Rules of Procedure for the Board of Directors of Festi hf.

1. Appointment of the Board of Directors, Chairperson, Vice-Chairperson and Procuration. Shareholders’ agreement and communication with shareholders.

1.1. Following the general meeting where the Board of Directors is elected, the board shall convene and appoint a chair and vice-chair. They shall be elected by a simple majority, but in the event of a tie, the result will be decided by lot. The most senior member of the Board of Directors heads the first meeting until a chairperson has been elected, who then takes over. During the same board meeting, the Board of Directors must sign the board's Rules of Procedure, the board's Code of Ethics and the Rules for Assessing Reputational Risk and Conflicts of Interest of board members, which shall apply until the Company's next general meeting. In the event of a change in the composition of the Board of Directors between general meetings, a new board member must sign all the above rules, at their first board meeting of the Company.

1.2. The Rules of Procedure, Code of Conduct and Rules for Assessing Reputational Risk and Conflicts of Interest of board Members include provisions regarding the division of labor among the Board of Directors, convening of board meetings, communication and handling of information, evaluation of competency of board members, appointment of sub-committees and other matters appropriate for regulation to promote a successful working ground for the Board of Directors.

1.3. The chairperson of the Board of Directors represents the Company externally, unless otherwise decided by the board. The authorization and obligation of the CEO to act on behalf of the Company is found in the law on limited companies and the Company's Articles of Association.

1.4. Due to the Company's agreement with the Competition Authority, board members of the Company must not be connected to the Company's competitors through their own ownership or ownership of a board member’s spouse. Further, they can not have current or previous connection with the Company’s competitors through employment or through board positions within 2 years before taking a seat on the Company’s board. Spouses/partners of board members can not have current or previous connection with the Company’s competitors as key employees or through board positions within the last 2 years. Parties who have carried out lobbying or consulting work for Festi's competitors within two years before board elections shall not sit on Festi's Board of Directors. The same applies if a spouse/partner has performed such work for Festi's competitors during the same period.

1.5. Should the chairperson be unable to perform their duties due to absence, the Vice-Chairperson takes their place.

1.6. The majority of the Board of Directors has procuration. The Board of Directors of the Company grants procuration on the Company’s behalf.

1.7. The Company's board members are independent in their work and do not take instructions from Company shareholders or other parties of interest. Board members also maintain confidentiality in their work and do not provide shareholders with information regarding the Company's operation or activities unless such information is presented to the Board of Directors in its entirety.

2. Convening of Meetings and Quorum

2.1. Board meetings shall be held as often as necessary and generally no fewer than eight times a year. The chairperson convenes board meetings and ensures that all members of the Board of Directors are notified. A board meeting must be held if any board member or the CEO so requests.

2.2. The CEO is present at meetings of the Board of Directors, even if that person is not a member of the board, and has the right to participate and make proposals, unless the Board of Directors decides otherwise in individual instances.

2.3. The Board of Directors can authorize to other employees to attend board meetings.

2.4. Board meetings must be announced with at least 3 days’ notice. However, a meeting may be called with shorter notice, provided the meeting is necessary due to special circumstances. In case of matters that require the Board of Directors immediate attention, a board meeting can be conducted via telephone or internet. The Board of Directors is competent to make decisions when the majority of board members are in attendance of a board meeting. However, an important decision can not be made unless all board members have had an opportunity to discuss the matter, if at all possible.

2.5. Chairperson presides over the meetings of the Board of Directors.

2.6. A majority of votes determines the handling of matters at board meetings.

3. Meeting minutes

3.1. Minutes are to be kept of all occurrences at board meetings. The following must be recorded in the meeting minutes:

3.1.1. The place and time the board meeting starts.

3.1.2. All participants of the meeting and moderator’s name

3.1.3. Brief description of agenda items, documents presented under each item, discussions and votes at the meeting and/or decisions made by the meeting.

3.1.4. Name of the person writing the minutes.

3.1.5. Meeting’s end time and information on when and where the next board meeting will be held, if such a decision is made.

3.1.6. A board member or CEO who does not agree with the Board of Directors's decision has the right to have their opinion recorded in the minutes book, as can others in accordance with rules set by the board.

