Ardour Global Indexes

This document provides the rules for calculating and maintaining the Ardour Global Alternative Energy Indexes, hereafter referred to as the “AGI Family”. Included in these rules are the following: 1) a description of the AGI Family, 2) the design specifications for the AGI Family, and 3) the index calculation and data elements.

I. General Description

The Ardour Global Index^SM (Composite) (“The Composite”) is a capitalization weighted, float adjusted equity index designed to serve as an equity benchmark for globally traded stocks which are principally engaged in the field of Alternative Energy Technologies, including renewable energy, alternative fuels and related enabling technologies.

The Composite comprises five main business segments:Alternative Energy Resources. Companies whose technologies are involved with:

• Solar Power- including photo-voltaic (PV) and thermal
• BioEnergy- including power and fuel
• Wind PowerHydro Power, Tidal Power and Wave Power
• Geothermal Power

Distributed Generation. Companies whose technologies produce power at or near the end user. These technologies include:

• Micro Turbines
• Diesel Engines
•  Fuel Cells
•  Hydrogen Generation and Storage

Energy Efficiency. Companies whose technologies are involved with:

• Lighting
• White Tags
• Cogeneration
• Energy Recycling
• Advanced Metering
• Demand Response

Enabling Technologies. Companies whose technologies are involved with:

• Power Electronics
• Advanced Battery Chemistries
• Flywheels Superconductors
• Ultracapacitors
• Advanced Materials

Environmental Technologies. Companies whose technologies are involved with:

• Water and Wastewater Treatment
• Air Quality and Emission Mitigation
• Clean Coal

The Composite is a capitalization weighted, float adjusted equity index containing stocks selected from a universe of equity securities traded on recognized stock exchanges in a) North America, b)  South and Central America, c) Europe, Middle East & Africa (EMEA) and c) Asia/Pacific, based on a set of objective screening criteria. The selection criteria include requirements for industry participation, primary exchange listing, minimum capitalization (adjusted for free float), minimum price and average daily trading volume. Stocks that meet the screening criteria at inception or on a rebalancing date will be included in the Composite, unless otherwise determined by the Index Committee. Each stock’s relative weighting in the Composite will be based on its market capitalization, adjusted for free float, relative to the overall market capitalization, adjusted for free float, of the Composite, subject to certain restrictions, limitations and modifications.The weight of any stock contained in the Composite will be capped at 20% of the total market capitalization of the Composite and the aggregate weight of all stocks with individual weights of 5% or more will be capped at 45% of the total market capitalization of the Composite.

The companies contained in the Global Index will be divided into four regional groupings to form the regional sub-indexes. The regional sub-indexes are:

• North America. Companies whose principle place of doing business is North America and whose securities have their primary listings on North American Stock Exchanges.
• Europe, Middle East, & Africa (EMEA). Companies whose principle place of doing business is Europe, Africa or the Middle East and whose securities have their primary listing on stock exchanges in those regions.
• Asia/Pacific. Companies whose principle place of doing business is Asia, including, Japan, Korea, Southeast Asia, Indonesia, Taiwan, the Philippines, Australia and New Zealand and whose securities have their primary listing on stock exchanges in this region.  (Not Presently compiled or calculated.)
• South and Central America.  Not presently compiled.

III. Sector Sub-Index

The companies contained in the Global Index that are engaged in the production of Solar Energy and related products or services form the Ardour Solar Energy Index (ASI).  The ASI includes companies in three primary sectors:  1) Photovoltaic, Concentrated Solar Power, and Solar Thermal Power; 2) Solar Integrators; and 3) Related Technologies.   

IV. The Index Committee

The AGI Index Committee (“The Committee”) will be composed of not less than four members. The Committee Chairman will have extensive experience in the overall field of alternative and renewable energy. Two of the members will have some expertise in at least one of the above-named segments. The fourth member will have extensive experience and expertise in financial markets and stock market characteristics. The Committee will be responsible for maintaining a comprehensive list of companies that are principally engaged in one of the business segments and the list will form the Composite universe of stocks.Impartial selection criteria will then be applied to these stocks to determine whether or not they should be included in the index. The Committee will then review the stocks to be included in the Composite and may reject any stock that it believes does not meet its overall standards for risk and sound business practice. The Committee will meet quarterly, either in person or via teleconference, to discuss index issues and organize the quarterly or special rebalancings. The composition of the Committee may from time to time be changed to reflect changes in market conditions.

