipment. 0° to
88° deviation well operations are to be considered (case of horizontal wells). 

  
 17 

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, together with the
respective accessories for BN valve placement or recoup (releaser and fisher), weight bars, mechanical scissors, flexible detour joints (knees) and moving (mobile) joints, minor tools like adapters, flange connections and joints, Steel Line Units
with depth measurement system in mode as follows: mechanic and electronic, superficial tension-weight system, as well as activities to be performed in the operation such as: installation movements, assembling, testing and uninstalling for adequate
work performance. 

  

	 	•	 	 Process: Placement and recoup works of the Pneumatic Pump valve at a given depth are considered to be performed and under the program requested by PEP
in the Work Order. 

  

	 	•	 	 Verification. PEP’s supervisor shall verify compliance with the operation program for placement or recoup of the pneumatic pump valve according to
the request contained in the Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.7	TO PLACE OR RECOUP PNEUMATIC PUMPING SHUTTER 

  

	 	•	 	 Description. It is the process of performing with steel line placement or recoup of a Pneumatic Pumping shutter to inject gas inside the production
pipeline. When it has been placed in its seat. The Pneumatic Pumping shutter shall be supplied by PEP. Line unit accessories include calibration and 5,000 PSI pressure control equipment. 0° to 88° deviation well operations are to be
considered (case of horizontal wells). 

  

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, together with the
respective accessories for Pneumatic Pumping shutter placement or recoup (releaser and fisher), weight bars, mechanical scissors, flexible detour joints (knees) and moving (mobile) joints, minor tools like adapters, flange connections and joints,
Steel Line Units with depth measurement system in mode as follows: mechanic and electronic, superficial tension-weight system, as well as activities to be performed in the operation such as: installation movements, assembling, testing and
uninstalling for adequate work performance. 

  

	 	•	 	 Process: Placement and recoup works of the Pneumatic Pump shutter at a given depth are considered to be performed and under the program requested by
PEP in the Work Order. 

  
 18 

	 	•	 	 Verification. PEP’s supervisor shall verify compliance with the operation program for placement or recoup of the pneumatic pump shutter according
to the request contained in the Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.8	TO RECOVER MATCHING ELEMENT OF PNEUMATIC PUMPING ACCESSORY. 

  

	 	•	 	 Description. It is the process of performing with steel line recoup of the matching rod of a pneumatic pumping accessory and thus establish
communication matching the existing pressures between the annular space and the production pipeline in the rigs that have pneumatic pump chucks. The Pneumatic Pumping matching element of the accessory shall be supplied by PEP. It includes
calibration and 5,000 PSI pressure control equipment. 0° to 88° deviation well operations are to be considered (case of horizontal wells). 

  

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, together with the
respective accessories to recoup accessory equalizing element of pneumatic pumping (special element fishers), weight bars, mechanical scissors, flexible detour joints (knees) and moving (mobile) joints, minor tools like adapters, flange connections
and joints, Steel Line Units with depth measurement system in mode as follows: mechanic and electronic, superficial tension-weight system, as well as activities to be performed in the operation such as: installation movements, assembling, testing
and uninstalling for adequate work performance. 

  

	 	•	 	 Process: Recoup works of the equalizing element of pneumatic pumping at a given depth are considered to be performed and under the program requested by
PEP in the Work Order. 

  

	 	•	 	 Verification. PEP’s supervisor shall verify compliance with the operation program for placement or recoup of the equalizing element of the
pneumatic pump according to the request contained in the Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.9.-	 TO PLACE AND RECOUP PIPELINE ANCHOR: 2  3/8”, 2
 7/8”, 3  1/2” and 4  1/2” 

 

	 	•	 	 Description: It is the process of performing with steel line placement or recoup of the 2  3/8”, 2  7/8”, 3  1/2” and 4  1/2” pipeline anchor to prevent a loss of pneumatic

  
 19 

	 	 
pump valves and accessories during a change of the same. The pipeline anchor shall be provided by PEP. It includes calibration and 5,000 PSI pressure control equipment. 0° to 88°
deviation well operations are to be considered (case of horizontal wells). 

  

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, together with the
respective accessories for pipeline anchor placement or recoup (special fishers and JD type releaser), weight bars, mechanical scissors, flexible detour joints (knees) and moving (mobile) joints, minor tools like adapters, flange connections and
joints, Steel Line Units with depth measurement system in mode as follows: mechanic and electronic, steel line superficial tension-weight system, as well as activities to be performed in the operation such as: installation movements, assembling,
testing and uninstalling for adequate work performance. 

  

	 	•	 	 Process: Placement and recoup works of pipeline anchors at a given depth are considered to be performed and under the program requested by PEP in the
Work Order. 

  

	 	•	 	 Verification. PEP’s supervisor shall verify compliance with the operation program for fish displacement according to the request contained in the
Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.10.-	TO PLACE OR RECOUP BOTTOM THROTTLE ACCORDING TO PIPELINE DIAMETER. 

  

	 	•	 	 Description: It is the process of performing with steel line the introduction and placement or recoup at a given depth indicated by PEP of the bottom
throttle in 2  3/8”, 2  7/8”, 3  1/2” and 4  1/2” pipelines. It includes calibration and 5,000 PSI pressure
control equipment. 0° to 88° deviation well operations are to be considered (case of horizontal wells). 

  

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, together with the
respective accessories for bottom throttle placement or recoup (fisher, releaser and bottom throttle packer with different diameters), weight bars, mechanical scissors, flexible detour joints (knees) and moving (mobile) joints, minor tools like
adapters, flange connections and joints, Steel Line Units with depth measurement system in mode as follows: mechanic and electronic, steel line superficial tension-weight system, as well as activities to be performed in the operation such as:
installation movements, assembling, testing and uninstalling for adequate work performance. 

  

	 	•	 	 Process: Placement and recoup works of the bottom throttle according to the pipeline diameter at a given depth are considered to be performed and under
the program requested by PEP in the Work Order. 

  
 20 

	 	•	 	 Verification. PEP’s supervisor shall verify compliance with the operation program for placement or recoup of bottom throttles according to the
request contained in the Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.11.-	TO PLACE OR RECOUP PEP’S ANCHOR WITH PRESSURE-TEMPERATURE SENSORS. 

  

	 	•	 	 Description: It is the process of performing with steel line placement or recoup of 2  3/8”, 2  7/8”, 3  1/2” and 4  1/2” diameter pipelines of an anchor with pressure-temperature
recording sensors to provide a mechanism that allows to host and hang measurement instruments, installing them with a mechanical nipple or tubing stop in an anchor tubing less (optional) according to the pipeline’s diameter and to the program
indicated by PEP. This work is generally performed in tests with prolonged data monitoring of 7, 15, 20, 30 days, etc. time periods, that will depend on the memory capacity of the data recording instrument. Recoup of the anchor with sensor is done,
in general, when the maximum time to obtain information from a used device has been met, either to replace or to definitely withdraw the same. It includes calibration and 5,000 PSI pressure control equipment. 0° to 88° deviation well
operations are to be considered (case of horizontal wells). 

  

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, together with the
respective accessories for placement or recoup of the anchor with pressure and temperature sensor (fisher, releaser, anchor mechanical lock, shock absorber, centralizer and measurement instruments), weight bars, mechanical scissors, flexible detour
joints (knees) and moving (mobile) joints, minor tools like adapters, flange connections and joints, Steel Line Units with depth measurement system in mode as follows: mechanic and electronic and superficial tension (weight-tension) system, as well
as activities to be performed in the operation such as: installation movements, assembling, testing and uninstalling for adequate work performance. 

  

	 	•	 	 Process: Placement or recoup of anchor with pressure and temperature sensor at a given depth are considered to be performed and under the program
requested by PEP in the Work Order. 

  

	 	•	 	 Verification. PEP’s supervisor shall verify compliance with the operation program for placement or recoup of anchor with pressure and temperature
sensor according to the request contained in the Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

  
 21 

	ITEM 15.12.-	TO DISPLACE RESISTANCE OR FISH. 

  

	 	•	 	 Description: The purpose of fish displacement with steel line is to slide and strike with a scissor an obstruction that prevents free passage into the
well through the production rig until it may go to the bottom leaving free access to any other tool to be introduced. It includes calibration and 5,000 PSI pressure control equipment. 0° to 88° deviation well operations are to be considered
(case of horizontal wells). 

  

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, together with the
respective accessories for fish displacement (blind box), weight bars, mechanical scissors, flexible detour joints (knees) and moving (mobile) joints, minor tools like adapters, flange connections and joints, Steel Line Units with depth measurement
system in mode as follows: mechanic and electronic and superficial tension (weight-tension) system, as well as activities to be performed in the operation such as: installation movements, assembling, testing and uninstalling for adequate work
performance. 

  

	 	•	 	 Process: Resistance or fish displacement works at a given depth are considered to be performed and under the program requested by PEP in the Work
Order. 

  

	 	•	 	 Verification. PEP’s supervisor shall verify compliance with the operation program for fish displacement according to the request contained in the
Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.13.-	STEEL LINE FISHING 

  

	 	•	 	 Description: The purpose of fishing with a Steel Line Unit is to recoup tools and/or accessories that stayed as fish within the well. It includes
calibration and 5,000 PSI pressure control equipment. 0° to 88° deviation well operations are to be considered (case of horizontal wells). 

  

	 	•	 	 Performance: a winch operator and two assistants, calibration tools (printing block, paraffin stamper or cutter) are required, weight bars, mechanical
scissors, flexible detour joints (knees) and moving (mobile) joints, minor tools like adapters, flange connections and joints. There are several fishing tools with specific purposes for this type of operation such as: davit harpoon (for wire
fishing), JD or JU type fisher (to fish tool with fish neck), O’Bannon type fisher (for tools without fish neck). Steel Line Units with depth measurement system in mode as follows: mechanic and electronic and superficial tension
(weight-tension) system, as well as activities to be performed in the operation such as: installation movements, assembling, testing and uninstalling for adequate work performance. 

  
 22 

	 	•	 	 Process: Fish displacement works with steel line at a given depth are considered to be performed and under the program requested by PEP in the Work
Order. 

  

	 	•	 	 Verification. PEP’s supervisor shall verify compliance with the operation program for steel line fishing according to the request contained in the
Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Day) depending on the program requested by PEP. In the event that due to well conditions the
programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached. 

 

	ITEM 15.14.-	5,000 PSI PRESSURE CONTROL EQUIPMENT TO USE WITH H2S/CO2. 

  

	 	•	 	 Description: This service shall have all pressure control equipment components for sour environments (H2S and/or CO2) and includes accessories for
proper performance such as: flange adapters, nuts and bolts with rings for 5,000 PSI. The team shall present the respective certification, as well as the respective recently preformed tests (not older than one year). This Service must include a
basic and original kit of parts. 

  

	 	•	 	 Performance: A pressure Control Equipment Operator, 5,000 PSI pressure control equipment for sour environments with all necessary components and
accessories for its proper performance and operation, as well as several activities to be performed during operation: installation movements, assembling, tests and uninstalling for proper work performance. 

 

	 	•	 	 Process: Works are considered to be performed with pressure control equipment for sour environments under the requested program as stated in the Work
Order and at PEP’s request. 

  

	 	•	 	 Verification: PEP’s supervisor shall verify compliance with the operation program with 5,000 PSI pressure control equipment for sour environments
as requested in the Work Order. 

  

	 	•	 	 Measurement Unit: The amount to estimate shall be per Day or Day prorate depending on the program requested by PEP and considering full service.

  

	ITEM 15.15.-	 TO DRILL 2
 3/8”, 2  7/8” AND 3  1/2” PRODUCTION PIPELINES WITH STEEL LINE EQUIPMENT.

  

	 	•	 	 Description: A production pipeline is drilled when the well has to be controlled and its production rig lacks of a sliding shirt. This work is
performed with a Steel Line unit. 

  

	 	•	 	 Performance: An operator and an assistant are required. The equipment consists of a winch, calibration tools, accessories (printing block, paraffin
stamper or cutter), a 5000 psi lubricator. The Steel Line unit will be installed, the punching tool shall be assembled and taken down at a depth specified by PEP, the pipeline shall be drilled then withdrawn, well tools shall be tested with pressure
and circulation work effectiveness. The charge shall be supplied by PEP. 

  
 23 

	 	•	 	 Process: Works are considered to be performed with Steel Line Unit and accessories to drill production pipelines that allow communication or not among
production pipelines and the annular space at a designated depth and under the program requested by PEP in the Work Order. 

  

	 	•	 	 Measurement Unit: the amount to estimate shall be by (Work) depending on the program requested by PEP and considering complete work. In the event that
due to well conditions the programmed depth is not reached and PEP decides to suspend the operation, payment shall be made under Item 15.9. The amount to estimate would be by meter according to the maximum depth reached.

  

			
	Merco Ingeniería Industrial, S.A. de C.V.	 	Forbes Energy Services, LTD
		
	/s/ Luis Lauro Moreno Ricart	 	/s/ José Andrés Suárez Canales
	Luis Lauro Moreno Ricart	 	José Andrés Suárez Canales
	Sole Administrator	 	Special attorney-in-fact
	
	Pemex Exploración y Producción
	
	/s/ Luis Angel Ayala Gómez
	Luis Ángel Ayala Gómez
	Alternate Manager for Contract Services, D.N.

 GVT/MAS 
 (Illegible signature) 
 Contract 424048860 

  
 24Subscription Agreement

 Exhibit 10.14 
 SUBSCRIPTION AGREEMENT 
 THIS AGREEMENT is made as of the
17th day of May, 2010. 

BETWEEN: 
 FORBES
ENERGY SERVICES LTD., a company established pursuant to the laws of Bermuda (the “Corporation”) 
 AND: 

WEST FACE LONG TERM OPPORTUNITIES LIMITED PARTNERSHIP, a limited partnership established under the laws of the Province of British
Columbia (“West Face LP”) 
 AND: 
 WEST FACE LONG TERM OPPORTUNITIES (USA) LIMITED PARTNERSHIP, a limited partnership established under the laws of Delaware (“West Face USA LP”) 

AND: 
 WEST FACE LONG
TERM OPPORTUNITIES MASTER FUND L.P., a limited partnership established under the laws of the Cayman Islands (“West Face Master LP”, and together with West Face LP and West Face USA LP, the “Purchasers”)

 WHEREAS: 
  

	A.	the authorized capital of the Corporation consists of 450,000,000 common shares of par value $0.01 each (“Common Shares”) of which 54,173,700
are issued and outstanding, 40,000,000 Class B shares of par value $0.01 each (the “Class B Shares”) of which 29,500,000 are issued and outstanding, and 10,000,000 preference shares of par value $0.01 each (the
“Preference Shares”) of which none are issued and outstanding; 

  

	B.	the Corporation has established and created Series B Preferred Shares (as defined below) with terms set out in Schedule B hereto; and 

 

	C.	the Purchasers have agreed to subscribe for and purchase from the Corporation 580,800 Series B Preferred Shares for aggregate gross proceeds of $14,520,000 on the terms
and conditions set out herein and the Corporation has agreed to accept such subscription. 

 NOW, THEREFORE, THIS AGREEMENT
WITNESSES THAT, in consideration of the premises and the respective covenants and agreements herein contained, the parties hereto covenant and agree as follows: 
 ARTICLE 1 – INTERPRETATION 
  

	1.01	Definitions 

 (1)
“Act” means the Securities Act (Ontario). 

 (2) “Applicable Law” means any and all applicable laws including all
statutes, codes, ordinances, decrees, rules, regulations, municipal by-laws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards, instruments, policies, guidelines, and
general principles of common law and equity, binding on or affecting the person referred to in the context in which the word is used. 
 (3) “Business Day” means any day, other than a Saturday or a Sunday, upon which banks are open for business in Toronto, Ontario, and in Houston, Texas. 

(4) “Canadian Securities Laws” means, collectively, the Act and the applicable securities laws of the other provinces of
Canada, other than Québec, the regulations made and the forms prescribed thereunder with all applicable published rules, instruments, policy statements and blanket orders and rulings of the Canadian securities regulatory authorities in such
provinces. 
 (5) “Closing” has the meaning ascribed thereto in Section 5.01. 

(6) “Closing Date” means May 20, 2010 or such other date as may be agreed by the parties, each acting reasonably.

 (7) “Code” has the meaning ascribed thereto in Section 3.01(1)(ss). 

(8) “Constating Document” means the charter, the memorandum, the articles of association, the articles of incorporation,
the articles of continuance, the articles of amalgamation, the bye-laws, the partnership agreement, the limited partnership agreement or any other instrument pursuant to which an entity is created, incorporated, continued, amalgamated or otherwise
established, as the case may be, and/or which governs in whole or in part such entity’s affairs, together with any amendments thereto. 
 (9) “Control” used as a verb means, with respect to a body corporate, the right in all circumstances, directly or indirectly, to exercise a majority of the votes which may be cast at a
general meeting of the shareholders of the body corporate or the right to elect or appoint, directly or indirectly, a majority of the directors of the body corporate and, when used with respect to another person, means the actual or legal ability to
control the actions of another, through family relationships, agency, contract or otherwise; and “Control” used as a noun means an interest which gives the holder the ability to exercise any of the foregoing powers. 

(10) “Continuous Disclosure Documents” means, at any time, the following continuous disclosure documents filed by the
Corporation (a) pursuant to National Instrument 51-102 – Continuous Disclosure Obligations of the Canadian securities regulatory authorities, as amended, and (b) with the United States Securities and Exchange Commission:

  

	 	(i)	the Corporation’s then most recent annual information form (which is comprised of the Corporation’s Annual Report on Form 10-K); 

 

	 	(ii)	 the Corporation’s most recently filed audited annual consolidated/combined comparative financial statements, together with the

  
 - 2 -

	 	 
notes thereto and the auditor’s report thereon and including management’s discussion and analysis of financial condition and results of operations for the periods reported on;

  

	 	(iii)	the Corporation’s unaudited interim comparative consolidated condensed financial statements, including management’s discussion and analysis of financial
condition and results of operations for periods to which such financial statements relate, filed since the end of the financial year of the Corporation to which the Corporation’s then most recently filed audited annual consolidated/combined
comparative financial statements relate; 

  

	 	(iv)	all management proxy circulars filed by the Corporation during the twelve months preceding such time; and 

 

	 	(v)	all material change reports filed by the Corporation since the date of its most recently filed annual information form. 

(11) “Directed Selling Efforts” means “directed selling efforts” as defined in Regulation S and, without
limiting the foregoing, but for greater clarity, it means, subject to the exclusions from the definition of directed selling efforts contained in Regulation S, any activity undertaken for the purpose of, or that could reasonably be expected to have
the effect of, conditioning the market in the United States of the Series B Preferred Shares, and includes the placement of any advertisement in a publication with a general circulation in the United States that refers to the offering of the Series
B Preferred Shares. 
 (12) “Eligible Market” has the meaning ascribed thereto in Section 2.02(2).