3.2. Minutes of the meeting shall be presented for approval and signed by those attending the meeting, as applicable, at the next meeting of the Board of Directors. Board members not present at the board meeting covered by the minutes must confirm with their signature that they have read the minutes.

3.3. Draft minutes must be submitted to the chairperson of the Board of Directors for reading no later than two days after the meeting and sent to other board members no later than five days after the meeting. If these parties do not submit comments on the draft within a week of receiving it, it is considered approved and must then be signed at the next board meeting or through an electronic signature system.

4. Confidentiality obligations

4.1. Board members are bound by an obligation of confidentiality regarding the affairs of the Company, the interests of its customers and other matters they become aware of during their work as directors and which must be kept confidential according to the Company's Articles of Association, the law or the nature of the case, unless the Board of Directors decides to make the matter public or if it is made public as per provisions of the Limited Companies Act or the Company's Articles of Association. The obligation of confidentiality remains in place, even after leaving the job. Violation of the above obligation of confidentiality may result in penalty according to the provisions of the Limited Companies Act and/or the General Penal Code and liability for damages according to general rules on damages.

4.2. A board member must securely store all data they receive in their capacity as a board member. If a board member resigns, they must hand over any and all data they have in their possession to the Company according to the above.

4.3. Board members and CEO may not abuse their position by trading shares in the Company or in other companies within the same group.

4.4. Board members and CEO may not make any arrangements that obviously favor certain shareholders or other inappropriate interests at the cost of other shareholders or the Company.

4.5. Board members and CEO may not enforce the decisions of a shareholders’ meeting or of the Company’s other executives if the decisions are invalid due to violation of law or the Company’s Articles of Association.

5. Incompetence – specific and general eligibility

5.1. A board member or CEO may not participate in the handling of an issue concerning contracts between the Company and themselves, on a lawsuit against themselves or contracts or lawsuit against a third party if they have considerable interests at stake which may be at odds with the Company’s interests. In the event of such a case, the relevant board member or CEO is obliged to inform about any interests.

5.2. All contracts that a board member or CEO may enter into with the Company, as well as contracts between the Company and a third party must be submitted to the Board of Directors for approval or rejection if a board member or CEO has a significant interest that may conflict with the Company's interests.

5.3. Board members must ensure that they always meet the applicable eligibility requirements. Special rules apply at Festi regarding reputational risk and conflicts of interest. The Board of Directors must be informed without delay regarding matters covered by those rules. It is the responsibility of a board member to inform about any issues that may affect their independence or duties as a board member.

5.4. Board members must be aware of the consequences for Festi if they are found to be in violation of the laws and rules that apply to the operation, including rules that apply specifically to the Company's Board of Directors. Consequences can include operational and/or reputational damage for Festi, which can result in financial damage in the form of reduced share prices, rising financial costs, legal costs, fines, loss of business relationships, etc.

6. Increased Duties of Directors and CEO

6.1. Board members and CEOs must avoid conflicts between the Company's interests or the public interest related to the registered Company on the one hand and their financial or personal interests, or their family's, on the other, and make sure that personal relationships or conduct as well as their work as a board member, other work and private life do not have a negative impact on the Company's interests and reputation.

6.2. Conduct and behavior.

6.2.1. Board members and the CEO should avoid all actions that are likely to raise suspicions that they are using their position for personal gain.

6.2.2. A board member should be careful that his actions do not give other employees reason to believe that violations of laws, codes of conduct or other rules of the Company will be overlooked.

6.2.3. A board member is careful not to diminish the respect of the Board of Directors and the Company through reprehensible behavior, indifference to the law or disrespect for human dignity and human rights. A board member ensures that they conduct their work and private life in accordance with the Company's values, code of conduct and social policy.

7. Appointment of the CEO

7.1. The Company's Board of Directors appoints a CEO to the Company, grants procuration, determines remuneration and scope of work, prepares their employment contract and supervises their work. The CEO and other key employees of the Company, as defined in Festi's agreement with the Competition Authority dated July 30, 2018, must not be connected to Festi's competitors through employment, board positions or own ownership. The same applies to spouses or common-law partners of these parties, through employment as key employees, board positions or own ownership. The person's possible ownership through mutual funds that the person has no influence over is not included.