V. Design Specifications

The Composite will contain stocks that meet the following criteria:

1. The company has been classified by the Committee as being principally engaged (>50% of gross revenues derived from business of alternative energy) in one of the five business segments described above.
   
   The company’s stock must trade on a recognized North American, European or Asian stock exchange. (National Stock Exchange, formerly NASDAQ, stocks must be “reported securities” under 11Aa3-1 of the Securities and Exchange Act, i.e., National Market System stocks, and similar criteria apply to stocks with foreign listings.) Only actual common shares outstanding are eligible for inclusion. For companies with multiple share classes, the eligibility of each share class will be considered based upon overall liquidity (average daily trading volume) as if each represented a separate company.
   
   The stock must have an average daily closing price greater than $1, or the equivalent amount in its listing currency, for the preceding three months or the entire period of its stock exchange listing, if less than three months.
   
   The minimum capitalization value for each stock will be determined at index inception and will be revised with each quarterly rebalancing to reflect current market levels. The minimum capitalization value for any stock will be greater than USD 100 million, or the equivalent amount in its listing currency.
   
   A Composite constituent whose capitalization falls below 50% of the minimum on the date of the quarterly rebalancing shall be deleted from the AGI before the open of trade on the effective date.
   
   Companies with float below USD 50 million are not eligible for inclusion. Composite constituents that fall below the threshold as of the most recent rebalancing date shall be d from the index after the close on the effective date of the rebalancing
   
   A liquidity ratio, R-Score, is defined as the average 3-month daily trading volume (in thousands, USD) divided by the average 3-month market capitalization (in millions, USD).  A non-component with an R-Score less than 25% as of the snapshot date will be removed from the Composite selection pool.
   
   For a recent IPO (less than three months of trading history) to be included in the Composite selection pool, the stock will require at least 15 trading days as of the snapshot date.  R-Score will be based on the entire trading history if the company's trading history is less than three calender months.  Such companies may be added to the Composite on any rebalancing date at the discretion of the Committee. Recent IPOs in non-US jurisdictions will be added only after meeting relevant US regulations with respect qualifications for US ownership.
   
   Curren constituents with R-Score less than 15% shall be deleted from the Composite before the open of trade on the quarterly rebalancing date.
   
   Certain companies that are not principally engaged in one or more of the five segments, but that derive significant revenues from businesses in one or more of the five segments may be included in the Composite at the discretion of the Index Committee on a capitalization-adjusted basis, provided 1) such revenues represent more than 20% of the company’s total revenues and such revenues are independently reported in the company’s financial reports, 2) applicable revenues are likely to have a material impact on the company’s overall share price performance, and 3) the company’s applicable business is likely to have a significant impact on the alternative energy sector as a whole.

VI. Constituent Weightings

1. Each index constituent’s stock is capitalization weighted, using each stock’s actual shares outstanding multiplied by the closing price on the primary listing exchange on the inception or rebalancing date.  Each constituent’s capitalization is then adjusted to reflect the actual free float of the company’s shares.  Free float is the market capitalization after eliminating government holdings, industrial cross-holdings, restrictions of foreign investment and similar factors.Index constituents shall be subject to limitation on their float-adjusted capitalization weighting in the Composite.
1. No stock’s weight shall exceed 20%.
   The aggregate weight of stocks exceeding 5% shall not exceed 45%.
   
2. The following procedure shall be used to ensure that no Composite constituent weighting exceeds a pre-determined maximum weight on the rebalancing date:

Step 1: Sort the Composite constituents by float market capitalization in descending order. Starting with the second largest company in the index, calculate a float market capitalization ratio for each company to the next largest company in the index. Step 2: Adjust this ratio by the following formula:

where:
Original Ratio = the float market capitalization ratio of each company to the next largest company calculated in Step 1.
Factor = a divisor, that starts with 1, that increases the ratio calculated in Step1Step 3: Calculate new float market capitalization using the New Ratio for each company.Step 4: Calculate the new weights for each company based on the new float market capitalization and check to see if the weight limits described in V(ii) are satisfied.Step 5: If the weight limits are not satisfied, repeat Steps 2 to 4, increasing the Factor by .01 for each round until the weight limits are satisfied.Step 6: Once the weight limits are satisfied, calculate the final cap factors for each company using the float market capitalization calculated in Step 3 such that the smallest company in the index has a cap factor of 1.0.