 (13) “Encumbrance” means any mortgage, change, pledge, hypothecation, security interest, lien, easement,
right-of-way, encroachment, covenant, condition, right-of-entry, lease, license, assignment, option or claim or any other encumbrance, charge or any title defect of whatever kind of nature, regardless of form, whether or not registered or
registrable and whether or not consensual or arising by law (statutory or otherwise). 
 (14) “Environmental
Laws” has the meaning ascribed thereto in Section 3.01(1)(xx)(i). 
 (15) “Exchange Approval” means
the written approval, or the written acceptance of the Corporation’s notice, of the proposed issuance to the Purchasers of the Common Shares upon conversion of the Series B Preferred Shares issued at the Closing Date pursuant to the terms of
this Agreement along with the approval of the conditional listing of such Common Shares, given by the TSX. 
 (16)
“Fee” has the meaning ascribed thereto in Section 2.01(2). 
 (17) “Forbes Subsidiaries”
means, collectively, Forbes Energy Services LLC, Forbes Energy Capital Inc., C.C. Forbes, LLC, TX Energy Services, LLC, Superior Tubing Testers, LLC, Forbes Energy International, LLC, Forbes Energy Services México, S. de R.L. de C.V. and
Forbes Energy Services Mexico Servicios de Personal, S. de R.L. de C.V. 

  
 - 3 -

 (18) “Foreign Issuer” has the meaning ascribed thereto in Regulation S
under the U.S. Securities Act. 
 (19) “Founders” has the meaning ascribed thereto in Section 4.01(1)(g).

 (20) “General Solicitation” or “General Advertising” means “general solicitation”
or “general advertising”, as used in Rule 502(c) under the U.S. Securities Act, including, but not limited to, advertisements, articles, notices or other communications published on the Internet or in any newspaper, magazine or similar
media or broadcast over radio, television or on the Internet, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising. 
 (21) “Governmental Authority” means any national, central, federal, provincial, state, municipal, county or other government or regional authority, whether executive, legislative or
judicial, and includes any ministry, department, commission, bureau, administrative or other agency or regulatory body or instrumentality thereof. 
 (22) “Incentive Compensation Plan” means the Corporation’s incentive compensation plan dated May 29, 2008, pursuant to which the Corporation has reserved for issuance 5,220,000
Common Shares. 
 (23) “Leased Premises” has the meaning ascribed thereto in Section 3.01(1)(ww).

 (24) “material change” and “material fact” have the respective meanings ascribed thereto in
the Act. 
 (25) “Material Adverse Effect” has the meaning ascribed thereto in Section 3.01(1)(c).

 (26) “Maturity Date” means the date that is seven years after the Closing Date. 

(27) “Nominating and Voting Agreement” means the nominating and voting agreement dated as of May 29, 2008, by and
among the Corporation and the Founders. 
 (28) “Notes” has the meaning ascribed thereto in
Section 3.01(1)(q). 
 (29) “Notice” has the meaning ascribed thereto in Section 7.07. 

(30) “parties” means, collectively, the Corporation, West Face LP, West Face USA LP and West Face Master LP and
“party” means any of them. 
 (31) “Private Placement” has the meaning ascribed thereto in
Section 2.01(1). 
 (32) “Redemption Date” has the meaning ascribed to it in the terms of the Series B
Preferred Shares set out in Schedule B hereto. 
 (33) “Registration Rights Agreement” means the registration
rights agreement in substantially the form attached hereto as Schedule C. 
 (34) “Regulation D” means
Regulation D under the U.S. Securities Act. 

  
 - 4 -

 (35) “Regulation S” means Regulation S under the U.S. Securities Act.

 (36) “Rights Agreement” means a rights agreement, dated as of May 19, 2008, by and between the
Corporation and CIBC Mellon Trust Company, as rights agent. 
 (37) “Securities Laws” means, collectively,
Canadian Securities Laws, U.S. Securities Laws and all other Applicable Laws regulating trading in securities. 
 (38)
“Series B Preferred Share” means a senior convertible Preference Share in the capital of the Corporation having those terms set out in Schedule B which is convertible (in accordance with such terms) into Common Shares, initially at
a rate of 36 Common Shares per Series B Preferred Share. 
 (39) “Shareholders’ Agreement” means the
shareholders’ agreement dated as of May 29, 2008, by and among the Corporation and the Founders. 
 (40)
“Subscription Amount” has the meaning ascribed thereto in Section 2.01(1). 
 (41)
“Subsidiaries” means, in respect of a specified person, any person that is owned (either wholly or in part) and Controlled by such specified person. 
 (42) “Term Sheet” means the non-binding indicative term sheet dated April 22, 2010 between West Face Capital Inc. and the Corporation. 

(43) “TSX” means the Toronto Stock Exchange. 
 (44) “United States” has the meaning ascribed thereto in Regulation S under the U.S. Securities Act. 
 (45) “U.S. Exchange Act” means the United States Securities Exchange Act of 1934, as amended. 
 (46) “U.S. Person” has the meaning ascribed to it in Regulation S. 
 (47) “U.S. Securities Act” means the United States Securities Act of 1933, as amended. 
 (48) “U.S. Securities Laws” means, collectively, the U.S. Securities Act, the U.S. Exchange Act, the securities laws of the states of the United States, the regulations made and forms
prescribed thereunder together with all applicable published rules, instruments, policy statements and blanket orders and rulings of the United States Securities and Exchange Commission. 

 

	1.02	Interpretation 

  

	 	(1)	For the purposes of this Agreement, except as otherwise expressly provided: 

 

	 	(a)	 “this Agreement” means this agreement, including the Schedules hereto, and not any particular Article, Section or other subdivision
hereof, and includes any 

  
 - 5 -

	 	 
agreement, document or instrument entered into, made or delivered pursuant to the terms hereof, as the same may, from time to time, be supplemented or amended and in effect;

  

	 	(b)	all references in this Agreement to a designated Article, Section or other subdivision or to a schedule are references to the designated Article, Section or other
subdivision of, or schedule to, this Agreement; 

  

	 	(c)	the words “hereof”, “herein”, “hereto” and “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other subdivision or schedule unless the context or subject matter otherwise requires; 

 

	 	(d)	the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and are not intended
to interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof; 

  

	 	(e)	unless otherwise provided herein, all references to currency in this Agreement are to lawful money of the United States and, for greater certainty, “$” and
“US$” mean United States dollars; 

  

	 	(f)	a reference in this Agreement to a statute includes all regulations made thereunder, all amendments to the statute or regulations in force from time to time, and any
statute or regulation that supplements or supersedes such statute or regulations; 

  

	 	(g)	the singular of any term includes the plural, and vice versa, and words importing any gender include all genders, and the word “including” is not
limiting whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto; 

 

	 	(h)	words importing persons include individuals, corporations, limited and unlimited liability companies, general and limited partnerships, associations, trusts,
unincorporated organizations, joint ventures, Governmental Authorities and other entities; 

  

	 	(i)	in the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action will be required to be
taken on the next succeeding day which is a Business Day; and 

  

	 	(j)	all references to “approval”, “authorization” or “consent” in this Agreement mean written approval, authorization or
consent. 

  
 - 6 -

	1.03	Schedules 

  

	 	(1)	Attached to and forming part of this Agreement are the following Schedules: 

Schedule A – Subscription Details 

Schedule B – Certificate of Designation 

Schedule C – Form of Registration Rights Agreement 

ARTICLE 2 – PURCHASE OF SERIES B PREFERRED SHARES 

 

	2.01	Private Placement 

(1) Subject to the terms and conditions contained herein, on the Closing Date, the Purchasers will subscribe for and purchase that number
of Series B Preferred Shares indicated opposite each Purchaser’s name in Schedule A hereto, from the Corporation, and the Corporation will issue and sell to each Purchaser that number of Series B Preferred Shares indicated opposite each
Purchaser’s name in Schedule A hereto, at an issue price of $25.00 per Series B Preferred Share, for an aggregate subscription price (the “Subscription Amount”) of $14,520,000 in cash (the “Private Placement”).

 (2) In consideration of the agreement of the Purchasers to purchase the Series B Preferred Shares hereunder, the Corporation
agrees to pay at the Closing Time to the Purchasers, an aggregate fee (the “Fee”) equal to 2% of the Subscription Amount, being $290,400 to be allocated among the Purchasers pro rata based on the percentages in Schedule A.
Payment of the Subscription Amount for the Series B Preferred Shares by the Purchasers will be made in accordance with Section 5.03(1)(c) against payment of the Fee by the Corporation and delivery of certificates representing the Series B
Preferred Shares purchased at the Closing Time. 
  

	2.02	Elections and Approvals 

 (1) The obligation of each of the Purchasers to purchase, and the Corporation’s obligation to issue and sell the Series B Preferred Shares is subject to Exchange Approval. 

(2) The Corporation covenants and agrees with the Purchasers that it will (a) use its best commercial efforts to maintain the
listing and posting for trading of the Common Shares on the TSX or a national securities exchange or automated quotation system in the U.S. (each an “Eligible Market”) and (b) maintain its status as a reporting issuer, or the
equivalent thereof, not in default of the requirements of Canadian Securities Laws, for as long as the Series B Preferred Shares remain issued and outstanding. 
 (3) The Corporation covenants and agrees with the Purchasers that if the Corporation, in accordance with the terms of the Series B Preferred Shares set out in Schedule B hereto, elects to pay dividends on
the Series B Preferred Shares in kind in the form of additional Series B Preferred Shares, then at the time of issuance of such additional Series B Preferred Shares, the Common Shares (or other securities as contemplated in the terms set out in
Schedule B hereto) to be issued upon conversion of such additional Series B Preferred Shares must be listed and posted for trading on an Eligible Market. 
 (4) The obligation of each of the Purchasers to purchase, and the Corporation’s obligation to issue and sell the Series B Preferred Shares is subject to the election of holders of not less than 66
2/3% of Class B Shares to convert all the Class B Shares owned by such holders 

  
 - 7 -

 
into Common Shares, in accordance with the Corporation’s Constating Documents, by no later than immediately prior to the time of Closing on the Closing Date. The Corporation will promptly
give written notice to the Purchasers, in accordance with Section 7.07, once such election has been made. 

ARTICLE 3 – REPRESENTATIONS AND WARRANTIES, COVENANTS AND ACKNOWLEDGMENTS 

 

	3.01	Representations, Warranties and Covenants of the Corporation 

 (1) The Corporation makes the following representations and warranties (and where applicable, covenants) to the Purchasers: 

 

	 	(a)	each of the Corporation and its Subsidiaries has been duly incorporated or formed (as the case may be) and is validly existing and subsisting under the laws of its
jurisdiction of incorporation or formation (as the case may be) and no proceedings have been taken or authorized by it or, to its knowledge, by any other person, with respect to the bankruptcy, insolvency, liquidation, dissolution or winding-up of
the Corporation or any of its Subsidiaries; 

  

	 	(b)	each of the Corporation and its Subsidiaries has the corporate or limited liability company, respectively, power and authority to carry on its business as described in
the Corporation’s Continuous Disclosure Documents and to own, lease and operate its properties and assets as described in the Corporation’s Continuous Disclosure Documents; 

 

	 	(c)	each of the Corporation and its Subsidiaries has conducted and is conducting and will conduct its business in compliance in all material respects with all Applicable
Laws applicable to it and holds all licences, registrations and qualifications in all jurisdictions in which it carries on business which are necessary or desirable to carry on the business of each of the Corporation and its Subsidiaries as now
conducted and as contemplated to be conducted in the Corporation’s Continuous Disclosure Documents (except where the failure to so conduct its business or to hold such licences, registrations or qualifications would not, individually or in the
aggregate, materially and adversely affect the business, operations, capital, properties, assets, liabilities (absolute, accrued, contingent or otherwise), ownership or condition (financial or otherwise) or results of operations of the Corporation
and its Subsidiaries taken as a whole (a “Material Adverse Effect”)), all such licences, registrations or qualifications are valid and existing and in good standing (except where the lack of such valid or existing license would not,
individually or in the aggregate, have a Material Adverse Effect) and none of such license, registrations or qualifications contain any burdensome term, provision, condition or limitation which would have a Material Adverse Effect, and the
Corporation is not aware of any legislation, regulation, rule or lawful requirements presently in force or proposed to be brought into force which the Corporation anticipates the Corporation or any of its Subsidiaries will be unable to comply with
without having a Material Adverse Effect; 

  
 - 8 -

	 	(d)	the Corporation and its Subsidiaries are qualified to carry on business under the laws of each jurisdiction in which it presently carries on its business except where
the failure to do so would not have a Material Adverse Effect; 

  

	 	(e)	the Corporation’s execution and delivery of this Agreement and the Registration Rights Agreement has been authorized by all necessary corporate action and the
Corporation has the requisite corporate power and authority to enter into and perform its obligations under such agreements; 

  

	 	(f)	the Corporation is not in default or breach of, and the execution and delivery of, and the performance of and compliance with the terms of, this Agreement by the
Corporation or any of the transactions contemplated hereby (including in respect of the Registration Rights Agreement), does not and will not result in any breach of, or constitute a default under, and does not and will not create a state of facts
which, after notice or lapse of time or both, would result in a breach of or constitute a default under, (i) the Corporation’s Constating Documents, (ii) any resolutions of shareholders or directors (or any committee thereof) of the
Corporation, (iii) any indenture, mortgage, note, contract, agreement (written or oral), instrument, lease or other document to which the Corporation is a party or by which it is bound, or (iv) to the Corporation’s knowledge, any
Applicable Law, which default or breach might reasonably be expected to have a Material Adverse Effect or would impair the ability of the Corporation to consummate the transactions contemplated hereby or to duly observe and perform any of its
covenants or obligations contained in this Agreement; 

  

	 	(g)	except for the Exchange Approval and the filing of applicable post-trade filing reports, including those required under applicable United States federal and state
securities laws, and insider and early warning reports with applicable securities regulatory authorities, no exemption, consent, approval, order or authorization of, or registration or filing with any court, Governmental Authority or any third party
is required by, or with respect to, the Corporation in connection with the execution, delivery and performance of this Agreement by the Corporation or the consummation by the Corporation of the transactions contemplated by this Agreement;

  

	 	(h)	there is not, to the Corporation’s knowledge, any order, decree, suit, action, proceeding or investigation of a court of competent jurisdiction or any Governmental
Authority threatened against or affecting the Corporation, restraining, interfering with or enjoining the Corporation’s ability to perform its obligations under, or to complete any of the transactions contemplated by, this Agreement or the
Registration Rights Agreement; 

  

	 	(i)	this Agreement has been duly executed and delivered by the Corporation and is a valid and binding obligation of the Corporation enforceable against it in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, fraudulent conveyance and other laws affecting the enforcement of creditors’ rights generally; by general
principles of equity (whether brought in a proceeding at law or in equity); and by the fact that rights to waiver, and the ability to sever unenforceable terms, may be limited by Applicable Law; 

  
 - 9 -

	 	(j)	the Registration Rights Agreement will be duly executed and delivered by the Corporation and will be a valid and binding obligation of the Corporation enforceable
against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, fraudulent conveyance and other laws affecting the enforcement of creditors’ rights
generally; by general principles of equity (whether brought in a proceeding at law or in equity); and by the fact that rights to waiver, and the ability to sever unenforceable terms, may be limited by Applicable Law; 

 

	 	(k)	the authorized capital of the Corporation consists of 450,000,000 Common Shares of which 54,173,700 are issued and outstanding, 40,000,000 Class B Shares of which
29,500,000 are issued and outstanding each as fully paid and non-assessable shares, and 10,000,000 Preference Shares of which none are issued and outstanding; 

 

	 	(l)	the currently issued and outstanding Common Shares are listed and posted for trading on the TSX and the Corporation is in compliance with all rules and policies of the
TSX; 

  

	 	(m)	other than the Series B Preferred Shares being issued and sold by the Corporation pursuant to the terms of this Agreement, the 5,220,000 Common Shares reserved for
issuance under the Incentive Compensation Plan of which 2,680,000 are issuable pursuant to the options previously granted by the Corporation thereunder, and the rights authorized under the Rights Agreement and associated with the Common Shares, no
person, firm, corporation or other entity holds any securities convertible or exchangeable into securities of the Corporation or has any agreement, warrant, option, right or privilege (whether pre-emptive or contractual) being or capable of becoming
an agreement, warrant, option or right (whether or not on condition(s)) for the purchase or other acquisition of any unissued securities of the Corporation; 

 

	 	(n)	none of the directors, officers or employees of the Corporation, any person who owns, directly or indirectly, more than 10% of any class of securities of the
Corporation, or any associate or affiliate of any of the foregoing, had or has any material interest, direct or indirect, in any material transaction or any proposed material transaction with the Corporation which, as the case may be, has had or
will have a Material Adverse Effect, except as disclosed in the Corporation’s Continuous Disclosure Documents; 

  

	 	(o)	other than as contemplated in Section 2.01(2) of this Agreement, the Corporation has not incurred any obligation or liability, contingent or otherwise, for
brokerage fees, finder’s fees, underwriter’s or agent’s commission or other similar forms of compensation with respect to the transactions contemplated hereby; 

 

	 	(p)	other than the Forbes Subsidiaries, the Corporation has no Subsidiaries, it is not “affiliated” with or a “holding corporation” of any other body
corporate nor is it or any of its Subsidiaries a partner of any partnership or limited partnerships or a party to any joint ventures; 

  
 - 10 -

	 	(q)	the Corporation owns, directly or indirectly, all of the issued and outstanding shares or membership interests, as the case may be, of each of the Forbes Subsidiaries,
all of the issued and outstanding shares of the Forbes Subsidiaries that are corporations are issued as fully paid and non-assessable shares, and the Corporation owns, directly or indirectly, all such shares and membership interests, as the case may
be, of the Forbes Subsidiaries, free and clear of any Encumbrances (except the liens securing the Corporation’s 11% senior secured notes due 2015 and the first lien floating rate notes due 2014 issued by Forbes Energy Services LLC and Forbes
Energy Capital Inc. and guaranteed by the Corporation (collectively, the “Notes”) , and no person, firm or corporation has any agreement or any option right or privilege (whether pre-emptive or contractual) capable of becoming an
agreement, for the purchase from the Corporation or any of the Forbes Subsidiaries of any interest in any of the shares in its capital or membership interests of any of the Forbes Subsidiaries; 

 

	 	(r)	the Corporation’s Continuous Disclosure Documents, after taking into account any amendments thereto filed prior to the date hereof, do not contain any any untrue
statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances in which they were made, not false or misleading; 

 

	 	(s)	the Corporation is, and will on the Closing Date be, a “reporting issuer”, not in default of its obligations under Canadian Securities Laws, and no material
change relating to the Corporation has occurred with respect to which the requisite material change report has not been filed under Canadian Securities Laws and no such disclosure has been made on a confidential basis; 

 

	 	(t)	there has not been any “reportable event” (within the meaning of National Instrument 51-102 - Continuous Disclosure Obligations of the Canadian
securities regulatory authorities, as amended) with the present or former auditors of the Corporation; 

  

	 	(u)	the auditors of the Corporation who audited the financial statements for the year ended December 31, 2009 and who provided their audit report thereon are
independent public accountants in accordance with the Canadian Public Accountability Board; 

  

	 	(v)	to the Corporation’s knowledge, the Corporation maintains a system of internal accounting controls sufficient to provide reasonable assurance that transactions are
recorded as necessary to facilitate preparation of financial statements in conformity with United States generally accepted accounting principles and to maintain accountability for assets, except for the deficiencies and material weaknesses
described in the Corporation’s Continuous Disclosure Documents; 

  

	 	(w)	other than as disclosed in the Corporation’s Continuous Disclosure Documents, since December 31, 2009, 