8. Duties of the Board of Directors and CEO

8.1. Board members and the CEO must always and exclusively be guided by the Company's interests. They must be familiar with its Articles of Association and the main points of the Act on limited companies. They must ensure that the Company operates according to law and fulfills the mandatory duty to provide information. They shall also seek to ensure that the rights of the Company's shareholders, creditors, customers and employees are not violated.

8.2. The Board of Directors’ duties shall, in principle, be carried out at board meetings. In case of communications outside of meetings between board members or between board members and the Company's employees on issues that are on the agenda of board meetings, this must be recorded at the beginning of board meetings and recorded in the meeting minutes.

8.3. The Board of Directors must set goals for the Company in accordance with its purpose and determine the main direction to be taken to achieve set goals.

8.4. The CEO takes care of any day-to-day operations of the Company and in that, must follow both policy and instructions laid down by the Board of Directors. They are the Company's advocate along with the Chairperson of the Board of Directors and can always represent the Company in matters that are within their scope of work.

8.5. The Board of Directors makes decisions in matters that are considered to be unusual or major. The Board of Directors can authorize the CEO to take such measures. The CEO can also take such measures if it is not possible to wait for decisions by the Board of Directors without significant disadvantage for the Company's operations, and they must then notify the Board of Directors of the measure as soon as possible.

8.6. The Board of Directors must ensure that the Company's organization and operations are always in good and proper standing, e.g. in terms of financial statements, internal control, computer systems and budgets.

8.7. The CEO shall ensure that Company’s bookkeeping is in accordance with law and general practices and that all Company assets are handled in a secure manner.

9. Supervisory duties of the Board of Directors

9.1. The Board of Directors shall ensure that there is sufficient supervision of accounting and handling of the Company's funds and shall monitor any plans, including budgets, and take a position on reports on the liquidity of the Company, purchases, sales, financing, investments, cash flow and special risk factors. The Company has an Audit Committee, a Remuneration Committee and an Investment Board, which report directly to the Board of Directors and deal with any issues referred to them by the Board of Directors as well as other matters that by law fall under their scope of operation.

9.2. The Board of Directors must oversee that the Company has sufficient damage and liability insurance in accordance with its operations at all times.

9.3. At each regular board meeting, the CEO shall present to the Board of Directors a report on the Company's activities since the last review, including regular preliminary financial statements. The Board of Directors is obligated to check the Company's preliminary financial statements and evaluate them with regard to plans and possible deviations from said plans, among other things. The Board of Directors must acquire information and data that are necessary for the Board of Directors to carry out its work and supervisory duties.

9.4. According to the above, the Board of Directors shall supervise the Company's activities on the basis of information that its employees submit to the Board of Directors on a regular basis.

9.5. The Board of Directors must have access to all the Company's documents in order to fulfill its supervisory duties.

9.6. All board members have equal rights to receive information about the Company.

9.7. Board members' inquiries must be presented to the Board of Directors at a board meeting. Board members can send queries to the CEO between board meetings. Such queries must be sent by email and a copy sent to all board members. Answers must be presented to all board members simultaneously.

9.8. All queries shall be recorded in the minutes of the board meeting along with their answers. Board members shall not request information through direct communication with the Company's employees.

9.9. The supervision of the Board of Directors shall, as appropriate, also cover any subsidiaries that are in control of the Company at any given time.

10. Audit and Financial Statements

10.1. The Board of Directors is obligated to ensure that the necessary basis for auditing the Company's accounting and accounts is present.

10.2. The Board of Directors and CEO must provide auditors with the information, data, facilities and assistance they deem necessary for their work.

10.3. The CEO, along with the Board of Directors, shall have a draft prepared of the annual accounts, the Board of Directors's report, the sustainability report and, if applicable, a consolidated statement, which is then delivered to auditors for review no later than one month before the Annual General Meeting. The CEO shall be involved in the preparation of other reports that are published with the annual report in the same way.

