Frjalsi Investment Bank Ltd.

Objective, board, managing director and main shareholders:

The Frjalsi Investment Bank’s objective is to provide financial services. By law, it has the right to use the designation “investment bank” and has the same rights as commercial and savings banks, with the exception that as an investment bank it is not able to accept deposits from the public for investment.

The Bank advances credit to individuals and companies against securities in the form of real property and private cars, makes development loans for construction projects and engages in the factoring of commercial claims, these consisting mainly of credit-card receivables. The Bank has also been putting more emphasis on larger loans to medium and large-sized enterprises with a sound financial basis.

The board of the Frjalsi Investment Bank

Alternates:
Lárus J. Sigurðsson, Branch Manager of SPRON
Ari Bergmann, Branch Manager of SPRON
Þorvaldur F. Jónsson, Branch Manager of SPRON
Ósvaldur Knudsen, General Manager of SPRON
Harpa Gunnarsdóttir, General Manager of SPRON

Managing Director:
Kristinn Bjarnason

History

The Frjalsi Investment Bank Ltd (formerly the Samvinn Fund of Iceland Ltd) was founded on the 100th anniversary of the founding of the Co-operative Movement in Iceland on 18th November 1982. The aim of the company when it was founded was to stimulate the Icelandic economy by opening the way for the Co-operative Movement to play a role in the Icelandic business life, particularly in new occupational sectors. Thus, it was the first ?venture capital? company in Iceland at the time of its foundation, but its focus has changed since then.

The founding members of the Company were various co-operatives, including Olíufélagið Ltd., Samvinnutryggingar, Reginn Ltd and the SÍS Pension Fund.

To begin with, the Bank?s activities were restricted to the purchase of market bonds, granting credit and issuing sureties for the owners and purchasing shares in new companies with a growth potential. Among the first companies that it took part in founding were Marel Ltd and the Icelandic Development Corporation (Þróunarfélagið hf).

The following have been the Managers of the Frjalsi Investment Bank:

1982-1984 Þorsteinn Ólafsson, Chairman
1984-1987 Þórður Yngvi Guðmundsson
1987-1988 Þorsteinn Ólafsson
1988-1998 Arnór Arnórsson
1998-1999 Kristinn Bjarnason (temporarily appointed)
1999-2001 Örn Gústafsson
2001- Kristinn Bjarnason

In 1984 the Company became the first enterprise in Iceland to offer bonds for sale to the public on the open market; they were sold through Kaupthing Ltd.

In 1986 the Company revived financial leasing, which had been dormant for many years in Iceland; this led to the foundation, with the Samvinn Bank and the French bank Banque Indosuez, of the leasing company Lind Ltd. In 1992 the Company sold its share in Lind to the National Bank of Iceland, which had acquired the shares of the other two founder members the previous year.

The year 1995 marked a new beginning for the Bank, as it was then that the Act on Credit Institutions Other Than Commercial and Savings Banks, No. 123/1993, took effect. Under this new act, the Company could call itself an investment bank and had the same rights as the commercial and savings banks, with the exception that it is not permitted to accept deposits from the public for investment.

Following a stock issue handled by Kaupthing, the Bank was listed on the Iceland Stock Exchange in 1997. The stock issue was highly successful; shares were sold for a par value of ISK 200 m, and the number of shareholders rose to more than 300.

The year 2000 was a time of great changes at the Frjalsi Investment Bank. For almost 20 years, the main focus had been on credit and investment in shares. One of the changes of emphasis made at the beginning of 2000 was to make better use of the Bank?s scope as an investment bank and to extend its field of operations. In January, authorisation was given for negotiations with the securities brokerage Fjárvangur, the main activities of which were securities trading and asset management, fields that were closely compatible with the plans for broadening the Bank?s activities. The merger of the two companies was announced in May.

At the end of 2000, Kaupthing and its partners purchased 70% of the shares in the Bank, and the new board decided to change its operations. The securities trading and asset management departments were sold to Kaupthing, while credit operations were expanded. After this, Kaupthing made the other shareholders a takeover bid that was accepted by the vast majority. Following this takeover, the Bank no longer met the conditions regarding the minimum number of shareholders for being listed on the Iceland Stock Exchange, and its shares were removed from the exchange?s listing.

Annual reports

Calling in of Debts

Frjalsi Investment Banks Ltd.

On 23^rd June 2009, the executive board of the Frjalsi Investment Banks Ltd. (Frjálsi fjárfestingarbankinn hf.) demanded that the bank should be liquidated under the Financial Institutions Act, No. 161/2002, Art. 101, par. 1, sub-par. 3, as it did not consider it likely that the bank’s financial difficulties would be cleared anytime soon.

The ultimate date is 23^rd June 2009, cf. the Act No. 44/2009, Art. 102, par. 3, sub-par. 2, when the Reykjavík District Court appointed a liquidation board for the bank.

All those who wish to claim any kind of debts, or other rights, against the Frjalsi Investment Bank Ltd., or assets under the auspices of the bank, are hereby urged to declare their claims in writing to the liquidation board of the bank within three months from the publication of this calling in of debts. The statements of claims shall have been received by the liquidation board within the aforementioned deadline, their content being in keeping with the instructions of the Bankruptcy, etc., Act., No. 21/1991, Art. 117, par. 2 and 3.

The statements of claims should be submitted to:

The Liquidation Board of the Frjalsi Investment Bank Ltd.,

Lágmúli 6

108 Reykjavík

[Iceland]

Due to the aforementioned provisions of law, the claimants, in the statement of claims, are requested to specify the itemized amount of the claim as of 23rd June 2009,

Claims in a foreign currency should be specified in the currency in question. However, claimants within the member countries of the European Economic Area and the European Free-Trade Association shall be authorized to specify their claims in the language of their home country. Such statements of claims shall be accompanied by an Icelandic translation. However, claims may be specified in English without any accompanying translation. Other claimants may specify their claims in Icelandic or English.

In the event the claims are not specified within the aforementioned time limit, they shall be interpreted in the same manner as an imperfect specification of a claim under the Bankruptcy, etc., Act, No. 21/1991, Art. 118, thus ceasing to apply against the Frjalsi Investment Bank Ltd., unless coming under sub-par. 1-6 of this provision of law.

It should be emphasized that by specifying his claim, the claimant will be considered to have rescinded any confidentiality (bank secrecy) regarding the claim in question.

This constitutes a call to a meeting of the claimants which will be convened on Thursday 19th November 2009, 10:00 a.m., at the Hilton Hotel Nordica, Sudurlandsbraut 2, Reykjavík. Those who have specified their claims against the bank shall have the right to attend the meeting. On the agenda of the meeting there will be a list of the specified claims and the liquidation board’s position as it will then be available. At least one week before the aforementioned meeting is convened, a list of the specified claims will be available to those who have specified their claims against the bank.

Further information on the statements of claims, and the processing of the claims, will be made available on the bank’s website, http://www.frjalsi.is/. The liquidation committee would like to make the following recommendations to the claimants:

a) To specify their email address, or their representative, concerning the statement of claims, so as to facilitate the dissemination of information.

b) To specify a bank account so as to facilitate any disbursement if and when this would occur.

c) To specify their claims as soon as possible subsequent to this calling in of debts.

Reykjavík, 14th July 2009

The Liquidation Committee of the Frjalsi Investment Bank Ltd.,

Hildur Sólveig Pétursdóttir, Advocate to the Supreme Court

Hlynur Jónsson, District Court Attorney

Leiðarkerfi vefsins