  
 - 11 -

	 	(i)	there has been no material change (actual, anticipated, proposed or prospective, whether financial or otherwise) in the business, operations, capital, properties,
assets, liabilities (absolute, accrued, contingent or otherwise), ownership or condition (financial or otherwise) or results of operations of the Corporation and its Subsidiaries taken as a whole (or their properties or assets);

  

	 	(ii)	the Corporation and its Subsidiaries have carried on their respective businesses in the ordinary course and there has been no transaction entered into by the
Corporation or its Subsidiaries which is material to the Corporation and its Subsidiaries, taken as a whole, other than those in the ordinary course of business; and 

 

	 	(iii)	there has been no material change in the capital or long-term debt of the Corporation or its Subsidiaries; 

 

	 	(x)	other than as disclosed in the Corporation’s Continuous Disclosure Documents, the Corporation has not entered into nor has any present intention to enter into any
agreement to acquire any securities in any other corporation or entity or to acquire or lease any other business operations which are material to the business, operations, capital, properties, assets, liabilities (absolute, accrued, contingent or
otherwise), ownership or condition (financial or otherwise) or results of operations of the Corporation and its Subsidiaries taken as a whole (or their properties or assets); 

 

	 	(y)	there is no action, suit, proceeding or investigation in respect of Corporation and the Subsidiaries, taken as a whole, pending or, to the knowledge of the Corporation,
threatened against or affecting the Corporation and its Subsidiaries, taken as a whole, at law or in equity or before or by any Governmental Authority which could reasonably be expected to have a Material Adverse Effect; 

 

	 	(z)	no order, ruling or determination by any Governmental Authority or stock exchange having the effect of suspending the sale or ceasing the trading of any securities of
the Corporation has been issued or made and is continuing in effect and no proceedings for that purpose have been instituted or are pending or, to the Corporation’s knowledge, contemplated or threatened by any such authority or under any
Securities Laws; 

  

	 	(aa)	other than as disclosed in the Corporation’s Continuous Disclosure Documents, none of the Corporation’s Subsidiaries are in violation of their Constating
Documents or resolutions of its securityholders, directors, or any committee of its directors, or in default in the performance or observance of any material terms, obligation, agreement, covenant or condition contained in any contract, indenture,
trust, deed, mortgage, loan agreement, note, lease or other agreement or instrument to which it is a party or by which it or its property may be bound and there exists no state of facts which, after notice or lapse of time or both, or otherwise,
would constitute a default under or breach of a material obligation, agreement, covenant or condition of any of such documents except where this would not have a Material Adverse Effect; 

  
 - 12 -

	 	(bb)	taking into account any amendments or restatements that have been subsequently filed as part of the Corporation’s Continuous Disclosure Documents, all financial
statements forming part of the Corporation’s Continuous Disclosure Documents, as of their respective dates, are complete and comply with Securities Laws in all material respects, and fairly present the consolidated financial position of the
Corporation’s results of operations and cash flows as of the dates and for the periods indicated, and have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis throughout such
periods; 

  

	 	(cc)	there has not been any material change in the capital, assets, liabilities or obligations (absolute, accrued, contingent or otherwise) of the Corporation from the
position set forth in the most recently filed financial statements forming part of the Corporation’s Continuous Disclosure Documents and there has not occurred any facts, transactions, events or occurrences having a Material Adverse Effect
since December 31, 2009; 

  

	 	(dd)	the Corporation, as a voluntary filer, has filed reports of the same nature as those required to be filed, pursuant to Section 13 of the U.S. Exchange Act, by
companies that have a class of securities registered under the U.S. Exchange Act; 

  

	 	(ee)	to the Corporation’s knowledge, no insider of the Corporation has a present intention to sell any securities of the Corporation other than as disclosed to the
Purchasers; 

  

	 	(ff)	the form and terms of definitive certificates representing the Series B Preferred Shares and the Common Shares issuable upon their conversion have been duly approved
and adopted by the Corporation and comply with all Applicable Law relating thereto; 

  

	 	(gg)	to the knowledge of the Corporation, none of its directors or officers are subject to an order or ruling of any securities regulatory authority or stock exchange
prohibiting such individual from acting as a director or officer of a public company or of a company listed on a particular stock exchange; 

  

	 	(hh)	the Series B Preferred Shares to be issued to the Purchasers on the Closing Date have been duly authorized and approved by all requisite corporate action for future
issuance and will, when issued, be duly and validly issued, fully paid and non-assessable and free of all Encumbrances attributable to the Corporation and all of the Series B Preferred Shares to be issued by the Corporation if it exercises its
rights to pay interest in the form of additional Series B Preferred Shares as per the terms of the Series B Preferred Shares have been duly reserved and will, when and if issued, be duly and validly issued, fully paid and non-assessable and free of
all Encumbrances attributable to the Corporation; 

  

	 	(ii)	the Common Shares to be issued to the Purchasers upon conversion of the Series B Preferred Shares (in accordance with their terms) have been duly reserved and approved
by all requisite corporation action for future issuance and will, when issued, be duly and validly issued, fully paid and non-assessable and free of all Encumbrances attributable to the Corporation; 

  
 - 13 -

	 	(jj)	the Corporation will not, until the earlier of the Maturity Date and the Redemption Date following which there are no Series B Preferred Shares issued and outstanding,
issue or designate any new class or series of Preference Shares that ranks senior in priority to the Series B Preferred Shares; 

  

	 	(kk)	none of the Corporation, its affiliates or any person acting on their behalf, has engaged or will engage in any Directed Selling Efforts with respect to the Series B
Preferred Shares; 

  

	 	(ll)	the Corporation is not, and following the application of the proceeds of the sale of the Series B Preferred Shares, will not be registered or required to be registered
as an “investment company” under the United States Investment Company Act of 1940, as amended; 

  

	 	(mm)	none of the Corporation, its affiliates or any person acting on their behalf, has engaged in any form of General Solicitation or General Advertising or in any conduct
involving a public offering within the meaning of Section 4(2) of the U.S. Securities Act in connection with any offer or sale of the Series B Preferred Shares in the United States; 

 

	 	(nn)	none of the Corporation, its affiliates or any person acting on their behalf have taken, or will take, any action that would cause the exemptions or exclusions from
registration, under Regulation S or Rule 506 of Regulation D to be unavailable for the offer and sale of the Series B Preferred Shares pursuant to this Agreement; 

 

	 	(oo)	the Series B Preferred Shares are not, and as of the Closing Time, the Series B Preferred Shares will not be, and no securities of the same class as the Series B
Preferred Shares are or will be, listed on a national securities exchange in the United States registered under Section 6 of the U.S. Exchange Act, quoted in an “automated inter-dealer quotation system”, as such term is used in the
U.S. Exchange Act; 

  

	 	(pp)	in connection with offers and sales of Series B Preferred Shares, the Corporation will, within prescribed time periods, prepare and file any forms or notices required
under the U.S. Securities Act or laws in any state of the United States (i.e. applicable blue sky laws); 

  

	 	(qq)	in connection with offers and sales of Series B Preferred Shares, the Corporation, its respective affiliates and any person acting on its or their behalf have complied
and will comply with the requirements for an “offshore transaction”, as such term is defined in Regulation S, for all sales made outside of the United States; 

 

	 	(rr)	none of the Corporation or any of its predecessors or affiliates have been subject to any order, judgment, or decree of any court of competent jurisdiction temporarily,
preliminarily or permanently enjoining such person for failure to comply with Rule 503 under Regulation D; 

  
 - 14 -

	 	(ss)	if the Corporation is a “passive foreign investment company” within the meaning of Section 1297(a) of the United States Internal Revenue Code of 1986, as
amended (the “Code”), as determined by the Corporation or any Purchaser in the United States, during any calendar year following the purchase of Series B Preferred Shares pursuant to this Agreement, the Corporation will provide to
such person, upon written request, all information that would be required for income tax reporting purposes by a United States securityholder making an election to treat the Corporation as a “qualified electing fund” for the purposes of
the Code; 

  

	 	(tt)	the minute books of each of the Corporation and its Subsidiaries are, in all material respects, true and correct and contain copies of all minutes of all meetings and
all resolutions of the directors, committees of directors and shareholders of the Corporation and its Subsidiaries and all such meetings were duly called and properly held and all consent resolutions were properly adopted; 

 

	 	(uu)	subject to the disclosures regarding deficiencies and material weaknesses in internal controls set forth in the Corporation’s Continuous Disclosure Documents, the
books of account and other records of the Corporation and its Subsidiaries, whether of a financial or accounting nature or otherwise, have been maintained in accordance with prudent business practices; 

 

	 	(vv)	each of the Corporation and its Subsidiaries has duly and on a timely basis, subject to standard extensions, filed all tax returns required to be filed by it, has paid
all taxes due and payable by it and has paid all assessments and reassessments and all other taxes, governmental charges, penalties, interest and other fines due and payable by it and which were claimed by any Governmental Authority to be due and
owing and adequate provision has been made for taxes payable for any completed fiscal period for which tax returns are not yet required and there are no agreements, waivers, or other arrangements providing for an extension of time with respect to
the filing of any tax return or payment of any tax, governmental charge or deficiency by the Corporation or any of its Subsidiaries and, to the Corporation’s knowledge, there are no actions, suits, proceedings, investigations or claims
threatened or pending against the Corporation or any of its Subsidiaries in respect of taxes, governmental charges or assessments or any matters under discussion with any Governmental Authority relating to taxes, governmental charges or assessments
asserted by any such authority; 

  

	 	(ww)	with respect to each of the premises of the Corporation and its Subsidiaries which is material to the Corporation on a consolidated basis and which the Corporation or
any of its Subsidiaries occupies as tenant (the “Leased Premises”), the Corporation or such Subsidiary occupies the Leased Premises and has the exclusive right to occupy and use the Leased Premises and each of the leases pursuant to
which the Corporation and/or its Subsidiaries occupies the Leased Premises is in good standing and in full force and effect except where any deficiencies would not have a Material Adverse Effect; 

  
 - 15 -

	 	(xx)	except to the extent that any violation or other matter referred to in this subsection would not have a Material Adverse Effect: 

 

	 	(i)	neither the Corporation nor any of its Subsidiaries is in violation of any applicable federal, provincial, municipal or local laws, regulations, orders, government
decrees or ordinances with respect to environmental, health or safety matters (collectively, “Environmental Laws”); 

  

	 	(ii)	the Corporation and each of its Subsidiaries have operated its business at all times and have received, handled, used, stored, treated, shipped and disposed of all
contaminants without violation of Environmental Laws; 

  

	 	(iii)	there have been no spills, releases, deposits or discharges of hazardous or toxic substances, contaminants or wastes into the earth, air or into any body of water or
any municipal or other sewer or drain water systems by the Corporation or any of its Subsidiaries that have not been remedied or that are not presently being remedied; 

 

	 	(iv)	no orders, directions or notices have been issued and remain outstanding pursuant to any Environmental Laws relating to the business or assets of the Corporation or any
of its Subsidiaries; 

  

	 	(v)	neither the Corporation nor any of its Subsidiaries have failed to report to the proper Government Authority the occurrence of any event which is required to be so
reported by any Environmental Law; and 

  

	 	(vi)	the Corporation and each of its Subsidiaries holds all licences, permits and approvals required under any Environmental Laws in connection with the operation of its
business and the ownership and use of its assets, all such licences, permits and approvals are in full force and effect, and the Corporation has not received any notification pursuant to any Environmental Laws that any work, repairs, constructions
or capital expenditures are required to be made by it as a condition of continued compliance with any Environmental Laws, or any licence, permit or approval issued pursuant thereto, or that any licence, permit or approval referred to above is about
to be reviewed, made subject to limitation or conditions, revoked, withdrawn or terminated; 

  

	 	(yy)	any and all operations of the Corporation and its Subsidiaries and, to the knowledge of the Corporation, any and all operations by third parties, on or in respect of
the assets and properties of the Corporation, have been conducted in accordance with good industry practices and in material compliance with Applicable Laws, except where the failure to so operate would not have a Material Adverse Effect;

  

	 	(zz)	 there has not been and there is not currently any labor disruption, grievance, arbitration proceeding or other conflict which could reasonably be
expected to have a Material Adverse Effect, and the Corporation and each of its Subsidiaries is in compliance with Applicable Law respecting employment and employment 

  
 - 16 -

	 	 
practices, terms and conditions of employment and wages and hours, except where non-compliance with any such provisions would not have a Material Adverse Effect; 

 

	 	(aaa)	no union has been accredited or otherwise designated to represent any employees of the Corporation or any of its Subsidiaries and, to the knowledge of the Corporation,
no accreditation request or other representation question is pending with respect to the employees of the Corporation or any of its Subsidiaries and no collective agreement or collective bargaining agreement or modification thereof has expired or is
in effect in any of the Corporation’s facilities and none is currently being negotiated by the Corporation or any of its Subsidiaries; 

  

	 	(bbb)	the Corporation has its and its Subsidiaries properties and assets insured against loss or damage by insurable hazards or risks on a replacement cost basis. Such
insurance coverage is of a type and in an amount typical to the business in which the Corporation operates as conducted by a reasonably prudent person based on the advice of reputable insurance brokers consulted by such person. In the last twelve
months the Corporation has not made any material claim on any policy of insurance or been refused any insurance coverage sought or applied for. The Corporation does not have any reason to believe that it will not be able to renew the existing
insurance coverage of the Corporation as and when such coverage expires or obtain similar coverage from similar insurers as may be necessary to continue with its businesses at a cost that would not have a Material Adverse Effect;

  

	 	(ccc)	to the Corporation’s knowledge, subject to the existing bad debt reserve, all material receivables recorded on the books of each of the Corporation and its
Subsidiaries are bona fide and are good and collectible without set off or counterclaim; 

  

	 	(ddd)	the Corporation and each of its Subsidiaries owns or has the right to use under licence, sub-license or otherwise all material intellectual property used by the
Corporation and its Subsidiaries in its business, including copyrights, industrial designs, trademarks, trade secrets, knowhow and proprietary rights, free and clear of all Encumbrances except liens securing the Notes, and except where the failure
to own or license such material would not have a Material Adverse Effect; 

  

	 	(eee)	except as disclosed in the Corporation’s Continuous Disclosure Documents, neither the Corporation nor any of its Subsidiaries have received any communications
alleging that the Corporation or the Subsidiaries have violated or, by conducting its business as proposed, would violate any existing patents or patents pending of any other person or entity and the Corporation is not aware of any potential basis
for such an allegation or of any reason to believe that such an allegation may be forthcoming or that there is any such violation except where such allegation and the consequences of such allegation would not be expected to have a Material Adverse
Effect; 

  

	 	(fff)	 to the Corporation’s knowledge, all material bonuses, commissions, salaries and other amounts owing to employees are reflected and have been
accrued in the 

  
 - 17 -

	 	 
books of account of the Corporation, except for bonuses awarded by the Corporation for annual periods on or after April 1, 2010 in the ordinary course of business that have not been granted
to date; 

  

	 	(ggg)	neither the Corporation nor any of its Subsidiaries is a party to or bound by any agreement of guarantee, indemnification (other than an indemnification of directors
and officers in accordance with the bye-laws of the Corporation and Applicable Laws, indemnification agreements or covenants that are entered into arising in the ordinary course of business, including operating and similar agreements,
indemnification and contribution provisions in agency and underwriting agreements, transfer agency agreements, indentures and credit borrowing agreements) or any other like commitment of the obligations, liabilities (contingent or otherwise) of
indebtedness of any other person except any guarantee of the Notes; 

  

	 	(hhh)	except as set forth in the Corporation’s Continuous Disclosure Documents, neither the Corporation nor any of its Subsidiaries have any loans or other indebtedness
which have been made to or from any of its shareholders, officers, directors or employees or any other person not dealing at arm’s length with it that are currently outstanding; 

 

	 	(iii)	there are no actions, suits, proceedings or inquiries in existence or, to the knowledge of the Corporation, pending or threatened against or affecting the Corporation
or any of its Subsidiaries at law or in equity or before or by any federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality the impact of which would have a Material Adverse Effect
or which affects or may affect the Private Placement or which would impair the ability of the Corporation to consummate the transactions contemplated hereby or to duly observe and perform any of its covenants or obligations contained in this
Agreement or the Registration Rights Agreement and the Corporation is not aware of any existing ground on which such action, suit, proceeding or inquiry might be commenced with any reasonable likelihood of success; 

 

	 	(jjj)	Codan Services Limited has been duly appointed as registrar of the Common Shares in Bermuda and CIBC Mellon Trust Company has been duly appointed as branch registrar
and transfer agent of the Common Shares in Canada; 

  

	 	(kkk)	except as disclosed in the Corporation’s Continuous Disclosure Documents, the Corporation is not a party to any written contracts of employment with its executive
officers which may not be terminated on one month’s notice or which provide for payments occurring on a change of control of the Corporation; 

  

	 	(lll)	 except as disclosed in the Corporation’s Public Disclosure Documents, there are no material contracts or agreements to which the Corporation or
any of its Subsidiaries is a party or by which it is bound and each of such contracts and agreements constitute a legally valid and binding agreement of the Corporation and/or Subsidiary enforceable in accordance with their respective terms and, to
the knowledge of the Corporation, no party thereto is in default thereunder, which 

  
 - 18 -

	 	 
default could reasonably be expected to have a Material Adverse Effect. For the purposes of this subsection, any contract or agreement pursuant to which the Corporation or any of its Subsidiaries
will, or may reasonably be expected to, result in a requirement to expend more than an aggregate of $250,000 or receive or be entitled to receive revenue of more than $250,000, in either case in the next 12 months, or is out of the ordinary course
of business of the Corporation, will be considered to be material; 

  

	 	(mmm)	other than the Rights Agreement, the Corporation does not have in place a shareholder rights protection plan or other similar type of plan or arrangement;

  

	 	(nnn)	based on the Corporation’s board of directors approving the transaction contemplated under the terms of this Agreement, such transaction does not constitute a
Flip-In Event or make any of the Purchasers or West Face Capital Inc. an Acquiring Person for the purposes of and as defined under the Rights Agreement; 

  

	 	(ooo)	except for the Shareholders’ Agreement and the Nominating and Voting Agreement, to its knowledge, neither the Corporation nor any of its shareholders is a party to
any unanimous shareholders agreement, pooling agreement, voting trust or other similar type of arrangements in respect of outstanding securities of the Corporation; 

 

	 	(ppp)	there has not been any material disagreement with the Corporation’s auditors and the Corporation has no current intention to change auditors;

  

	 	(qqq)	to the knowledge of the Corporation, there is no plan in place to change the management of the Corporation within the period that is six months following the date
hereof, except as otherwise disclosed to the Purchasers; 

  

	 	(rrr)	the net proceeds to the Corporation from the sale of the Series B Preferred Shares in accordance with this Agreement will first be used on or before June 30, 2010,
to repurchase, in cash, $6.6 million of 11% senior secured notes issued by Forbes Energy Services LLC and Forbes Energy Capital Inc. and the remainder of the proceeds will be used for general corporate purposes; and 

 

	 	(sss)	the Corporation acknowledges that the Purchasers will rely on the representations and warranties (and where applicable, covenants) made herein by it in completing the
transactions contemplated by this Agreement. 