10.4. After the audit, the Annual Financial Statement must be submitted to the Board of Directors. It must be accompanied by any suggestions and comments that the auditors want to convey to the Board of Directors. If the Board of Directors believes that the Annual Financial Statement should be approved, the board and CEO shall sign the statement. If a board member or CEO believes that the annual statement should not be approved or if they have objections that they consider appropriate for the members of the Company to be aware of, they must state this in their endorsement. The certification of auditors is governed by the provisions of the Act on annual accounts.

10.5. The Annual Financial Statement, signed by the Board of Directors and the CEO and an audit opinion by the auditors must be submitted to the general meeting with the board's proposal for the disposal of profits or compensation of losses.

11. Performance evaluation of the Board of Directors and CEO’s performance evaluation

11.1. The Board of Directors must annually evaluate its work, composition, procedures and practices, as well as the performance of subcommittees, the chairperson of the Board and the CEO. The Board of Directors must review and assess the Company's development with regards to Festi's mission. In such an assessment, the Board of Directors evaluates, among other things, the strengths and weaknesses of its work and procedures and considers issues that might be improved in future work. The Board of Directors can evaluate its own work, however, it is permitted to seek expert assistance as appropriate.

11.2. The Board of Directors must, along with the assessment according to Article 11.1. evaluate the work of subcommittees.

11.3. The Audit Committee annually evaluates the work of external auditors.

11.4. The Board of Directors must respond to the results of the assessment by preparing a plan of action if necessary.

11.5. Board members must meet without the CEO and other employees at least once a year to evaluate the CEO's performance, discuss the results of the evaluation etc.

12. Regarding rules of procedure for the Board of Directors

12.1. These rules are set according to provisions in paragraph 5 of Article 70 of Act no. 2/1995 on limited companies and paragraph 4 of Article 18 of the Company’s Articles of Association.

12.2. All board members must sign a copy of these Rules of Procedure at their first board meeting to confirm their content and signify the Board of Directors’s commitment to adhering to the rules.

12.3. Changes to these Rules of Procedure must be approved at a board meeting with a simple majority of votes, and a notification must be sent to the stock exchange, should any significant substantive changes be made.

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Thus approved at the meeting of the Board of Directors of Festi hf. on May 1, 2021

This was changed at the Board of Directors meeting of Festi hf. on 22 March, 2022

This was changed at the Board of Directors meeting of Festi hf. on 9 June, 2022

Thus amended at the meeting of the Board of Directors of Festi hf. on 24 January, 2024

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Rules for the assessment of reputational risks and conflicts of interest

1. Objectives and scope

1.1. The aim of these rules is to ensure proper governance and that Festi hf. (Festi/the Company), and its subsidiaries, always comply with the requirements of law, regulations, government orders, governance guidelines and other internal rules regarding reputational risks and conflicts of interest, as well as to ensure compliance with the Code of Conduct of the Company's Board of Directors.

1.2. These rules apply to the Board of Directors and CEO of the Company.

1.3. These rules are based on the guidelines of the Icelandic Chamber of Commerce et.al. on corporate governance and are set in place to clarify and supplement guidelines, the Board of Directors's Rules of Procedure and Code of Conduct and relevant provisions of law and regulations that apply to the Company's operations, in addition to its internal rules and other policies.

1.4. These rules are an addition to the general eligibility rules.

1.5. The term eligibility refers in these rules to a person that is covered by the rules having a good reputation and complying with the criteria specified in chapter 3 of these rules as to avoid a conflict with the Company's interests.

2. Responsibility for assessing eligibility

2.1. It is the responsibility of board members to ensure that they meet the eligibility requirements of the applicable law and regulations at all times.

2.2. According to the Nomination Committee Rules, the committee’s role is to review all announcements of candidacy to the Board of Directors as corresponding to paragraph 3 of Article 63 a. of Act no. 2/1995 on limited companies. The committee reviews candidates and makes suggestions for the election of board members based on qualifications, experience and knowledge, and takes into account guidelines on corporate governance and the results of the Board of Directors’s performance evaluation.

2.3. The Board of Directors appoints the CEO. When selecting a CEO, the Board of Directors must ensure to the best of its ability that the person they intend to hire meets the eligibility requirements that apply according to relevant law, rules and qualification criteria that the Board of Directors has defined for the job, as well as these rules.

