The proposals submitted at the Annual General Meeting of Flaga Group hf. on Tuesday 10 April 2007 were approved unanimously. 1. The following persons were elected as members of the Board of Directors for the next operating year: Board members: Bogi Pálsson Eggert Dagbjartsson Erlendur Hjaltason Hákon Sigurhansson Sveinn Þór Stefánsson Alternates: Ásmundur Tryggvason Helgi Jóhannesson 2. The following proposal regarding election of an auditor was approved: KPMG endurskoðun hf., Símon Á. Gunnarsson and Eyvindur Albertsson on their behalf. 3. The following proposal on allocation of profits/loss was approved: The Board of Directors proposes that the Company does not pay dividends for the year 2006. 4. The following proposal on remuneration to the Board of Directors was approved: It is proposed that remuneration for Board members for the year 2007 will be ISK 600,000 and that remuneration for the Executive Chairman of the Board will be double that amount. 5. The following proposal on a Remuneration Policy was approved: Remuneration Policy for Flaga Group hf. Article 1 - Objective The object of this Remuneration Policy is to make an employment for Flaga Group hf. a desirable choice for personnel, thereby guaranteeing the Company a position among the best in the world. In order to do so, it is necessary that the Board of Directors of the Company be in a position to offer competitive wages and other benefits that are comparable to other international companies in similar fields of business. Article 2 - Board of Directors - terms of employment Board members shall receive a fixed monthly payment in accordance with the decision of the annual general meeting of the Company, as is stipulated in Article 79 of the Act no. 2/1995 on Public Limited Companies. The Board of Directors shall submit a proposal on the fee for the upcoming operating year and shall take into account the time Board members spend on their duties, the responsibility involved, and the Company's operations in general. Board members shall receive a fixed fee for each meeting they attend in the Board's subcommittees. The fee shall be decided by the Annual General Meeting of the Company. Article 3 - Chief Executive Officer - terms of employment A written employment contract shall be made between the Company and the Chief Executive Officer. His terms of employment shall be competitive on an international standard. The amount of the salary and other payments to the CEO shall be decided on the basis of his education, experience and previous occupation. Other terms of employment shall be specified in the contract, along with pension payments, vacation rights, benefits and terms of notice. An initial payment at recruitment is permitted. In general, no additional retirement or termination payments to those stipulated in the employment contract shall be agreed upon in the case of termination. However, special circumstances may lead to a separate termination agreement with the CEO, the provisions of which may include retirement or termination payments. Article 4 - Acknowledgements to the management The CEO is authorised to propose to the Board of Directors that the management be rewarded in addition to their set terms of employment in the form of delivery of shares, performance-based payments, stock options or any payment having to do with company shares or the future value of such shares, loan contracts, pension fund contributions, retirement or severance payments. The status of the relevant member of management or employee, responsibility and future prospects and the main objectives of this policy shall be taken into consideration when deciding whether he should be granted rewards in addition to his set terms of employment. Article 5 - Approval of the Remuneration Policy and other matters The Remuneration Policy shall be presented to the shareholders in the Annual General Meeting for their approval. The Remuneration Policy shall be subject to annual review. The Remuneration Policy is binding for the Board of Directors with regard to stock options and any payment under which Directors are remunerated in shares, stock options or any other right to acquire shares or to be remunerated on the basis of share price movements and any substantial change in such schemes as per Article 79. a, Paragraph 2 of the Act no. 2/1995 on Public Limited Companies. In all other aspects, the policy shall be viewed as a guideline. The Board of Directors shall note in the minutes of its meetings any major deviation from the Remuneration Policy and such deviation shall be well justified. The Board of Directors shall inform the Annual General Meeting of such a deviation.