  

	3.02	Representations, Warranties and Covenants of the Purchasers 

 (1) Each of the Purchasers makes the following representations and warranties (and where applicable, covenants), as applicable, on a several and not a joint basis, to the Corporation: 

 

	 	(a)	it is a limited partnership existing under the laws of British Columbia (in the case of West Face LP), or a limited partnership existing under the laws of Delaware (in
the case of West Face USA LP), or a limited partnership existing under the laws of the Cayman Islands (in the case of West Face Master LP) and that it has the power to enter into and perform its obligations under this Agreement.

  
 - 19 -

	 	(b)	the execution, delivery and performance by it of this Agreement by and through West Face Capital Inc., its duly authorized advisor: 

 

	 	(i)	has been duly authorized by all necessary action on its part; 

  

	 	(ii)	does not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or a violation of, or conflict
with, any of the terms or provisions of any agreement to which they are a party or pursuant to which any of its assets or property may be affected that would, individually or in the aggregate, have a material effect on the ability of it to perform
its obligations hereunder; and 

  

	 	(iii)	will not result in the violation of any Applicable Law that would not individually or in the aggregate have a material effect on the ability of it to perform its
obligations hereunder; 

  

	 	(c)	this Agreement has been duly executed and delivered by the Purchaser and is a valid and binding obligation of the Purchaser, enforceable against it in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, fraudulent conveyance and other laws affecting the enforcement of creditors’ rights generally; by general principles of
equity (whether brought in a proceeding at law or in equity); and by the fact that rights to waiver, and the ability to sever unenforceable terms, may be limited by Applicable Law; 

 

	 	(d)	either: 

  

	 	(i)	it is not a person in the United States or Canada and it is acquiring or will acquire Series B Preferred Shares and any Common Shares issuable on conversion of any
Series B Preferred Shares in accordance with Rule 903 under Regulation S, or 

  

	 	(ii)	it is a person in Canada and it is acquiring or will acquire Series B Preferred Shares and any Common Shares issuable on conversion of any Series B Preferred Shares in
accordance with Rule 903 under Regulation S and it: 

  

	 	(A)	is purchasing the Series B Preferred Shares as principal within the meaning of the Canadian Securities Laws, for its own account and not for the benefit of any other
person, for investment only and not with a view to the resale or distribution of all or any of such Series B Preferred Shares; 

  

	 	(B)	 is resident in the Province of British Columbia, and is an “accredited investor” as that term is defined in National Instrument 45-106
Prospectus Registration Exemptions of the Canadian 

  
 - 20 -

	 	 
Securities Administrators by virtue of its status as an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser; and

  

	 	(C)	it acknowledges that: 

  

	 	(I)	no securities commission or similar regulatory authority has reviewed or passed on the merits of the Series B Preferred Shares; 

 

	 	(II)	there is no government or other insurance covering the Series B Preferred Shares; 

 

	 	(III)	there are risks associated with the purchase of the Series B Preferred Shares; 

 

	 	(IV)	there are restrictions under the Canadian Securities Laws on the Purchaser’s ability to resell the Series B Preferred Shares and the Common Shares issuable on
conversion of the Series B Preferred Shares, that it has been advised to consult its own legal advisors with respect to the particulars of such resale restrictions, and that it is the Purchaser’s sole responsibility to find out what those
restrictions are and to comply with them; and 

  

	 	(V)	the Corporation has advised the Purchaser that the Corporation is relying on an exemption from the requirements to provide the Purchaser with a prospectus and to sell
the Series B Preferred Shares through a person or company registered to sell securities under the Canadian Securities Laws and, as a consequence of acquiring the Series B Preferred Shares pursuant to this exemption, certain protections, rights and
remedies provided by the Act, including statutory rights of rescission or damages, will not be available to the Purchaser; or 

  

	 	(iii)	it is a person in the United States and: 

  

	 	(A)	understands that that the Series B Preferred Shares and the Common Shares issuable on the conversion of such Series B Preferred Shares acquired by it have not been and
will not be registered under the U.S. Securities Act and that the sale to it contemplated hereby is being made in reliance on a private placement exemption pursuant to Regulation D; 

 

	 	(B)	has had access to information concerning the Corporation as it has considered necessary in connection with its decision to invest in the Series B Preferred Shares and
the Common Shares issuable on the conversion of such Series B Preferred Shares; 

  
 - 21 -

	 	(C)	has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Series B Preferred
Shares and the Common Shares issuable on the conversion of such Series B Preferred Shares and is able to bear the economic risks of such investment; 

  

	 	(D)	is an “accredited investor” as defined in Rule 501 under Regulation D; 

 

	 	(E)	acknowledges that it is not purchasing the Series B Preferred Shares and the Common Shares issuable on the exchange of such Series B Preferred Shares as a result of any
general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising; and 

  

	 	(e)	it acknowledges that the Corporation will rely on the representations and warranties (and where applicable, covenants) made herein by it in completing the transactions
contemplated by this Agreement. 

  

	3.03	Knowledge 

 (1) For
the purposes of any representation or warranty in this Article 3 made to a party’s “knowledge”, the term “knowledge” means actual knowledge of: 

 

	 	(a)	the indicated conclusion in respect of the relevant matter; or 

  

	 	(b)	facts that would reasonably lead to the indicated conclusion in respect of the relevant matter; 

 on the part of the executive officers of the representing party. 
  

	3.04	Legending of Certificates 

 (1) The Purchasers acknowledge that, in accordance with the requirements of U.S. Securities Laws, the certificates representing the Series B Preferred Shares to be issued pursuant to the terms of this
Agreement (and the Common Shares issuable upon the conversion thereof) will be inscribed with the following restrictive legend: 

“THE ISSUANCE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THESE SECURITIES, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF FORBES ENERGY SERVICES LTD. THAT, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER, THESE SECURITIES 

  
 - 22 -

 
MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO FORBES ENERGY SERVICES LTD., (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S
(“REGULATION S”) UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE CANADIAN LOCAL OR OTHER APPLICABLE FOREIGN LAWS AND REGULATIONS, (C) WITHIN THE UNITED STATES IN ACCORDANCE WITH RULE 144 UNDER THE U.S. SECURITIES ACT
AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO
(C) OR (D) ABOVE, A LEGAL OPINION REASONABLY SATISFACTORY TO FORBES ENERGY SERVICES LTD. MUST FIRST BE PROVIDED.” 
 (2) The Purchasers may, at any time and from time to time, exchange a certificate bearing the restrictive legend referred to in Section 3.04(1) for a certificate bearing no such legend upon having
furnished evidence satisfactory to the Corporation, acting reasonably, which may include the requirement for the delivery of an opinion of counsel, that the removal of such restrictive legend would not be contrary to Applicable Law, provided that
evidence satisfactory to the Corporation with respect to the removal of the restrictive legend shall be deemed satisfied (and no opinion of counsel shall be required) if such person furnishes to the Corporation a written certification signed by such
person that it intends to immediately resell the Common Shares represented by such certificate (which Common Shares were issued as a result of the conversion of the Series B Preferred Shares) on the TSX in accordance with Rule 904 of Regulation S.
In such event, the legend shall not be required on any shares sold pursuant to Rule 904 of Regulation S, but will be affixed to any shares not sold for which a new certificate or certificates are issued. 

(3) The Purchasers acknowledge that, in accordance with the requirements of Canadian Securities Laws, the certificates representing the
Series B Preferred Shares to be issued pursuant to the terms of this Agreement (and the Common Shares issuable upon the conversion thereof) will be inscribed with the following restrictive legend: 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES MUST NOT TRADE THE SECURITIES BEFORE [INSERT THE DATE
THAT IS 4 MONTHS AND A DAY AFTER THE ISSUE DATE].” 
 (4) The Purchasers may, at any time and from time to time,
exchange a certificate bearing the restrictive legend referred to in Section 3.04(3) for a certificate bearing no such legend upon expiry of the restrictive period detailed in such legend. 

 

	3.05	Survival of Representations and Warranties 

 The representations and warranties (and where applicable, covenants) of the parties contained in Sections 3.01 and 3.02 are given as of the date hereof and will survive the Closing Date and survive the
closing of the transactions contemplated in this Agreement and will continue in full force and effect for a period ending on the later of: (i) the date that is six years 

  
 - 23 -

 
following the Closing Date, and (ii) the latest date under applicable Securities Laws (non-residents of Canada being deemed to be resident in the Province of Alberta for such purposes) that
an action may be commenced or a right of rescission may be exercised with respect to a misrepresentation in connection with the offering the Series B Preferred Shares. 
 ARTICLE 4 - CONDITIONS OF CLOSING 
  

	4.01	Conditions of Closing 

 (1) The obligation of each Purchaser to complete the Private Placement is subject to the satisfaction, on or before the Closing Date, of the following conditions being satisfied in full which conditions
are for the exclusive benefit of each Purchaser, any of which may be waived with respect to such Purchaser, in whole or in part, by such Purchaser on its own behalf, in its sole and absolute discretion, without prejudice to its right to rely on any
other or others of them: 
  

	 	(a)	the representations and warranties of the Corporation contained in Section 3.01 will be true in all material respects on the Closing Date with the same effect as
though made at and as of such date, except that representations and warranties with materiality qualifiers shall be true in all respects and except for representations and warranties that speak as of specific prior dates; 

 

	 	(b)	each of the acts and undertakings of the Corporation to be performed on or before the Closing Date pursuant to the terms of this Agreement will have been duly performed
by them; 

  

	 	(c)	since the date of execution of this Agreement, there will have been no change in business, operations, capital, properties, assets, liabilities (absolute, accrued,
contingent or otherwise), ownership or condition (financial or otherwise) or results of operations of the Corporation and its Subsidiaries that would be reasonably expected to have a Material Adverse Effect; 

 

	 	(d)	the Corporation will have obtained Exchange Approval in a form acceptable to the Purchasers, acting reasonably, subject only to the filing, after the Closing Date, of
documents customary for similar transactions and the payment of any applicable listing fees; 

  

	 	(e)	all of the Class B Shares will have been converted into Common Shares in accordance with the Corporation’s Constating Documents so that no Class B Shares will be
issued or outstanding; 

  

	 	(f)	the Corporation and the Purchasers will have entered into the Registration Rights Agreement; 

 

	 	(g)	John E. Crisp, Charles C. Forbes and Janet Forbes (collectively, the “Founders”) will have executed a consent pursuant to Section 4 of the
Nominating and Voting Agreement, in a form satisfactory to the Purchasers, acting reasonably; and 

  

	 	(h)	the Founders will have executed a waiver or amendment in accordance with Section 5.5 of the Shareholders’ Agreement and confirmed their respective registration
rights thereunder in relation to the Purchasers, all in a form satisfactory to the Purchasers, acting reasonably. 

  
 - 24 -

 (2) The obligations of the Corporation to complete the Private Placement are subject to the
satisfaction, on or before the Closing Date, of the following conditions being satisfied in full which conditions are for the exclusive benefit of the Corporation any of which may be waived by the Corporation, in whole or in part, without prejudice
to its rights to rely on any other or others of them; 
  

	 	(a)	the representations and warranties of the Purchasers contained in Section 3.02, will be true in all material respects on the Closing Date with the same effect as
though made at and as of such time, except that their representations and warranties with materiality qualifiers shall be true in all respects and except for representations and warranties that speak as of specific prior dates;

  

	 	(b)	each of the acts and undertakings of the Purchasers to be performed on or before the Closing Date pursuant to the terms of this Agreement will have been duly performed
by it; 

  

	 	(c)	the Corporation will have obtained Exchange Approval, subject only to the filing, after the Closing Date, of documents customary for similar transactions and the
payment of applicable listing fees; and 

  

	 	(d)	the successful conversion of the Class B Shares into Common Shares. 

 ARTICLE 5 - CLOSING 
  

	5.01	Time and Place 

Subject to the terms and conditions hereof, the Private Placement will be completed at 9:00 a.m. (Texas time) on the Closing Date (the
“Closing”) at the offices of Winstead PC, counsel to the Corporation, or at such other time and place as the parties may agree. 
  

	5.02	Closing Deliveries by the Corporation 

 (1) At the Closing, the Corporation will deliver the following to the Purchasers, as applicable: 
  

	 	(a)	duly issued certificates representing the Series B Preferred Shares, registered in the names of each the Purchasers, respectively; 

 

	 	(b)	certified copies of the resolutions of the board of directors of the Corporation approving this Agreement, the Registration Rights Agreement and the consummation of the
transactions contemplated by each of this Agreement and the Registration Rights Agreement; 

  

	 	(c)	a duly executed counterpart copy of the Registration Rights Agreement; 

  

	 	(d)	a certificate of a senior officer of the Corporation that all of the representations and warranties of the Corporation contained in Section 3.01 hereof are true
and correct as of the Closing Date in all material respects, except that representations and warranties with materiality qualifiers shall be true in all respects; 

  
 - 25 -

	 	(e)	favourable corporate, enforceability and securities legal opinions under the laws of British Columbia, Ontario, the United States and the Cayman Islands, dated the
Closing Date and addressed to each of the Purchasers, in form and substance satisfactory to each of the Purchasers, acting reasonably, with respect to such matters contemplated by this Agreement as each of the Purchasers may reasonably request; and

  

	 	(f)	written evidence of Exchange Approval; and 

  

	 	(g)	such other documents as the Purchasers may reasonably request. 

  

	5.03	Closing Deliveries by the Purchasers 

 (1) At the Closing, the Purchasers, as applicable, will deliver to the Corporation: 
  

	 	(a)	a certificate of a senior officer of the advisor of the Purchasers that all of the representations and warranties of the Purchasers contained in Section 3.02, as
applicable, are true and correct as of the Closing Date in all material respects, except that representations and warranties with materiality qualifiers shall be true in all respects; 

 

	 	(b)	a duly executed counterpart copy of the Registration Rights Agreement; and 

 

	 	(c)	a wire transfer or bank transfer, in the amount representing the Subscription Amount for the Series B Preferred Shares being issued and sold by the Corporation to the
Purchasers at the Closing Time under this Agreement net of (i) the Fee, and (ii) any reimbursable expenses payable by the Corporation to the Purchasers in accordance with Section 7.09 and determinable at the Closing Time, as
acknowledged in advance by the Corporation. 

 ARTICLE 6 - TERMINATION 

 

	6.01	Termination by the Corporation 

 (1) The Corporation will be entitled, by giving written notice to the Purchasers in accordance with Section 7.07, at any time prior to the Closing Date and in its sole discretion, to elect to
terminate and cancel, without any liability on its part, its obligations under this Agreement if: 
  

	 	(a)	any inquiry, investigation (whether formal or informal) or other proceeding is commenced by a Governmental Authority pursuant to Applicable Laws in relation to the
Corporation or its Subsidiaries or in relation to any of the directors and officers of the Corporation, any of which suspends or ceases trading in the Common Shares or operates to prevent or restrict the lawful distribution of the Series B Preferred
Shares or the Common Shares issuable upon conversion of the Series B Preferred Shares; 

  
 - 26 -

	 	(b)	any order is issued by a Governmental Authority pursuant to Applicable Laws, or if there is any change of Applicable Law, either of which suspends or ceases trading in
the Common Shares or operates to prevent or restrict the lawful distribution of the Series B Preferred Shares or the Common Shares issuable upon conversion of the Series B Preferred Shares; or 

 

	 	(c)	any of the conditions set out in Section 4.01(2) are not satisfied by the Closing Date; 

 provided, however, that the Corporation will be entitled to make such election to terminate only if the Corporation has used best efforts to comply with its obligations under this Agreement which directly
or indirectly relate to the relevant termination right which are required to have been performed prior to the time of giving such notice to the Purchasers 
  

	6.02	Termination by the Purchasers 

 (1) The Purchasers will be entitled acting jointly, by giving written notice to the Corporation in accordance with Section 7.07, at any time prior to the Closing Date and in their sole discretion, to
elect to terminate and cancel, without any liability on their part, their obligations under this Agreement, if: 
  

	 	(a)	any inquiry, investigation (whether formal or informal) or other proceeding is commenced by a Governmental Authority pursuant to Applicable Laws in relation to the
Corporation or its Subsidiaries or in relation to any of the directors and officers of the Corporation, any of which suspends or ceases trading in the Common Shares or operates to prevent or restrict the lawful distribution of the Series B Preferred
Shares or the Common Shares issuable upon conversion of the Series B Preferred Shares; 

  

	 	(b)	any order is issued by a Governmental Authority pursuant to Applicable Laws, or if there is any change of Applicable Law, either of which suspends or ceases trading in
the Common Shares or operates to prevent or restrict the lawful distribution of the Series B Preferred Shares or the Common Shares issuable upon conversion of the Series B Preferred Shares; 

 

	 	(c)	there should develop or occur or come into effect, any catastrophe of national or international consequence or any law or other occurrence of any nature whatsoever that
in the reasonable opinion of such Purchaser, seriously adversely affects, or will seriously adversely affect the financial markets in Canada or the U.S. or which results in or will result in an adverse material change; 

 

	 	(d)	an event, circumstance, fact, act or omission which is or would reasonably be expected to affect, and be materially adverse to, the nature, business, prospects, assets,
liabilities, financial condition or results of operations of, or manner of conducting, the business of the Corporation or the Corporation and its Subsidiaries, taken as a whole, or which may materially adversely affect the ability of the Purchasers
to recover all or any part of their investments in the Corporation; 

  
 - 27 -

	 	(e)	the Common Shares are de-listed or suspended or halted for trading for a period greater than one Business Day for any reason by the TSX at any time prior to the closing
of the Private Placement; 

  

	 	(f)	the Corporation is in default of its obligations hereunder and fails to remedy such breach on or before the earlier of (i) the date that is 5 days following the
date upon which the Purchasers have been provided written notice of such breach in accordance with Section 7.07 and (ii) the Closing Date; or 

  

	 	(g)	if any of the conditions set out in Section 4.01(1) are not satisfied by the Closing Date. 

 Notwithstanding any other provision hereof, should the Corporation or the Purchasers validly terminate this Agreement pursuant to, and in accordance with, this Article 6, the obligations of the
Corporation and each of the Purchasers under this Agreement will terminate and there will be no further liability on the part of the Purchasers to the Corporation, on the part of the Corporation to the Purchasers, or on the part of any Purchaser to
the other Purchasers hereunder (except for any breach of this Agreement which occurred on or prior to the termination or for any liability of the Corporation to the Purchasers that exists at such time or that may arise thereafter pursuant to
Section 7.09). 
 ARTICLE 7 - GENERAL 

 

	7.01	Time of the Essence 

Time will be of the essence of this Agreement. 
  

	7.02	Benefit of the Agreement 

 This Agreement will enure to the benefit of and be binding upon the respective successors and permitted assigns of the parties hereto. 

 

	7.03	Further Assurances 

Each of the parties will take, from time to time and without additional consideration, such further actions and execute such additional
instruments as may be reasonably necessary or convenient to implement and carry out the intent and purpose of this Agreement. 
  

	7.04	Severability 

 If
any provision of this Agreement or any part hereof or thereof will be found or determined to be invalid, illegal or unenforceable in any jurisdiction, it will for the purposes of such jurisdiction only be severable from this Agreement and the
remainder of this Agreement will for the purposes of such jurisdiction only be construed as if such invalid, illegal or unenforceable provision or part had been deleted. 

 

	7.05	Amendments and Waivers 

 No modification of or amendment to this Agreement will be valid or binding unless set forth in writing and duly executed by the parties hereto and no waiver of any breach of any term

  
 - 28 -

 
or provision of this Agreement will be effective or binding unless made in writing and signed by the party purporting to give the same and, unless otherwise provided, will be limited to the
specific breach waived. 
  