2.4. Should any doubt arise regarding eligibility according to these rules, the board member must always inform the Compliance Officer as well as the Board of Directors, and provide every relevant information and assistance so that eligibility can be assessed according to them.

2.5. The Company's Board of Directors shall, to the best of its ability, always ensure and supervise the continued eligibility of individual board members, the Board of Directors as a whole and the CEO.

3. Eligibility Criteria

3.1. Board members must continuously show care for the following:

a) Independence from competitors: There can be no relationship with the Company's competitors through employment, ownership or board membership. The same shall apply to spouses or common-law partners of the persons to whom these rules apply. Furthermore, those who perform regular interest monitoring or consulting work for Festi's competitors are not considered independent.

b) Ethics and social awareness: A positive corporate culture must be promoted, social responsibility shown, and awareness of the Company's reputation and its environment.

c) Reputation and actions: Board members must have a good reputation and conduct their actions in accordance with the Board of Directors's Code of Conduct.

3.2 Board members’ reputation is considered to be good if no solid data or reasons indicate otherwise. When evaluating a good reputation, it is considered whether the board members have shown any conduct, action or inaction, which gives reason to question their ability to stand for reliable and healthy operations. The assessment also takes into account any conduct that might undermine their credibility and damage the Company's reputation if it were public.

3.3 In cause of solid data or reasons such as public discussion, a formal complaint or other conduct, an assessment must be made as to whether the aforementioned criteria are met. The assessment is performed according to article 6-8 of the rules. The assessment includes the following:

a) If a board member is accused of alleged criminal conduct or has been convicted of criminal conduct: During the assessment, all circumstances are taken into account; the seriousness and nature of the offense, whether the alleged offense is considered particularly reprehensible in public opinion, what was the person’s role and what the sanctions were or the effect. Elapsed time and the person’s conduct since then, as well as the reaction of the board member and their desire for reconciliation and improvement, should also be considered. Conduct should be assessed based on the interests of the Company and those involved, but opinions should not be formed regarding a potential guilty-verdict if ruling has not been made in court.

b) If a board member is accused of conduct that is not considered criminal but reprehensible in public opinion: During the assessment, all circumstances are taken into account as well as the severity and nature of the behavior, the board member’s reaction, willingness to reconcile and make amends. The conduct should be evaluated based on the interests of the Company and those involved. The evaluation is not intended to come to a conclusion of events, should they not be clear.

4. Initial and ongoing eligibility assessment

4.1. The Nomination Committee's assessment of the board member's qualifications shall, as a rule, be considered satisfactory as it pertains to these rules. An assessment of the CEO must be made before they are appointed. During the evaluation, board members and CEO must consider the relevant provisions of the law, Code of Conduct, the Board of Directors's Rules of Procedure, these Rules, the Icelandic Chamber of Commerce governance guidelines and Festi's agreement with the Competition Authority, dated July 30, 2018 etc. The Nomination Committee’s role is to evaluate the board members who present themselves to the committee in accordance with its rules.

4.2 Board members carry out an independent assessment of their own eligibility after taking a seat on the Board of Directors, in case the assessment has not been carried out before. The evaluation shall be based on the evaluation framework of the Nomination Committee as it is at each time.

4.3. Should any doubt arise regarding the eligibility of a particular board member, the Board of Directors, via the Compliance Officer, may request to view any documents that the board member submitted to the Nomination Committee and the committee's minutes book from interviews. The Board of Directors can obtain additional data for the assessment if deemed necessary.

4.4. Board members and CEO must continuously monitor their own eligibility and the eligibility of individual board members and the Board of Directors in its entirety.

4.5. In the event of a case such as that described in chapter 5, the process calls for the board member in question to withdraw themselves from meetings and must observe the confidentiality obligations to the Company, provide any requested information and not try to influence the assessment review, e.g. by communicating with other board members, shareholders or anyone else who is a part of the reviewing process on behalf of the Board of Directors.

5. Assessment review

5.1. If an incident occurs or the circumstances change in a way so that doubts arise concerning eligibility, the board member must notify the Board of Directors of this without delay. The board member themselves shall independently review and evaluate their own eligibility, referencing the changes in circumstances. The board member's self-assessment must be completed within three days of the change or incident that led to the assessment, and the board member must subsequently notify the Board of Directors in writing of their decision and must state what caused the assessment review and give a justification for the decision.