	7.06	Assignment 

 Except
as otherwise expressly provided in this Agreement, no party may assign its rights or obligations under this Agreement without the prior written consent of the other parties. 

 

	7.07	Notices 

 All
notices (each, a “Notice”), given to another party hereto will be in writing, and will be addressed to such party as follows: 
 To the Corporation: 
 P.O. Box 2108 

Alice, Texas 

78333 
 Facsimile
No.: 361 664-0599 
 Attention: L. Melvin Cooper 
 With a copy, which shall not constitute notice, to: 
 Winstead PC 

24 Waterway Avenue 
 Suite 500 
 The Woodlands, Texas 

77380 
 Facsimile
No.: 281 681-5901 
 Attention: R. Clyde Parker, Jr. 
 To the Purchasers: 
 West Face Capital Inc. 

2 Bloor Street East 
 Suite 810, Box #85 
 Toronto, Ontario    M4W 1A8 

Facsimile No.: 647 724-8910 
 Attention: Peter Fraser 
 With a copy, which shall not constitute notice, to:

 McCarthy Tétrault LLP 
 Suite 5300, TD Bank Tower 
 Toronto Dominion Centre 

  
 - 29 -

 66 Wellington Street West 

Toronto, Ontario M5K 1E6 
 Facsimile No.: 416 868-0673 
 Attention: Andrew Parker 

or at such other address or fax number or to such other contact person as a party may give Notice to the other parties. All Notices will be given by
registered mail with acknowledgement of receipt, or by courier, or by fax, with confirmation by registered mail or courier with acknowledgment of receipt. All Notices will be effective and deemed given: 

 

	 	(a)	if delivered by hand, immediately; 

  

	 	(b)	in the case of delivery by mail or courier, two Business Days after the date of posting (if posted or couriered to an address in the same country) or five Business Days
after the date of posting (if sent by courier to an address in another country); and 

  

	 	(c)	in the case of fax, on receipt by the sender of a transmission control report from the dispatching machine showing the relevant number of pages and the correct
destination fax machine number and indicating that the transmission has been made without error; 

 but if the result is that a
Notice would be taken to be given or made on a day which is not a Business Day in the place to which the notice or communication is sent or is received later than 4:00 pm (local time), it will be taken to have been given or made at the commencement
of the next Business Day in that place. 
  

	7.08	Obligations Several 

The Corporation agrees that the obligations of the Purchasers hereunder are several and not joint or joint and several. 

 

	7.09	Fees and Expenses 

In addition to the payment of the Fee in accordance with Section 2.01(1), the Corporation is responsible for all expenses related to
the execution of this Agreement and the completion of the Private Placement in accordance with the terms herein, including the fees and expenses (including reasonable legal fees) of the Purchasers regardless of whether the Private Placement is
completed. For greater certainty, the Corporation agrees that under no circumstances will the Purchasers or West Face Capital Inc. be liable for any costs incurred in connection with the Private Placement. 

 

	7.10	Entire Agreement 

This Agreement and the Registration Rights Agreement constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and cancels and supersedes any prior understandings and agreements between the parties hereto with respect thereto. There are no representations, warranties, terms, conditions, undertakings or collateral agreements,

  
 - 30 -

 
express, implied or statutory, between the parties other than as expressly set forth in this Agreement. This Agreement and the Registration Rights Agreement supersede in its entirety the Term
Sheet, which upon the execution hereof will be of no further force and effect. 
  

	7.11	Governing Law 

This Agreement will be governed by and interpreted in accordance with the laws of Ontario and the federal laws of Canada applicable
therein without regard for any conflict of laws or choice of laws principles that would permit or require the application of the laws of any other jurisdiction. Each of the parties hereby irrevocably attorns to the non-exclusive jurisdiction of the
courts of the Province of Ontario with respect to any matters arising out of this Agreement. 
  

	7.12	Communications 

 No
party will issue any press release or otherwise make public statements with respect to this Agreement without the consent of the other parties (which consent shall not be unreasonably withheld or delayed). The Corporation and its Subsidiaries will
not make any filing with any Governmental Authority with respect to this Agreement without prior consultation with the Purchasers and the Purchasers will not make any filing with any Governmental Authority without prior consultation with the
Corporation. The foregoing will be subject to each party’s overriding obligation to make any disclosure or filing required under Applicable Laws, and the party making such disclosure will use all commercially reasonable efforts to give prior
written notice to the other parties in accordance with Section 7.07 and a reasonable opportunity to review or comment on the disclosure or filing, and if such prior notice is not possible, to give such notice immediately following the making of
such disclosure or filing. The Purchasers acknowledge that a press release and Form 8-K filing under U.S. Securities Laws and current report filing under Canadian Securities Laws will be required in connection with each of the execution and closing
of this Agreement and the transaction contemplated hereby. 
  

	7.13	Counterparts 

 This
Agreement may be executed in any number of counterparts, and it will not be necessary that the signatures of all parties be contained on any counterpart. Each counterpart will be deemed an original, but all counterparts together will constitute one
and the same instrument. A party may deliver an executed copy of this Agreement by facsimile or e-mail transmission, provided such party will thereafter deliver to the other parties an original executed copy of this Agreement. 

[The remainder of this page left intentionally blank] 

  
 - 31 -

 IN WITNESS WHEREOF the parties have executed this Agreement as of the date first written above. 

 

			
	FORBES ENERGY SERVICES LTD.
		
	By:	 	 /s/ John E. Crisp

		 	Title: President and Chief Executive Officer
	
	WEST FACE LONG TERM OPPORTUNITIES LIMITED PARTNERSHIP by its advisor, WEST FACE CAPITAL INC.
		
	By:	 	 /s/ John Maynard

		 	Title: Chief Financial Officer
	
	WEST FACE LONG TERM OPPORTUNITIES (USA) LIMITED PARTNERSHIP by its advisor, WEST FACE CAPITAL INC.
		
	By:	 	 /s/ John Maynard

		 	Title: Chief Financial Officer
	
	WEST FACE LONG TERM OPPORTUNITIES MASTER FUND L.P. by its advisor, WEST FACE CAPITAL INC.
		
	By:	 	 /s/ John Maynard

		 	Title: Chief Financial Officer

 SCHEDULE A 

 

													
	 Purchaser
	  	# of Series B
Preferred Shares	 	  	% of Private
Placement	 	 	Purchase
Price	 
	 West Face Long Term Opportunities Limited Partnership
	  	 	81,312	  	  	 	14	% 	 	$	2,032,800	  
				
	 West Face Long Term Opportunities (USA) Limited Partnership
	  	 	185,856	  	  	 	32	% 	 	$	4,646,400	  
				
	 West Face Long Term Opportunities Master Fund L.P.
	  	 	313,632	  	  	 	54	% 	 	$	7,840,800	  
				
	 TOTAL
	  	 	580,800	  	  	 	100	% 	 	$	14,520,000	  

 SCHEDULE B 
 Certificate of Designation 

 SCHEDULE C 
 Form of Registration Rights Agreement 

 REGISTRATION RIGHTS AGREEMENT 

BETWEEN 

FORBES ENERGY SERVICES LTD. 
 AND 
 THE SHAREHOLDERS LISTED ON SCHEDULE A 

May [—], 2010 

 TABLE OF CONTENTS 

 

							
	ARTICLE 1 INTERPRETATION	  	 	1	  
			
	 1.1
	  	Definitions	  	 	1	  
	 1.2
	  	Interpretation Not Affected by Headings, etc.	  	 	4	  
	 1.3
	  	Accounting References	  	 	4	  
	 1.4
	  	Number, etc.	  	 	4	  
	 1.5
	  	Statutory References	  	 	4	  
	 1.6
	  	Date for Any Action	  	 	5	  
		
	ARTICLE 2 REGISTRATION RIGHTS	  	 	5	  
			
	 2.1
	  	Required Qualification	  	 	5	  
	 2.2
	  	Qualification	  	 	7	  
	 2.3
	  	Selection of Underwriters	  	 	8	  
	 2.4
	  	Qualification Expenses	  	 	8	  
		
	ARTICLE 3 REGISTRATION PROCEDURES	  	 	8	  
			
	 3.1
	  	Procedures	  	 	8	  
	 3.2
	  	Obligations of the Holders	  	 	11	  
		
	ARTICLE 4 DUE DILIGENCE; INDEMNIFICATION	  	 	12	  
			
	 4.1
	  	Preparation; Reasonable Investigation	  	 	12	  
	 4.2
	  	Indemnification	  	 	13	  
		
	ARTICLE 5 GENERAL	  	 	16	  
			
	 5.1
	  	No Inconsistent Agreements	  	 	16	  
	 5.2
	  	Remedies	  	 	16	  
	 5.3
	  	Amendments and Waivers	  	 	16	  
	 5.4
	  	Assignment	  	 	16	  
	 5.5
	  	Term	  	 	16	  
	 5.6
	  	Severability	  	 	17	  
	 5.7
	  	Delays or Omissions	  	 	17	  
	 5.8
	  	Descriptive Headings	  	 	17	  
	 5.9
	  	Governing Law; Submission to Jurisdiction	  	 	17	  
	 5.10
	  	Notices	  	 	17	  

 REGISTRATION RIGHTS AGREEMENT 

This registration rights agreement (this “Agreement”) is made the
[—] day of May, 2010 between Forbes Energy Services Ltd. (the “Corporation”), a company established pursuant to the laws of Bermuda, and the holders of the Convertible
Preference Shares (as defined hereon) listed on Schedule A hereto (the “Holders”). 
 WHEREAS in
consideration of the agreement by the Holders to subscribe for and purchase Convertible Preference Shares pursuant to the subscription agreement dated May 14, 2010 (the “Subscription Agreement”), and as an inducement to such
Holders to consummate the transactions contemplated by the Subscription Agreement, the Corporation agrees to provide inter alia for the right of the Holders to require the Corporation to prepare and file a preliminary prospectus and a final
prospectus with the Commissions (as hereinafter defined) and, in certain limited circumstances described herein, the SEC (as hereinafter defined), covering the Designated Qualifiable Securities (as hereinafter defined) to permit the sale thereof in
such manner as the Holders may designate on the terms and conditions of this Agreement. 
 NOW THEREFORE THIS AGREEMENT
WITNESSES THAT in consideration of the respective covenants, agreements, representations, warranties and indemnities of the parties herein contained and for other good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by each party), the parties agree as follows: 
 ARTICLE 1 

INTERPRETATION 
 1.1
Definitions 
 In this Agreement, unless there is something in the subject matter or context inconsistent therewith, the
following terms will have the respective meanings set out below and grammatical variations of such terms will have corresponding meanings: 
  

	 	(a)	“1933 Act” means the United States Securities Act of 1933, as amended, including the rules and regulations adopted by the SEC thereunder.

  

	 	(b)	“1934 Act” means the United States Securities Exchange Act of 1934, as amended, including the rules and regulations adopted by the SEC
thereunder. 

  

	 	(c)	“Affiliate” has the meaning ascribed thereto in the 1933 Act. 

 

	 	(d)	“Business Day” means any day, other than a Saturday or Sunday, upon which banks are open for business in Toronto, Ontario and Houston, Texas.

  

	 	(e)	“Commissions” means the securities commissions or other securities regulatory authorities in each of the provinces of Canada, other than Québec.

  

	 	(f)	“Common Share” means a common share of par value $0.01 in the capital of the Corporation. 

	 	(g)	“control person” has the meaning ascribed thereto in the Securities Act (Ontario). 

 

	 	(h)	“Convertible Preference Share” means a senior convertible preference share of par value $0.01 in the capital of the Corporation having those terms set
out in Schedule B of the Subscription Agreement which is convertible (in accordance with such terms) into Common Shares, initially, at a rate of 36 Common Shares per Convertible Preference Share. 

 

	 	(i)	“Corporation” means Forbes Energy Services Ltd. and any entity resulting from the amalgamation or merger of the Corporation with another entity or
other entities. 

  

	 	(j)	“Demand Qualifiable Securities” will have the meaning set out in subsection 2.1(a). 

 

	 	(k)	“Demand Qualification” will have the meaning set out in subsection 2.1(a). 

 

	 	(l)	“Designated Qualifiable Securities” will have the meaning set out in subsection 2.1(c). 

 

	 	(m)	“Distribution Period” has the meaning ascribed thereto in subsection 3.1(c). 

 

	 	(n)	“Effective Date” means the date on which the Corporation closes the Private Placement. 

 

	 	(o)	“Holders” means the shareholders listed on Schedule A hereto. 

 

	 	(p)	“misrepresentation” means (i) an untrue statement of material fact, or (ii) an omission to state a material fact that is required to be
stated or necessary to make a statement not misleading in light of the circumstances in which it was made. 

  

	 	(q)	“Person” means an individual, body corporate with or without share capital, partnership, joint venture, unincorporated association, syndicate, sole
proprietorship, trust, pension corporation, union, governmental agency, board, tribunal, ministry, commission or department and the heirs, beneficiaries, executors, legal representatives or administrators of an individual. 

 

	 	(r)	“Piggy Back Qualifiable Securities” will have the meaning set out in subsection 2.1(c). 

 

	 	(s)	“Piggy Back Qualification” will have the meaning set out in subsection 2.1(c). 

 

	 	(t)	“POP Issuer” means an issuer eligible to use the POP System or equivalent system established from time to time by the Commissions.

  

	 	(u)	“POP System” means the prompt offering prospectus qualification system under National Instrument 44-101—Short Form Prospectus Distributions of the
Canadian Securities Administrators or any successor policy, rule, regulation or similar instrument. 

  
 2 

	 	(v)	“Private Placement” means the issuance and sale by the Corporation of 580,800 Convertible Preference Shares to the Holders at an issue price of $25.00
per Convertible Preference Share, for an aggregate subscription price of $14,520,000 in cash, all in accordance with the Subscription Agreement. 

  

	 	(w)	“Qualifiable Securities” means with respect to any Holder at any time, any Common Shares issued or issuable in respect of the conversion of Convertible
Preference Shares and any other Common Shares issued or issuable as a distribution made in respect of such Convertible Preference Shares and any other securities issued or issuable in respect of such Qualifiable Securities upon any stock split,
stock dividend, recapitalization or similar event. 

  

	 	(x)	“Qualification” means the qualification or registration of securities under the Securities Laws so as to permit the distribution of such securities to
the public in any or all of the provinces and territories of Canada and, if applicable pursuant to Section 2.2(b), in the United States, including all the states of the United States, subject to the limitations contained herein.

  

	 	(y)	“Qualification Expenses” means all expenses in connection with any Qualification pursuant to this Agreement including, without limitation, the
following: 

  

	 	(i)	all reasonable fees or commissions payable to an underwriter, investment banker, broker-dealer, manager or agent and fees, disbursements and expenses payable to counsel
on behalf of the Holders in connection with the qualification, registration and/or distribution of the Qualifiable Securities; 

  

	 	(ii)	all fees, disbursements and expenses of counsel and auditors to the Corporation; 

 

	 	(iii)	all expenses in connection with the preparation, translation, printing and filing of any preliminary prospectus, prospectus, registration statement or any other
offering document and any amendments and supplements thereto and the mailing and delivering of copies thereof to any underwriters and dealers; 

  

	 	(iv)	all filing fees of any Commission or, if applicable pursuant to Section 2.2(b), the SEC and any applicable U.S. state regulator; 

 

	 	(v)	all transfer agents’, depositaries’ and registrars’ fees and the fees of any other agent appointed by the Corporation; 

 

	 	(vi)	all expenses relating to the preparation of certificates; 

  

	 	(vii)	all fees and expenses of any securities exchange or over-the-counter market on which the Common Shares are then listed; and 

 

	 	(viii)	all expenses relating to “road shows” and marketing activities and all travel and lodging expenses in connection with such “road shows” and
marketing activities. 

  
 3 

	 	(z)	“Qualification Period” means, with respect to a Holder, the period commencing 4 months plus one day following the Effective Date and terminating
November [•], 2017. 

  

	 	(aa)	“Requesting Holders” will have the meaning set out in subsection 2.1(a). 

 

	 	(bb)	“SEC” means the United States Securities and Exchange Commission. 

 

	 	(cc)	“Secondary Qualification” will have the meaning set out in subsection 2.1(c). 

 

	 	(dd)	“Securities Laws” means the applicable securities legislation of each of the provinces and territories of Canada, as well as the applicable federal and
state securities legislation of the United States, and all published rules, regulations, instruments, policy statements, orders, rulings, communiqués and interpretation notes issued thereunder or in relation thereto, as the same may hereafter
be amended or replaced. 

  

	 	(ee)	“Shareholder Group” means collectively, 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. 

 1.2 Interpretation Not Affected by Headings, etc.

 The division of this Agreement into Articles, sections and other portions and the insertion of headings are for
convenience of reference only and will not affect the construction or interpretation hereof. Unless otherwise indicated, all references to “section” or “subsection” followed by a number and/or a letter refer to the specified
section of this Agreement. The terms “this Agreement”, “hereof”, “herein” and “hereunder” and similar expressions refer to this Agreement and not to any particular Article, section or other portion hereof and
include any agreement or instrument supplementary or ancillary hereto. 
 1.3 Accounting References 

All accounting terms not expressly defined herein will be construed in accordance with United States generally accepted accounting
principles, except where the context otherwise requires. 
 1.4 Number, etc. 

Unless the context otherwise requires, words importing the singular will include the plural and vice versa and words importing any gender
will include all genders. 
 1.5 Statutory References 
 Except as otherwise expressly provided in this Agreement, any references to a statute or regulation will be construed as a reference to such statute or regulation in effect on the date of this Agreement
as it may be amended, re-enacted or superseded from time to time. 

  
 4 

 1.6 Date for Any Action 
 In the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action will be required to be taken on the next succeeding day
that is a Business Day. 
 ARTICLE 2 
 REGISTRATION RIGHTS 
 2.1 Required Qualification 

 

	 	(a)	Subject to the provisions hereof, Holders holding Qualifiable Securities (the “Requesting Holders”) may request the Corporation to effect a
Qualification of all or part of their Qualifiable Securities (such Qualification being hereinafter referred to as a “Demand Qualification”). Such a request will be in writing (such written request, a “Demand
Notice”) and will specify the number and the description of Qualifiable Securities to be sold (the “Demand Qualifiable Securities”), the intended method of disposition (including whether the disposition will be
underwritten) and the jurisdictions (which may only include Canada or any province thereof, other than Québec, or, if applicable pursuant to Section 2.2(b), the United States of America and the states thereof) in which the Requesting
Holders request that the Demand Qualification be effected. The Corporation will not be obligated to file a prospectus or registration statement in connection with a Demand Qualification except during the Qualification Period and will not be
obligated to file a prospectus or a registration statement within three months of the date of the receipt issued by the Commissions for any other final prospectus or the effective date of any other registration statement. In addition, the
Corporation will not be obligated to: (i) effect more than two Demand Qualifications under this Agreement for the Shareholder Group; or (ii) effect more than one Demand Qualification for the Shareholder Group during any six-month period.
For the purposes of this subsection, a Demand Qualification will not be considered as having been effected until a receipt has been issued for the final prospectus by the Commissions or, if applicable pursuant to Section 2.2(b), the
registration statement has been declared effective by the SEC, pursuant to which the Demand Qualifiable Securities are to be sold; provided, however, that a Demand Qualification will not be considered as having been effected if the Demand
Qualifiable Securities requested to be included in a registration hereunder are cut back pursuant to the provisions set forth below. 

 In the event that the Corporation and/or any other securityholder of the Corporation proposes to offer and sell its securities as part of any Demand Qualification initiated by the Requesting Holders under
this Agreement and the Demand Notice requests that the Demand Qualification be for an underwritten offering, and if the managing underwriter or underwriters advise the Corporation in good faith and in writing that the aggregate amount of securities
requested to be included in such offering is sufficiently large to have a material adverse effect on the distribution or sales price of the Demand Qualifiable Securities in such offering, then the Corporation will include in such Demand
Qualification, to the extent of the amount that the managing underwriter or underwriters believe may be sold without causing such material adverse effect, first, the Qualifiable Securities of the Requesting Holders requested to

  
 5 

 
be included in the offering under this subsection 2.1(a), and second, securities offered by the Corporation for its own account and/or by any other securityholder of the Corporation (in such
proportions as between the Corporation and such other securityholders as determined by the Corporation in its sole discretion). 
  

	 	(b)	The obligation of the Corporation pursuant to subsection 2.1(a)to comply with the request of the Requesting Holders for a Demand Qualification is subject to the
Corporation being entitled to postpone the filing of such prospectus or registration statement otherwise required to be prepared and filed by it pursuant hereto (or withdraw any prospectus or registration statement that has been filed by it pursuant
hereto), in each case for a reasonable period of time (not to exceed 90 days nor more than twice in any 365 day period) if the Corporation delivers a certificate within 10 days of its receipt of such Demand Notice signed by its Chief Executive
Officer or other senior executive officer or director stating that, in the good faith judgment of the Corporation’s board of directors, the Qualification and sale of the Demand Qualifiable Securities would be seriously detrimental to the
Corporation or its shareholders. The Corporation will not register any securities for its own account or that of any other securityholder of the Corporation during any such 90-day period. 

 

	 	(c)	 If during the Qualification Period the Corporation proposes to file a prospectus in Canada or, subject to Section 2.2(b), a registration statement
in the United States, in order to permit the Qualification of its Common Shares to be issued pursuant to an underwritten offering for its own account or for the account of any holder of Common Shares, in a form and manner that, with appropriate
changes, would permit the Qualification of Qualifiable Securities under such prospectus and/or registration statement, the Corporation will give reasonably prompt notice of its intention to do so to the Holders and will use all reasonable efforts to
include in the proposed distribution such number of Qualifiable Securities (the “Piggy Back Qualifiable Securities”, and together with any Demand Qualifiable Securities, the “Designated Qualifiable Securities”) as
any Holder will request (such Qualification hereinafter referred to as a “Piggy Back Qualification”, and together with any Demand Qualification, a “Secondary Qualification”) within 20 days (except in the case of a
“bought deal” where the Holders will have only six hours to make such request if given two days advance notice of such transaction) after the giving of such notice, upon the same terms (including the method of distribution) as such
distribution; provided that (i) the Corporation will not be required to include all such Piggy Back Qualifiable Securities in any such distribution by the Corporation if, in the case of an underwritten offering, the Corporation is advised in
good faith and in writing by its managing underwriter or underwriters that the inclusion of any such Piggy Back Qualifiable Securities would likely, in their opinion, materially and adversely interfere with the orderly sale and distribution of the
securities being offered by the Corporation or any such other securityholder, in which case first, the number of Common Shares of any other securityholder of the Corporation exercising such rights will be reduced as necessary on a pro-rata basis,
and second, the number of Piggy Back Qualifiable Securities will be reduced as necessary on a pro-rata basis, (ii) the Corporation may at any time prior to the issuance of a receipt for such final prospectus or the effectiveness of any such
registration statement pursuant to which 

  
 6 

	 	 
the securities are to be sold, at its sole discretion and without the consent of the Holders, withdraw such prospectus and registration statement and abandon the proposed distribution in which
the Holders have requested to participate, provided that the Corporation will pay, to the extent not prohibited by the Securities Laws, the Qualification Expenses in connection with such withdrawn prospectus or registration statement. The failure of
a Holder to respond within the periods referred to in the immediately preceding sentence will be deemed to be a waiver of the Holder’s rights under this subsection 2.1(c) with respect to such Piggy Back Qualification. A Holder may also waive
its rights under this subsection 2.1(c) by giving written notice to the Corporation. No Qualification of Qualifiable Securities under this subsection 2.1(c) will relieve the Corporation of its obligations to effect a Demand Qualification pursuant to
subsection 2.1(a) hereof. The Holders will be entitled to unlimited Piggy Back Qualifications. 

  

	 	(d)	Notwithstanding the other provisions of this Section 2.1, the Corporation shall not be obligated to effect a Demand Qualification if within five (5) Business
Days after receiving a Demand Notice, the Corporation notifies the holders of all Demand Qualifiable Securities of its intention to file a prospectus in Canada, or, subject to Section 2.2(b), a registration statement in the United States in
order to permit the Qualification of the issuance by the Corporation of its Common Shares for an underwritten public offering and within ninety (90) days after providing such notice, files a prospectus (or registration statement, if applicable)
for such offering. In such case, the holders shall have all the rights provided herein as if no such Demand Notice had been requested (including, for greater certainty any Piggy Back Qualification). If at any time the Corporation fails to pursue
diligently such prospectus or offering, the provisions of the preceding sentence shall not apply and the Corporation shall be obligated to satisfy its obligations Section 2.1(a). With respect to such offering, the Corporation shall have sole
authority to select or terminate the employment of underwriters, and to make all decisions in connection with the filing, effectiveness and consummation of the proposed offering, subject to the express provisions hereof. 

2.2 Qualification 
  

	 	(a)	The Corporation will effect a Secondary Qualification in Canada by way of a short-form prospectus prepared pursuant to the POP System if, at the time of such Secondary
Qualification, the Corporation is a POP Issuer and is able to do so in all of the jurisdictions in which the Secondary Qualification is to be effected, it being acknowledged that the Corporation will only be required to effect a Secondary
Qualification by way of a short-form prospectus in the provinces or territories of Canada in which it is then a reporting issuer or the equivalent. For greater certainty, it is acknowledged that in the event that the Corporation is not a POP Issuer
or is unable to utilize the POP System in one or more jurisdictions in which the Demand Qualification is to be effected, the Corporation will proceed by way of long-form prospectus. Notwithstanding the foregoing, the Corporation will not be
obligated to proceed by way of a long-form prospectus if it agrees to effect a Secondary Qualification of such Designated Qualifiable Securities in the United States in accordance with the provisions of subsection 2.2(b). 

  
 7 

	 	(b)	Notwithstanding any other provision of this Agreement, the Corporation shall not be obligated to effect a Demand Qualification in the United States until six
(6) months following (i) the date on which the Corporation’s initial registration statement of its Common Shares under the 1933 Act is declared effective with the SEC or the Common Shares are listed on a national securities exchange
or automated quotation system in the United States and (ii) the Corporation registers the class of Common Shares with the SEC under the 1934 Act (“U.S. Registration”). Thereafter, upon receipt of a demand notice under
Section 2.1(a), the Corporation will effect a Secondary Qualification in the United States by way of a registration statement on Form F-1 or on such other form as will be available to enable the Holders to sell the Designated Qualifiable
Securities in compliance with the Securities Laws of the United States. In the event that after U.S. Registration, the Corporation is no longer a reporting issuer in Canada, the Corporation shall not be obligated to effect a Demand Qualification or
a Piggy Back Qualification in Canada. 

 2.3 Selection of Underwriters 

Upon being requested to provide an underwritten Demand Qualification, the Corporation will, with the approval of the Requesting Holders
(not to be unreasonably withheld), select the investment banker(s) and manager(s) to effect the distribution in connection with such Demand Qualification. 
 2.4 Qualification Expenses 
 Except as expressly provided below, the
Corporation will pay all Qualification Expenses in connection with a Secondary Qualification, including the reasonable fees and expenses of the Holders’ legal counsel. The Holders will be solely responsible for the underwriting or other
broker-dealer commissions and fees payable in respect of the sale of the Designated Qualifiable Securities by netting from the proceeds of the sale of such Designated Qualifiable Securities any underwriting or other broker-dealer commissions or fees
before payment of the net proceeds to the selling Holder(s). The Corporation will not be obligated to reimburse the Holders for the fees and expenses of more than one U.S. and one Canadian law firm in connection with any Secondary Qualification and
the fees of any other counsel or any other advisors to the Holders will be the sole responsibility of the Holders. 

ARTICLE 3 
 REGISTRATION PROCEDURES 
 3.1 Procedures 

Subject to Section 2.1(d), upon receipt of a request from the Requesting Holders pursuant to section 2.1, the Corporation will,
subject to and in accordance with section 2.1, effect the Secondary Qualification as requested and, in particular, the Corporation will promptly: 
  

	 	(a)	 effect the Secondary Qualification in one or more Canadian provinces or territories in which the Corporation is then a reporting issuer or the
equivalent, prepare and file (in any event within 45 days after the later of (x) the date the request 

  
 8 

	 	 
for Secondary Qualification has been delivered to the Corporation or (y) the commencement of the Qualification Period) a preliminary prospectus under and in compliance with the Securities
Laws of each Canadian jurisdiction in which the Secondary Qualification is to be effected and such other related documents as may be necessary to be filed in connection with any such preliminary prospectus and will, as soon as possible after any
comments of the Commissions have been satisfied with respect thereto, prepare and file under and in compliance with the Securities Laws of such Canadian jurisdiction a prospectus, and obtain receipts therefor and use its commercially reasonable
efforts to cause a receipt to be issued for such prospectus as soon as possible and will take all other steps and proceedings that may be necessary in order to permit the Qualification of the Designated Qualifiable Securities for distribution by
registrants who comply with the relevant provisions of the Securities Laws of such Canadian Jurisdiction (provided that, before filing all such documents referred to in this subsection 3.1(a), the Corporation will furnish to the counsel to the
Requesting Holders copies thereof and otherwise comply with section 4.1 hereof); 

  

	 	(b)	subject to Section 2.2(b), effect a Secondary Qualification in the United States, prepare and file (in any event within 45 days after the later of (x) the
date the request for Secondary Qualification has been delivered to the Corporation or (y) the commencement of the Qualification Period) with the SEC a registration statement on Form F-1 or such other form as is permitted under Securities Laws
of the United States from time to time, covering the distribution of all of the Designated Qualifiable Securities and such other related documents as may be necessary to be filed in connection with any such registration statement or other form and
take all other steps and proceedings that may be necessary in order to permit the Qualification of the Designated Qualifiable Securities for distribution in the United States (provided that, before filing all such documents referred to in this
subsection 3.1(b), the Corporation will furnish to the counsel to the Requesting Holders copies thereof and otherwise comply with section 4.1 hereof); 

  

	 	(c)	subject to Section 2.2(b), prepare and file with the applicable Commissions in the Canadian provinces and territories in which the Secondary Qualification is to be
effected and, if applicable under Section 2.2(b), with the SEC, such amendments and supplements to such preliminary prospectus, final prospectus and registration statement, as may be reasonably necessary to comply with the provisions of the
applicable Securities Laws with respect to the Qualification of the Designated Qualifiable Securities, and take such steps as are reasonably necessary to maintain the effectiveness of such final prospectus and registration statement, as applicable,
until the time at which the distribution of the Designated Qualifiable Securities is completed (but such requirement will only extend for a maximum period of 60 days from the date of the effectiveness of the prospectus and/or registration statement,
as applicable (the “Distribution Period”); 

  
 9 

	 	(d)	subject to Section 2.2(b), use commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies,
the resale by the Holders of the Designated Qualifiable Securities covered by a registration statement under such other securities or “blue sky” laws of such jurisdictions of the United States, as designated by the Requesting Holders,
acting reasonably, in the Demand Notice, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Distribution Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Distribution Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Designated Qualifiable Securities for sale in such jurisdictions; provided, however, that the Corporation will not be required in connection therewith or as a condition thereto to
(A) qualify to do business as a foreign corporation or dealer in any jurisdiction where it would not otherwise be required to qualify but for this subsection 3.1(d), (B) subject itself to any taxation in any such jurisdiction, or
(C) file a general consent to service of process in such jurisdiction (it being understood and agreed that the Corporation may be required to file a consent to service of process with respect to claims arising from the offering of Designated
Qualifiable Securities). The Corporation will promptly notify the Holders of the receipt by the Corporation of any notification with respect to the suspension of the registration or qualification of any of the Designated Qualifiable Securities for
sale under the securities or “blue sky” laws of any jurisdiction of the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose; 

 

	 	(e)	furnish to the Holders participating in such Qualification and the underwriter or underwriters of any such distribution if any, upon their request, such number of
copies of such preliminary prospectus, final prospectus, registration statement and any amendment and supplement thereto (including any documents incorporated therein by reference) and such other relevant documents as such Holders may reasonably
request in order to facilitate the distribution of the Designated Qualifiable Securities; 

  

	 	(f)	furnish to the Holders participating in such Qualification, the underwriter or underwriters of any such distribution if any and such other persons as such Holders may
reasonably specify: 

  

	 	(i)	an opinion of counsel to the Corporation addressed to the underwriter or underwriters of such distribution if any and dated the closing date of the distribution
covering any opinion reasonably requested by the either of them, including, without limitation, as to the Corporation’s legal status and capacity, the Corporation’s authorized capital, the validity of the Designated Qualifiable Securities,
the “eligibility for investment” of the Designated Qualifiable Securities, the enforceability of any underwriting agreement to which the Corporation is a party, and the Qualification of the Designated Qualifiable Securities; and

  
 10 

	 	(ii)	such corporate certificates as are customarily furnished in securities offerings, and, in each case, covering substantially the same matters as are customarily covered
in such documents in the relevant jurisdictions and such other matters as the underwriters may reasonably request; 

  

	 	(g)	immediately notify the Holders participating in such Qualification of the happening of any event during the Distribution Period as a result of which the preliminary
prospectus, final prospectus or the registration statement, each as then in effect, would include a misrepresentation (insofar as such misrepresentation relates to or was made by the Corporation); 

 

	 	(h)	otherwise use its best efforts to comply with all applicable published policies, rules, regulations, forms, instruments, blanket orders and rulings of the applicable
Commissions and, if applicable under Section 2.2(b), the SEC, and any stock exchange and over-the-counter market on which the Common Shares are then listed; 

 

	 	(i)	provide a transfer agent and registrar for such Common Shares no later than the closing date of the offering; 

 

	 	(j)	cause all such Designated Qualifiable Securities to be listed on each securities exchange or over-the-counter market on which the Common Shares are then listed;

  

	 	(k)	if the distribution is an underwritten offering, enter into an underwriting agreement with the underwriter or underwriters for the distribution, such agreement to
contain such representations and warranties by the Corporation and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions and indemnification agreements consistent with section
4.2 and such other documents on such terms and conditions as are customary in secondary offerings and take all such other actions as permitted by law as the Holders participating in such Qualification or the underwriter or underwriters, if any,
reasonably request in order to expedite or facilitate the distribution of the Designated Qualifiable Securities; and 

  

	 	(l)	in the event of the issuance of any order or ruling suspending the effectiveness of a prospectus receipt or registration statement or any order suspending or preventing
the use of any prospectus or registration statement or suspending the Qualification of any of the Designated Qualifiable Securities by such prospectus or registration statement in any applicable province or territory of Canada or in the United
States, the Corporation will notify the Holders participating in such Qualification of such event and use its commercially reasonable efforts promptly to obtain the withdrawal of such order or ruling. 

3.2 Obligations of the Holders 
 In connection with any Secondary Qualification, the Holders participating in such Secondary Qualification will: 
  

	 	(a)	provide, in writing, such information with respect to such Holder including the number of securities of the Corporation held by such Holder as may be reasonably
required by the Corporation to comply with the applicable Securities Laws in each jurisdiction in which the Secondary Qualification is to be effected; 

  
 11 

	 	(b)	if required under applicable Securities Laws, execute any certificate forming part of a preliminary prospectus, final prospectus, registration statement or similar
document to be filed with the applicable Commissions or, if applicable under Section 2.2(b), the SEC; 

  

	 	(c)	immediately notify the Corporation of the happening of any event during the Distribution Period, as a result of which the preliminary prospectus, final prospectus or
the registration statement, as in effect, would include a misrepresentation insofar as such misrepresentation relates to such Holder or relates to information provided by such Holder to the Corporation in writing for inclusion in the preliminary
prospectus, final prospectus or the registration statement; 

  

	 	(d)	comply with all applicable published policies, rules, regulations, forms, instruments, blanket orders and rulings of the applicable Commissions and, if applicable under
Section 2.2(b), the SEC, and any stock exchange and over-the-counter market on which the Common Shares are then listed and to otherwise comply with applicable Securities Laws; and 

 

	 	(e)	not effect or permit to be effected sales of Designated Qualifiable Securities or deliver or permit to be delivered any prospectus or registration statement in respect
of such sale after notification by the Corporation of any order or ruling suspending the effectiveness of the prospectus or registration statement or after notification by the Corporation under subsection 3.1(g), until the Corporation advises such
Holder that such suspension has been lifted or that it has filed an amendment to such prospectus or registration statement and has provided copies of such amendment to such Holder. Such Holder will, if so directed by the Corporation, deliver to the
Corporation (at the Corporation’s expense) all copies, other than permanent file copies, then in such Holder’s possession of such prospectus covering the Designated Qualifiable Securities that was in effect at the time of receipt of such
notice. 

 ARTICLE 4 
 DUE DILIGENCE; INDEMNIFICATION 
 4.1 Preparation; Reasonable Investigation

 In connection with the preparation and filing of any preliminary prospectus, final prospectus or registration statement as
herein contemplated, the Corporation will give the Holders and the underwriter or underwriters of such distribution, if any, and their respective counsel and other representatives, the opportunity to participate in the preparation of such documents
and each amendment thereof or supplement thereto, and will insert therein such material furnished to the Corporation in writing, which in the reasonable judgment of the Requesting Holders and their counsel should be included, and will, subject to
the prior execution and delivery to the Corporation 

  
 12 

 
of reasonable confidentiality agreements, give each of them such reasonable and customary access to the Corporation’s books and records and such reasonable and customary opportunity to
discuss the business of the Corporation with its officers and auditors as will be necessary in the reasonable opinion of the Requesting Holders, the underwriter or underwriters and their respective counsel, and to conduct all reasonable and
customary due diligence which the Requesting Holders, the underwriter or underwriters and their respective counsel may reasonably require in order to conduct a reasonable investigation for purposes of establishing, to the extent permitted by law, a
due diligence defense as contemplated by the Securities Laws of Canada and in order to enable such underwriters to execute any certificate required to be executed by them in Canada or the United States for inclusion in each such document.