5.2 If the Board of Directors becomes aware of a change of circumstances or an incident that calls the eligibility of individual board members or the Board of Directors itself into question, without receiving notice from the board member pursuant to article 5.1., the Board of Directors shall examine the eligibility of the person concerned or the board as a whole and carry out an assessment based on the changes. This may apply, for instance, in cases of an incident or public debate regarding a board member, that affects their reputation in a way that could result in negative consequences for the Company’s interests. Any response must consider the nature of the case, assessment of possible consequences, and what measures can be taken to improve the situation.

5.3. Conducting a Board of Directors revaluation.

The Board of Directors decides whether a revaluation will take place:

a) The decision to carry out a revaluation shall be made at a board meeting and entered into the minute books in a formal manner.

b) If a revaluation process is initiated, the Board of Directors shall be permitted to seek advice and guidance from external experts as needed. The selection and appointment of external advisors must be approved by a majority of the Board of Directors. The qualifications and confidentiality obligations of such parties should be examined before they are informed of the facts of the case. The Board of Directors shall define a timeline and decide the date of the board meeting where the results of the assessment will be discussed. At that meeting, the Board of Directors will review the evaluation data, and, if warranted, a risk assessment, makes a final assessment of eligibility and determines the reaction of the committee. In general, items that have not changed or have not been affected shall be excluded during the reassessment. A board member who is subject to an assessment must recuse themselves from board meetings when the matter is discussed.

5.4. If a reassessment concludes that the board member does not meet the requirement of good reputation in such a way that the interests of the board member and the Company no longer coincide, the Board of Directors shall request that the member resigns from the Board of Directors. If a board member does not comply, the Board of Directors must call a shareholders' meeting to report on the results of the reassessment and a proposal is made to elect a new board member. The Nomination Committee shall prepare and publish an advertisement for the election and prepare in accordance with its Rules of Procedure. No other board seats shall be voted for at the meeting, if other board members have not resigned.

5.5. If the revaluation leads the Board of Directors to believe that the CEO no longer meets the qualification requirement of a good reputation, and that this will not be remedied by taking appropriate actions, the Board of Directors shall inform the CEO of the results of the evaluation and give them an option to resign, otherwise the Board of Directors shall dismiss and replace them. The Board of Directors's opinion, assessment and decision must be recorded in the Board of Director’s minute book in accordance with this section.

5.6. The Board of Directors's conclusion shall be the final decision on the matter. Efforts must be made to settle any dispute that may arise regarding the handling of a case or the result of a revaluation according to these rules, if appropriate with assistance from an external and independent party approved by a majority of the Board of Directors. Such conflict and its resolution shall be recorded in the minutes of the board meeting.

6. Assessment procedure according to these rules

6.1. The general rules of confidentiality according to Festi's Code of Conduct, the Board of Directors's Rules of Procedure, the principles of labor law, taking into account the substantive provisions of the Whistleblower Act and the Occupational Safety and Health Act on bullying, violence and harassment in the workplace, apply to proceedings pursuant to these rules, as applicable.

6.2. Should Festi be notified of incidents that may concern the eligibility of a CEO or a board member, Festi will handle such a notification in accordance with these rules and, as the case may be, Festi's Rules on Disclosure, and provides a separate email address for such notifications:

uppljostrun@festi.is

6.3 The Compliance Officer and other persons involved in the resolution of cases based on these rules must ensure that they are qualified to handle the case. The evaluation shall be based on the qualification rules of the Administrative Law.

The Board of Directors decides whether to carry out a revaluation and seeks the opinion of the Compliance Officer on whether it is right to carry out a revaluation before a decision is made:

7. Other

7.1. The results and actions taken on the basis of these rules must be recorded in a clear and meaningful way, including in any relevant meeting minutes. The processing of personal information must always comply with law and regulations on personal protection and Festi's approved Personal Protection Policy.

7.2. The Board of Directors must review these rules annually or arrange for them to be reviewed.

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Approved by the Board of Directors on March 22, 2022.

Thus, changed at the meeting of the Board of Directors on June 9, 2022.