 4.2 Indemnification 
  

	 	(a)	By Corporation 

 The Corporation
agrees to indemnify and hold harmless, to the extent permitted by law, the Holders, if applicable, and each Person who participates as an underwriter in the offerings or sale of the Designated Qualifiable Securities, their respective directors,
officers, employees, partners, members, shareholders and agents and each Person who controls such Holder (within the meaning of any applicable Securities Laws) against all losses (excluding loss of profits), claims, damages, liabilities and expenses
(in each case, as they are incurred) arising out of or based upon: (i) any information or statement contained in the preliminary prospectus, final prospectus, registration statement, any filing made in connection with the Qualification under
the securities or other “blue sky” laws or any amendment thereto which contains or is alleged to contain, a misrepresentation; (ii) any order made or inquiry, investigation or proceedings commenced or threatened by any applicable
Commission, the SEC, a court or other competent authority based upon any misrepresentation or alleged misrepresentation in the preliminary prospectus, the final prospectus, the registration statement, any amendment thereto or any other document
filed in connection therewith or based upon any failure or alleged failure to comply with applicable Securities Laws (other than any failure to comply with applicable Securities Laws by the Holders or the underwriter or underwriters); and
(iii) non-compliance or alleged non-compliance by the Corporation with any of the Securities Laws in connection with a Secondary Qualification and the distribution effected thereunder, except in the case of any of the foregoing insofar as
(A) any information or statement referred to in clause (i) or (ii) of this subsection 4.2(a) has been furnished to the Corporation by the Holders in writing pursuant to subsection 3.2(a) or the underwriter or underwriters expressly
for use therein; or (B) directly caused by any Holder’s or any underwriter’s failure to deliver to a purchaser of Designated Qualifiable Securities, a copy of the prospectus or the registration statement or any amendments or
supplements thereto or to otherwise comply with applicable Securities Laws or (C) any amounts paid in settlement of any claim if such settlement is effected without the prior consent of the Corporation, which consent will not be unreasonably
withheld, conditioned or delayed. 

  
 13 

	 	(b)	By Holders 

 Each of the
Holders, severally and not jointly, agrees to indemnify and hold harmless, to the extent permitted by law, the Corporation and each Person who participates as an underwriter in the offering or sale of the Designated Qualifiable Securities, their
respective directors, officers, employees, partners, members, stockholders and agents and each Person who controls the Corporation or such underwriter (within the meaning of any applicable Securities Laws) against all losses (excluding loss of
profits), claims, damages, liabilities and expenses (in each case as they are incurred) arising out of or based upon: (i) any information or statement contained in the preliminary prospectus, final prospectus, registration statement, any filing
made in connection with the Qualification under the securities or other “blue sky” laws or any amendment thereto which has been furnished to the Corporation by such Holder in writing expressly for use therein pursuant to subsection 3.2(a)
or section 4.1 which contains or is alleged to contain a misrepresentation; (ii) any order made or inquiry, investigation or proceedings commenced or threatened by any applicable Commission, the SEC, a court or other competent authority based
upon (A) any misrepresentation or alleged misrepresentation in the preliminary prospectus, the final prospectus, the registration statement, any amendment thereto or any other document filed in connection therewith based upon any information or
statement which has been furnished to the Corporation by the Holder in writing expressly for use therein pursuant to subsection 3.2(a) or section 4.1, or (B) any failure or alleged failure to comply with applicable Securities Laws by the
Holder; and (iii) the Holder’s failure to deliver to a purchaser of Designated Qualifiable Securities, a copy of the prospectus or the registration statement or any amendments or supplements thereto or to otherwise comply with applicable
Securities Laws, except in the case of any of the foregoing insofar as directly caused by the Corporation or any underwriter’s failure to deliver to a purchaser of Designated Qualifiable Securities a copy of the prospectus or the registration
statement or any amendments or supplements thereto or to otherwise comply with applicable Securities Laws; or (B) any amounts paid in settlement of any claim if such settlement is effected without the prior written consent of the Holder, which
consent will not be unreasonably withheld, conditioned or delayed. 
  

	 	(c)	Procedure 

 Any Person entitled
to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless in such indemnified party’s reasonable judgment, based upon the
written advice of counsel, a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel satisfactory to the indemnified
party, acting reasonably. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). The
indemnified party will have the right to retain other counsel to act on his or its behalf, provided that the fees and disbursements of such other counsel will be paid by the 

  
 14 

 
indemnified party unless (i) the indemnifying party and the indemnified party will have mutually agreed to the retention of such other counsel; or (ii) the indemnifying party fails to
assume the defence of the claim within 15 Business Days of receiving notice as contemplated herein. In addition, an indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party, based upon the written advice of counsel, a conflict of interest may
exist between such indemnified party and any other of such indemnified parties with respect to such claim and then only to the extent necessary to deal with the issue in conflict, and provided further that if such counsel determines, acting
reasonably, that it requires a legal firm qualified in another jurisdiction to assist it with the defence of such claim, the indemnifying party will also be responsible for such reasonable fees and expenses of such additional legal firm. No
indemnifying party may settle any claims without the express written consent of an indemnified party (such consent not to be unreasonably withheld where such consent does not contain any admission of liability). 

 

	 	(d)	Survival; Contribution 

 Unless
otherwise superseded by an underwriting agreement entered into in connection with an underwritten offering, the indemnification provided for under this Agreement will survive the expiry of this Agreement and will remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive any transfer of securities pursuant thereto. In the event the indemnification is
unavailable in whole or in part for any reason under this section 4.2, the Corporation and the Holders participating in such Qualification will contribute to the aggregate of all losses, claims, damages, liabilities and expenses in such proportion
as is appropriate to reflect the relative benefits and relative fault of the Corporation and such Holders in connection with the event giving rise to liability. The relative benefits shall be deemed to be in the same proportion as the total proceeds
(net of discounts and commissions but before deducting expenses) received by the Corporation and the selling Holders. The relative fault of the indemnifying party and of the indemnified party will be determined by reference to, among other things,
whether the misrepresentation or alleged misrepresentation relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or
prevent such misrepresentation; provided, however that, in any case, (1) no Holder will be required to contribute any amount in excess of the public offering price of all such Holder’s Qualifiable Securities offered and sold by such
Holder, and (2) no Person guilty of fraudulent misrepresentation (within the meaning of the 1933 Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation, and provided, further, that, in no
event will a Holder’s liability pursuant to this subsection 4.2(d), when combined with the amounts paid or payable by such Holder pursuant to subsection 4.2(b), exceed the proceeds from the distribution actually received by such Holder.

  
 15 

 ARTICLE 5 
 GENERAL 
 5.1 No Inconsistent Agreements 

The Corporation represents and warrants to the Holders that it has not entered into any agreement (after taking into account any amendment
thereof or waiver relating thereto) which is inconsistent with or violates the rights granted to the Holders pursuant to this Agreement. The Corporation covenants that it will not, without the prior written consent of the Holders, enter into any
agreement with any holder or prospective holder of any securities of the Corporation that would allow such holder or prospective holder to include such securities in any registration unless, under the terms of such agreement, such holder or
prospective holder may include such securities in any registration only to the extent that the inclusion of such securities will not reduce the number of the Qualifiable Securities that are included. 

5.2 Remedies 
 Any Person
having rights under any provision of this Agreement will be entitled to enforce such rights specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The
parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement. 
 5.3 Amendments and Waivers 
 This Agreement will not be amended, waived or
varied in its terms by oral agreement or by representations or otherwise without the prior written consent of each of the Corporation and each of the Holders. 
 5.4 Assignment 
 This Agreement and the rights and obligations of the
parties hereto will bind and enure to the benefit of each of the parties hereto and their successors. The rights under this Agreement may be assigned by a Holder to a transferee of Qualifiable Securities that is (i) an Affiliate of such Holder;
provided that such transferee agrees in a written instrument to the Corporation to be bound by and subject to the terms and conditions of this Agreement. Nothing contained in this section 5.4 will be deemed to increase the number of Demand
Qualifications provided pursuant to subsection 2.1(a). 
 5.5 Term 

This Agreement will expire upon the end of the Qualification Period with regard to all Holders, provided that in all cases the obligations
of the parties under section 4.2 hereof will survive the expiry of this Agreement. 

  
 16 

 5.6 Severability 
 If one or more provisions of this Agreement are held to be unenforceable under applicable law, portions of such provisions or such provisions in their entirety, to the extent necessary, will be severed
from this Agreement, and the balance of this Agreement will be enforceable in accordance with its terms. 
 5.7 Delays or Omissions

 No delay or omission to exercise any right, power or remedy accruing to any party to this Agreement, upon the breach or
default of the other party will impair any such right, power or remedy of such non-breaching party nor will it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter
occurring; nor will any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, consent or approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of the party of any provisions or conditions of this Agreement, must be made in writing and will be effective only to the extent specifically set forth in such writing. All remedies, either
under this Agreement or by law or otherwise afforded to the parties, will be cumulative and not alternative. 
 5.8 Descriptive Headings

 The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this
Agreement. 
 5.9 Governing Law; Submission to Jurisdiction 
 This Agreement will be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each of the parties hereby irrevocably attorns
and submits to the jurisdiction of the courts of the Province of Ontario in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts. 

5.10 Notices 
 All
notices, requests, demands or other communications required or permitted to be given by one party to another under this Agreement will be given in writing and delivered by personal delivery or delivery by recognized commercial courier, sent by
facsimile or delivered by registered mail, postage prepaid, addressed as follows: 

  
 17 

	 	(a)	In the case of the Corporation: 

P.O. Box 2108 

Alice, Texas 

78333 

Attention: — 
 Fax:         (361) 664-0599 
 With a
copy, which shall not constitute notice, to: 
 Winstead PC 

24 Waterway Avenue 
 Suite 500 
 The Woodlands, Texas 

77380 

Attention: R. Clyde Parker, Jr. 
 Fax: (281) 681-5901 
 With a copy, which shall not constitute notice, to:

 Bennett Jones LLP 
 4500 Bankers Hall East 
 855 – 2nd Street S.W. 

Calgary, Alberta T2P 4K7 
 Attention: Paul M. Farion 
 Fax: (403) 265-7219 

 

	 	(b)	In the case of the Holders: 

 In
the case of West Face LP, West Face USA LP and West Face Master LP (each as defined in the Subscription Agreement): 
 c/o West
Face Capital Inc. 
 2 Bloor Street East 
 Suite 810 
 Box #85 

Toronto, ON M4W 1A8 
 Attention: Peter Fraser 
 Fax: (647) 724-8910 

  
 18 

 With a copy, which shall not constitute notice, to: 

McCarthy Tétrault LLP 
 Suite 5300 
 Toronto Dominion Bank Tower 

Toronto-Dominion Centre 
 Toronto, ON M5K 1E6 
 Attention: Andrew Parker 

Fax: (416) 868-0673 
 or at
such other address or fax number of which the addressee may from time to time notify the addressor. Any notice delivered by personal delivery or by courier to the party to whom it is addressed as provided above will be deemed to have been given and
received on the day it is so delivered at such address. If such day is not a Business Day, or if the notice is received after 4:00 p.m. (addressee’s local time), then the notice will be deemed to have been given and received on the next
Business Day. Any notice sent by prepaid registered mail will be deemed to have been given and received on the sixth Business Day following the date of its mailing. In the event of any disruption, strike or interruption in the Canadian or United
States postal service after mailing and prior to receipt and deemed receipt of any such notice, notice will be deemed to be received on the sixth Business Day following full resumption of the postal service. Any notice transmitted by facsimile will
be deemed to have been given and received on the day in which transmission is confirmed. If such day is not a Business Day or if the facsimile transmission is received after 4:00 p.m. (addressee’s local time), then the notice will be deemed to
have been given and received on the first Business Day after its transmission. 

  
 19 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed
as of the date first above written. 
  

			
	 By the Corporation
  

FORBES ENERGY SERVICES LTD

		
	By:	 	 
		 	Name:
		 	Title:

  

			
	 By the Holders
  

WEST FACE LONG TERM OPPORTUNITIES LIMITED PARTNERSHIP by its advisor, WEST FACE CAPITAL INC.

		
	By:	 	 
		 	Name:
		 	Title:

  

			
	WEST FACE LONG TERM OPPORTUNITIES (USA) LIMITED PARTNERSHIP by its advisor, WEST FACE CAPITAL INC.
		
	By:	 	 
		 	Name:
		 	Title:

  

			
	WEST FACE LONG TERM OPPORTUNITIES MASTER FUND L.P. by its advisor, WEST FACE CAPITAL INC.
		
	By:	 	 
		 	Name:
		 	Title:

  
 20 

 SCHEDULE A 

HOLDERS 
 West Face Long
Term Opportunities Limited Partnership 
 West Face Long Term Opportunities (USA) Limited Partnership 

West Face Long Term Opportunities Master Fund L.P. 

 CERTIFICATE OF DESIGNATION 

OF 
 SERIES B
SENIOR CONVERTIBLE PREFERRED SHARES 
 OF 
 FORBES ENERGY SERVICES LTD. 
 Pursuant to the authority conferred upon the board
of directors (the “Board of Directors”) of Forbes Energy Services Ltd. (the “Company”) by its bye-laws (the “Bye-laws”) a series of preferred shares, par value $0.01 each (shares of any authorized series, the
“Preference Shares”) be and it hereby is established, in the number and having the designation, preferences, terms, qualifications, limitations, restrictions and relative rights, including voting rights, set forth below: 

Section 1. Designation and Amount. The shares of such series shall be designated as “Series B Senior Convertible
Preferred Shares” (the “Series B Preferred Shares”) and the number of shares constituting such series shall be eight hundred and twenty-five thousand (825,000). 
 Section 2. Dividends and Distributions. 
 (A) Subject to the
provisions for adjustment hereinafter set forth, and subject to the Companies Act 1981 (the “Act”), the holders of Series B Preferred Shares shall be entitled to receive out of funds legally available for the purpose, preferential
dividends in an amount per share (rounded to the nearest cent) equal to five percent (5%) of the Series B Original Issue Price (as defined in paragraph 2(B) of this Section 2) (or $1.25) per annum per share, payable quarterly on the
[        ] day of February, May, August and November, respectively (the “Quarterly Payment Date”), in each year during which any Series B Preferred Shares remain issued and outstanding (the
“Preferential Dividends”). The Preferential Dividends shall accrue from the Issuance Date (as defined in paragraph 8(A) of Section 8), whether or not declared; shall be fully cumulative, prior and in preference to any declaration or
payment of any dividend or other distribution on any other class or series of capital stock of the Company that is junior to the Series B Preferred Shares including, for greater certainty, the Series A Junior Participating Preferred Shares described
in the Company’s rights agreement with CIBC Mellon Trust Company, as rights agent (the “Series A Junior Participating Preferred Shares”), and the common shares, par value $0.01 each (the “Common Shares”) of the Company.
Except with the consent in writing of the holders of the Series B Preferred Shares, no dividend will at any time be declared and paid on or set apart for payment on any other class or series of capital stock of the Company that ranks in parity with
the Series B Preferred Shares (the “Parity Shares”) in any quarter unless the Preferential Dividends on all the Series B Preferred Shares outstanding prior to such payment have been declared and paid through the most recent Quarterly
Payment Date either prior to or coincidental with the payment of such dividends on the Parity Shares. The Preferential Dividends shall be payable, at the sole election of the Company, (i) in cash or (ii) in kind in the form of additional
Series B Preferred Shares (with an issue price equal to the Series B Original Issue Price). 
 (B) If the Company elects to pay
a Preferential Dividend in kind in the form of additional Series B Preferred Shares, subject to paragraph 7(D) of Section 7, the Company shall issue and deliver to each holder of the Series B Preferred Shares certificates representing the
number of additional Series B Preferred Shares equal to the Preferential Dividend not paid in 

 
cash divided by twenty-five dollars ($25.00) (the “Series B Original Issue Price”). Subject to paragraph 7(D) of Section 7, any fractional share owing such holder of Series B
Preferred Shares shall be held by the Company and paid in the form of a whole share when any fractional shares owed to such holder of Series B Preferred Shares equal at least one whole share and any such fractional shares thereafter to be held and
accounted for by the Company in accordance with generally accepted accounting principles until paid as a whole share or shares. The Company shall at all times when the Series B Preferred Shares shall be outstanding, reserve and keep available out of
its authorized but unissued capital stock such number of its duly authorized Series B Preferred Shares as shall be sufficient to pay in kind all unpaid and potential Preferential Dividends that the outstanding Series B Preferred Shares (and any
Series B Preferred Shares that may be issued as Preferential Dividends) may accrue prior to the Maturity Date (as defined in Section 10) (the “Potential In-Kind Dividends”). If at any time the number of authorized but unissued Series
B Preferred Shares shall not be sufficient to pay the Potential In-Kind Dividends, the Company shall take such corporate action as may be necessary to increase its authorized but unissued Series B Preferred Shares to such number of shares as shall
be sufficient for such purposes, including, amending this Certificate of Designation pursuant to Section 12. 
 (C)
Notwithstanding the foregoing, in the event that (i) the payment of a Preferential Dividend in cash would cause the Company to violate a covenant (“Cash Restriction”) under any of the agreements governing the Company’s debt
facilities in existence on the Issuance Date (as defined in Section 8), as subsequently amended, supplemented, modified or replaced (the “Debt Agreements”), and (ii) the payment of a Preferential Dividend in kind would trigger a
change of control provision in any of the Debt Agreements (“In-Kind Restriction”), the Company’s obligation to pay, in cash or in kind, Preferential Dividends would be suspended until the earlier to occur of and, with respect to
subparagraph (a), only to the extent, (a) the Cash Restriction or the In-Kind Restriction is removed or lapses in applicability, or (b) February 16, 2015. During any period of time when the payment of Preferential Dividends is
suspended, the Series B Preferred Shares shall continue to accrue and accumulate Preferential Dividends. 
 Section 3.
Voting Rights. 
 (A) The holders of Series B Preferred Shares shall not be entitled to any voting rights, except as
provided in paragraph 3(B) of this Section 3, the Bye-laws or otherwise under the Act. 
 (B) If the Preferential
Dividends accrued on the Series B Preferred Shares for eight or more quarterly dividend periods, whether consecutive or not, shall not have been declared and paid in full, either in cash or in kind, the holders of record of the Series B Preferred
Shares shall be entitled to notice of any shareholder meeting in accordance with the Bye-Laws and each holder of Series B Preferred Shares shall in such event be entitled to vote with the holders of the Common Shares, upon all matters presented to
the shareholders of the Company for their action or consideration at any meeting of shareholders of the Company (or by written consent of shareholders in lieu of meeting), to cast the number of votes equal to the number of whole Common Shares into
which the Series B Preferred Shares held by such holder are convertible (as set out in Section 7) as of the record date for determining shareholders entitled to 

  
 2 

 
vote on such matter (the “Preferential Voting Rights”). Except as provided by law or elsewhere herein, holders of Series B Preferred Shares shall vote together with the holders of
Common Shares as a single class. 
 (C) The voting rights provided in paragraph 3(B) of this Section 3 shall cease upon
payment in full, in cash or in kind, by the Company of all the dividends then in arrears to which the holders are entitled on the Series B Preferred Shares. 
 Section 4. Certain Restrictions. 
 (A) Whenever Preferential
Dividends have not been paid through the most recent Quarterly Payment Date, thereafter and until all such unpaid Preferential Dividends on Series B Preferred Shares outstanding shall have been paid in full or set aside for payment on the date
declared for payment, and in addition to any and all other rights which any holder of Series B Preferred Shares may have in such circumstances, the Company shall not: 

(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for
consideration, any shares ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Shares; 
 (ii) declare or pay dividends on or make any other distributions on any Parity Shares, other than in accordance with paragraph 2(A) of Section 2; 

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

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

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

  
 3 

 (C) While any Series B Preferred Shares remain issued and outstanding, the Company shall
not issue any series of Preference Shares with rights and privileges senior to or greater than those of the Series B Preferred Shares. 
 Section 5. Reacquired Shares. Any Series B Preferred Shares purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares upon their retirement and cancellation shall become authorized but unissued Preference Shares, without designation as to series, and such shares may be reissued as part of a new series of Preference Shares to be created by
resolution or resolutions of the Board of Directors in accordance with the Bye-laws. 
 Section 6. Liquidation,
Dissolution or Winding Up. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, no distribution shall be made (i) to the holders of shares ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Shares including, for greater certainty, the Series A Junior Participating Preferred Shares and the Common Shares of the Company, unless the holders of Series B Preferred Shares shall have
received, subject to adjustment as provided in Section 8, an amount equal to the Series B Original Issue Price per share plus an amount equal to accumulated and unpaid dividends and distributions thereon to the date of such payment, and
(ii) to the holders of shares ranking on a parity upon liquidation, dissolution or winding up with the Series B Preferred Shares, unless simultaneously therewith distributions are made ratably on the Series B Preferred Shares and all other such
parity stock in proportion to the total amounts to which the holders of Series B Preferred Shares are entitled under clause (i) of this sentence and to which the holders of such parity shares are entitled, in each case upon such liquidation,
dissolution or winding up. The amount to which holders of Series B Preferred Shares may be entitled upon liquidation, dissolution or winding up of the Company pursuant to clause (i) of the foregoing sentence is hereinafter referred to as the
“Liquidation Amount.” 
 Section 7. Conversion Rights. 

(A) Each of the Series B Preferred Shares shall be convertible, at the option of the holder thereof, at any time and from time to time,
and without the payment of additional consideration by the holder thereof, into thirty-six (36) fully paid and nonassessable Common Shares (the “Conversion Rate”). Such Conversion Rate shall be subject to adjustment as provided in
Section 8 below. In the event of a Redemption Notice (as defined below) of any Series B Preferred Shares pursuant to Section 9, the conversion rights of the shares designated for redemption shall terminate at the close of business on the
last full day preceding the date fixed for redemption, unless the redemption price is not fully paid on such redemption date, in which case the conversion rights for such shares shall continue until such price is paid in full. In the event of a
liquidation, dissolution or winding up of the Company, the conversion rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of the Liquidation Amount to the holders of Series B Preferred
Shares. 

  
 4 

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

(C) No fractional Common Shares shall be issued upon conversion of the Series B Preferred Shares. In lieu of any fractional Common Share
to which the holder would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the fair market value (as defined below), unless the Company determines, in its sole discretion, that such cash payment would cause the
Company to be in violation of a Debt Agreement, in which case any fractional Common Share to which the holder would otherwise be entitled shall be forfeited. For the purpose hereof, the fair market value of a Common Share (the “Common Share
Fair Market Value”) shall be determined by: 
 (i) its trailing five (5) day volume weighted average
trading price of the Common Shares on the date immediately preceding the date of conversion of such Series B Preferred Shares on (a) the Toronto Stock Exchange (the “TSX”), converted into U.S. dollars at the average noon rate for
converting Canadian dollars into U.S dollars as quoted by the Bank of Canada (or, if no longer available, by another institution selected by the Board of Directors) during such five (5) day trading period; or (b) on such other market or
exchange as the Common Shares may then trade, in the event that the Common Shares are not then traded on the TSX; or 
 (ii) the Board of Directors in good faith, in the event that the Common Shares are not then traded on any market or exchange; 
 (D) In order for a holder of Series B Preferred Shares to voluntarily convert Series B Preferred Shares into Common Shares, such holder shall request from the Company the total number of Common Shares
outstanding and the Conversion Rate, as adjusted pursuant to Section 8, if applicable. The chief executive officer or chief financial officer of the Company shall provide the holder with such information as soon as reasonably practicable, but
in any event within one (1) business day after receipt of notice of the request. After receiving this information from the Company, the holder desiring to convert shall, within one (1) business day, provide the Company with a certificate,
in the form attached hereto as Exhibit A (the “Conversion Certificate”), certifying (i) the number of Common Shares currently held by such holder (together with such holder’s affiliates), (ii) the number of Series B
Preferred Shares that the holder elects to convert, (iii) the name or the names of the nominees in which such holder wishes the certificate or certificates of Common Shares to be issued and the number of Common Shares that will be held by such
holder and such holder’s affiliates after the conversion and (iv) whether, based on the number of Common Shares outstanding represented by the Company, the conversion complies with paragraph (B) of this Section 7. Together with
the Conversion Certificate, the holders should provide the Company with the certificate or certificates for such Series B Preferred Shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost
certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company 

  
 5 

 
on account of the alleged loss, theft or destruction of such certificate), at the principal office of the Company’s transfer agent for the Series B Preferred Shares (or at the principal
office of the Company if the Company serves as its own transfer agent for the Series B Preferred Shares). 
 Absent manifest
error on the Conversion Certificate, the close of business on the date of receipt by the Company’s transfer agent (or by the Company if the Company serves as its own transfer agent) of such Conversion Certificate and such Series B Preferred
Share certificates (or lost certificate affidavit and agreement) shall be the time of conversion (the “Conversion Time”) and the Company shall cause the Company’s transfer agent for its Common Shares to, as soon as practicable after
the Conversion Time, (a) issue and deliver to such holder of Series B Preferred Shares, or to his, her or its nominees, a certificate or certificates for the number of Common Shares issuable upon such conversion in accordance with the
provisions hereof and a certificate for the number (if any) of the Series B Preferred Shares represented by the surrendered certificate that were not converted into Common Shares, (b) if required by paragraph 7(C) of this Section 7, pay in
cash such amount as provided therein in lieu of any fraction of a Common Share otherwise issuable upon such conversion and (c) pay in cash or in kind (as provided in Section 2) all dividends (accumulated but unpaid through the Conversion
Time) on the Series B Preferred Shares converted. Business day means any day, other than a Saturday or a Sunday, upon which banks are open for business in Toronto, Ontario and Houston, Texas. If the Company elects to pay such accumulated but unpaid
dividends in kind, the holder submitting the Series B Preferred Shares for conversion under this Section 7 shall be deemed to have also submitted for conversion the Series B Preferred Shares otherwise payable under this subparagraph
(b) (the “In-Kind Share Conversion”), which In-Kind Share Conversion will be added to the other Series B Preferred Shares of such holder submitted for conversion for purposes of the fractional share calculation under subparagraph
(b) of this paragraph 7(D) of Section 7, if applicable. The Common Shares issuable upon conversion of the Series B Preferred Shares submitted for conversion under this Section 7 (along with any such shares that are deemed to be
converted under this Section 7) shall be deemed to be outstanding of record as of the date on which the Conversion Time occurs. 
 (E) The Company shall at all times when the Series B Preferred Shares shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the
conversion of the Series B Preferred Shares, such number of its duly authorized Common Shares as shall from time to time be sufficient to effect the conversion of all outstanding Series B Preferred Shares (including any In-Kind Share Conversion);
and if at any time the number of authorized but unissued Common Shares shall not be sufficient to effect the conversion of all then outstanding Series B Preferred Shares, the Company shall take such corporate action as may be necessary to increase
its authorized but unissued Common Shares to such number of Common Shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite shareholder approval of any necessary amendment to
the Bye-laws. Before taking any action which would cause an adjustment to the Conversion Rate such that the Series B Original Issue Price per share divided by the Conversion Rate would be less than the then par value of the Common Shares issuable
upon conversion of the Series B Preferred Shares, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Common Shares at
such adjusted Conversion Rate. 

  
 6 

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

 (G) The Company shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or
delivery of Common Shares upon conversion of Series B Preferred Shares pursuant to this Section 7. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery
of Common Shares in a name other than that in which the Series B Preferred Shares so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Company the
amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid. 
 Section 8.
Certain Reclassifications and Other Events. 
 (A) If the Company shall at any time or from time to time after
May     , 2010 (the “Issuance Date”) effect a subdivision of the outstanding Common Shares, the Conversion Rate in effect immediately before that subdivision shall be proportionately increased so that the number of
Common Shares issuable on conversion of each Series B Preferred Share shall be increased in proportion to such increase in the aggregate number of Common Shares outstanding. If the Company shall at any time or from time to time after the Issuance
Date consolidate the outstanding Common Shares, the Conversion Rate in effect immediately before the consolidation shall be proportionately decreased so that the number of Common Shares issuable on conversion of each share of such series shall be
decreased in proportion to such decrease in the aggregate number of Common Shares outstanding. 
 (B) In the event the Company
at any time or from time to time after the Issuance Date shall make or issue, or fix a record date for the determination of holders of Common Shares entitled to receive, a dividend or other distribution payable on the Common Shares in additional
Common Shares, then and in each such event the Conversion Rate in effect immediately before such event shall be increased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such
record date, by multiplying the Conversion Rate then in effect by a fraction: 
 (i) the numerator of which shall
be the total number of Common Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of Common Shares issuable in payment of such dividend or distribution, and

  
 7 

 (ii) the denominator of which shall be the total number of Common Shares
issued and outstanding immediately prior to the time of such issuance or the close of business on such record date. 
 Notwithstanding the
foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Rate shall be recomputed accordingly as of the close of business
on such record date and thereafter the Conversion Rate shall be adjusted pursuant to this paragraph (C) of Section 8 as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made if
the holders of Series B Preferred Shares simultaneously receive a dividend or other distribution of Common Shares in a number equal to the number of Common Shares as they would have received if all outstanding Series B Preferred Shares had been
converted into Common Shares on the date of such event. 
 (C) In the event the Company at any time or from time to time after
the Issuance Date shall make or issue, or fix a record date for the determination of holders of Common Shares entitled to receive, a dividend or other distribution payable in securities of the Company (other than a distribution of Common Shares in
respect of outstanding Common Shares) or in other property (excluding cash), then and in each such event the holders of Series B Preferred Shares shall receive, simultaneously with the distribution to the holders of Common Shares, a dividend or
other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding Series B Preferred Shares had been converted into Common Shares on the date
of such event. 
 (D) If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger
involving the Company in which the Common Shares (but not the Series B Preferred Shares) are converted into or exchanged for securities, cash or other property (other than a transaction covered by paragraphs (B) and (C) of this
Section 8), then, following any such reorganization, recapitalization, reclassification, consolidation, merger or amalgamation, each Series B Preferred Share shall thereafter be convertible in lieu of the Common Shares into which it was
convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of Common Shares of the Company issuable upon conversion of one Series B Preferred Shares immediately prior to such
reorganization, recapitalization, reclassification, consolidation, merger or amalgamation would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions in this Section 8 with respect to the rights and interests thereafter of the holders of the Series B Preferred Shares, to the end that the provisions set forth in this Section 8
(including provisions with respect to changes in and other adjustments of the Conversion Rate) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion
of the Series B Preferred Shares. 
 (E) In the event the Company at any time or from time to time after the Issuance Date
shall make or issue, or fix a record date for the determination of holders of Common Shares entitled to receive, a dividend payable in cash, which is greater in value than five percent (5%), on a cumulative basis over the previous twelve months
prior to such making, issuing or fixing, of the then current Common Share Fair Market Value, then and in each such 

  
 8 

 
event the holders of Series B Preferred Shares shall receive, simultaneously with the distribution to the holders of Common Shares, a dividend payable in cash in an amount equal to the amount in
excess of five percent (5%) of the then current Common Share Fair Market Value per Common Share they would have received if all outstanding Series B Preferred Shares had been converted into Common Shares on the date of such event. 

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

(i) the Company shall take a record of the holders of its Common Shares (or other capital stock or securities at the time
issuable upon conversion of the Series B Preferred Shares) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or
any other securities, or to receive any other security; or 
 (ii) of any capital reorganization of the Company,
any reclassification of the Common Shares of the Company; or 
 (iii) of the voluntary or involuntary
dissolution, liquidation or winding-up of the Company, 
 then, and in each such case, the Company will send or cause to be sent to the holders
of the Series B Preferred Shares a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on
which such reorganization, reclassification, consolidation, merger, amalgamation, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Shares (or
such other capital stock or securities at the time issuable upon the conversion of the Series B Preferred Shares) shall be entitled to exchange their Common Shares (or such other capital stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger, amalgamation, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series B Preferred Shares and
the Common Shares. Such notice shall be sent at least thirty (30) days prior to the record date or effective date for the event specified in such notice. 

  
 9 

 (H) Adjustments to the Series B Preferred Shares required by the provisions of this
Section 8 shall be effective as of the time at which the event requiring such adjustments occurs. 
 Section 9.
Optional Redemption. 
 (A) The Series B Preferred Shares may be redeemed by the Company, at its election, out of
funds lawfully available therefor, at any time after the third anniversary of the Issuance Date, provided that at the time written notice of redemption is provided to the holders of the Series B Preferred Shares the Common Shares have a Common Share
Fair Market Value that is greater than 120% of the Series B Issue Price per share divided by the number of Common Shares issuable on conversion of each Series B Preferred Share under the applicable Conversion Rate. The Series B Preferred Shares
shall be redeemed by a cash payment equal to the Series B Original Issue Price per share, plus the cash amount of any accumulated and unpaid dividends thereon (the “Redemption Price”) to the date on which the Company proposes to pay the
Redemption Price (the “Redemption Date”). Before making any redemption, the Company shall mail by certified or registered mail, return receipt requested, to each record holder of any Series B Preferred Shares, at the address shown on the
Company’s records, a written notice (the “Redemption Notice”) stating the number of Series B Preferred Shares that the Company proposes to redeem, the Redemption Price, the Redemption Date, and the place at which the shares to be
redeemed shall be surrendered for the Redemption Price. The Redemption Notice must be mailed not more than 60 days nor less than 30 days prior to the redemption. 
 (B) If less than all outstanding Series B Preferred Shares are to be redeemed, the number of Series B Preferred Shares to be redeemed from each holder thereof under this Section 9 shall be the
greatest whole number generated by multiplying the total number of Series B Preferred Shares held by such holder by a fraction, the numerator of which shall be the total number of Series B Preferred Shares to be redeemed and the denominator of which
shall be the total number of Series B Preferred Shares then outstanding. On and after the Redemption Date specified in the Redemption Notice, each holder of Series B Preferred Shares called for redemption as aforesaid, upon presentation and
surrender at the place designated in such notice of the certificate or certificates representing the Series B Preferred Shares to be redeemed (or a properly executed affidavit of lost securities), properly endorsed in blank for transfer or
accompanied by proper instruments of assignment in blank, shall be entitled to receive the Redemption Price thereof. From and after the Redemption Date specified in the Redemption Notice, unless default shall be made by the Company in payment of the
Redemption Price, all dividends on the Series B Preferred Shares so called for redemption shall cease to accrue, such shares shall not be deemed to be outstanding for any purposes whatsoever, and the rights of the holders thereof shall be solely
limited to the right receive payment of the Redemption Price. In the event less than all of the shares represented by such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares. 

Section 10. Mandatory Redemption. On the seventh anniversary of the date of issuance (the “Maturity Date”), the
Company shall redeem any Series B Preferred Shares then 

  
 10 

 
outstanding at the applicable Redemption Price. For the purpose of this Section 10, the Redemption Price may, at the election of the Company, be paid in cash or Common Shares, valued for
such purpose at 95% of the Common Share Fair Market Value. 
 Section 11. Ranking. Unless otherwise provided in the
Bye-laws of the Company or the rights relating to a subsequent series of Preference Shares of the Company ranking pari passu with the Series B Preferred Shares, the Series B Preferred Shares shall rank senior to all other series of the
Company’s Preference Shares and to the Common Shares as to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up. 
 Section 12. Amendment. Except as contemplated herein, the provisions hereof and the Bye-laws of the Company shall not be amended in any manner which would adversely affect the rights,
privileges or powers of the Series B Preferred Shares without, in addition to any other vote of shareholders required by law, the affirmative vote of the holders of 66 2/3% of the outstanding Series B Preferred Shares, voting together as a single
class. Notwithstanding the foregoing, in the event that the authorized but unissued Series B Preferred Shares shall not be sufficient to pay the Potential In-Kind Dividends pursuant to paragraph 2(B) of Section 2, without a vote of the holders
of the Series B Preferred Shares, the Company may amend this Certificate of Designation of the Series B Preferred Shares to increase the number of shares constituting the Series B Preferred Shares as necessary to ensure there are sufficient
authorized but unissued Series B Preferred Shares to pay the Potential In-Kind Dividends. 
 Section 13. Currency.
As used herein, reference to dollar amounts, unless otherwise specifically indicated, shall mean the lawful money of the United States of America. 
 Section 14. Notice. All notices given pursuant to this certificate of designation shall be done in the manner prescribed in the subscription agreement (including the requirement to provide
copies to counsel) whereby the Series B Preferred Shares were originally issued. 

  
 11 

 EXHIBIT A 
 Conversion Certificate 
 Date:
                                        

  

									
	 CURRENT HOLDINGS OF COMMON SHARES
	  		  	
	 Holder
	 		 		  		  	
	 Name:
	 	  
	 		  	Number of shares:	  	  

	 Affiliates of Holder
	 		  		  	
	 Name:
	 	  
	 		  	Number of shares:	  	  

	 Name:
	 	  
	 		  	Number of shares:	  	  

		 		 		  	Total:	  	  

	
	PROPOSED CONVERSION OF SERIES B PREFERRED SHARES
	 Holder
	 		 		  		  	
	 Name:
	 	  
	 		  	Number of shares:	  	  

	 Affiliates of Holder
	 		  		  	
	 Name:
	 	  
	 		  	Number of shares:	  	  

	 Name:
	 	  
	 		  	Number of shares:	  	  

		 		 		  	Total:	  	  

		
	CONVERSION RATE, AS ADJUSTED, IF APPLICABLE	  	
	
	HOLDINGS OF COMMON SHARES AFTER PROPOSED CONVERSION (ASSUMING IN-KIND SHARE CONVERSION OF ACCUMULATED BUT UNPAID DIVIDENDS)
	 Holder
	 		 		  		  	
	 Name:
	 	  
	 		  	Number of shares:	  	  

	 Affiliates of Holder
	 		  		  	
	 Name:
	 	  
	 		  	Number of shares:	  	  

	 Name:
	 	  
	 		  	Number of shares:	  	  

		 		 		  	Total:	  	  

	
	PERCENTAGE OF COMMON SHARES HELD AFTER PROPOSED CONVERSION (ASSUMING IN-KIND SHARE CONVERSION OF ACCUMULATED BUT UNPAID DIVIDENDS)
	 Total number of Common Shares held by the holder and its affiliates after
proposed
 conversion:
	  	  

	 Total number of Common Shares outstanding:1
	  	  

	 Percentage ownership of the holder and its affiliates:
	  	 %

 

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

									
	NAME AND NUMBER OF SHARES TO BE PLACED ON COMMON SHARE CERTIFICATES
	 Name:
	  	  
	  		  	Number of shares:	  	  

	 Name:
	  	  
	  		  	Number of shares:	  	  

	 Name:
	  	  
	  		  	Number of shares:	  	  

		  		  		  	Total:	  	  

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

			
	[INSERT NAME OF HOLDER]
		
	By:	 	  

  
 2

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