• The foregoing methodology shall be applied to all indexes included in the AGI Family, except the Extra Liquid indexes for North America and EMEA, which shall follow a different weighting/capping procedure.  For these indexes the aggregate weight of the top five constituents shall be capped at 60% and the weights of each of the top five constituents shall be reduced by the excess weight in proportion to their respective relative weights in the top five index constituents.  The excess weight will then be added to the bottom ten constituents in proportion to their respective relative weights among the bottom ten constituents.

VII. Division into Regional Sub-Indexes

1. Upon completion, the Composite will then be divided into three regional sub-indexes based on the regional description contained in Section II.The weighting of each of the stocks contained in the sub-index shall be adjusted upward on a proportional basis so that the combined weights of these stocks equals 100%. The procedures applied to section V(i) through V(iii) herein shall then be applied to each regional sub-index.

VIII. Extra Liquid (XL) Series

1. Upon completion, the Composite and the North American and EMEA sub-indexes will each be reduced to a subset of the most liquid stocks contained in the Composite or relevant sub-index.
   
   
2. The Ardour Global Index^SM (Extra Liquid) (“AGI Extra Liquid”) will contain a total of 30 stocks and each of the regional (N.A. and EMEA) sub-indexes will contain a total of 15 stocks.
   
   
3. All stocks contained in the Extra Liquid Series shall meet the inclusion criteria defined herein for the Composite.
   
   
4. The stocks contained in the Extra Liquid Series shall in the case of the AGI Extra Liquid be the 30 stocks with the highest average rank of float market capitalization and average daily turnover for the previous three months and shall in the case of the North American and EMEA indexes be the 15 stocks with the highest average rank.
   
   
5. The Committee will screen the constituents to make sure that no constituent’s average daily turnover as a percentage of its market capitalization (float adjusted) is inconsistent with sound market trading patterns.  If in the opinion of the Committee a constituent presents such inconsistent trading patterns, it will not be included in the index and the next most actively traded stock will be selected in its place.
   
   
6. The weighting of each of the stocks contained in the AGI Extra Liquid shall be determined on a capitalization-weighted, float-adjusted basis, using methodology contained in Section V herein.
   
   
7. The weighting of each of the stocks contained in the North America and EMEA Extra Liquid Indexes shall be capitalization-weighted, float-adjusted, but weightings of those stocks whose weights exceed the limits defined in Section V(i)-V(iii) will not be adjusted as described in those sections.  Instead, a different formulation will be used to insure that the aggregate weight of the five largest constituents does not exceed 60% of the weight of the index.
   
   
8. At each reconstitution the constituent turnover of the various Extra Liquid indexes will be smoothed using the following methodology.  For the AGI Extra Liquid, no stock will be added to the index unless it statistically ranks among the top 25 candidate stocks and no stock will be d from the index unless it ranks lower than the 35th most liquid candidate. For the AGI regional Extra Liquid indexes, a stock must rank among the top 12 candidate stocks to be added and will not be d from the index unless it ranks lower than the 18th most liquid candidate.

IX.        Sector Sub-Index

 i)  Upon completion those companies contained in the Composite that have been identified as “Solar Energy Companies” by the Index Committee will be used to form the ASI.

 ii)  In addition to the eligibility criteria applied to the Composite, companies must have average daily trading volume of more than USD 1 million for the ninety days prior to the rebalancing date, or in the case of recent IPOs, companies must have average daily trading volume of more than USD 1 million for their entire trading history, provided the companies have traded more than 22 days and less than 90 days.

 iii)  The weighting of each of the stocks contained in the ASI shall be     determined on a capitalization weighted, float adjusted basis, using methodology contained in Section VI herein.

X. Rules for Calculation and Dissemination

The Composite and the related sub-indexes are calculated externally on behalf of Ardour Global Alternative Energy Indexes, LLC (“The Company”) by Dow Jones & Company Inc. (Calculation Agent).  The Calculation Agent is also responsible for index maintenance and price dissemination.  The calculation, maintenance and dissemination rules are as follows:

Index Rebalancings.  Shares outstanding totals for component stocks are d during the quarterly reviews (third Fridays of last month of calendar quarter). However, if the number of float-adjusted shares outstanding for an index component changes by more than 10% due to a corporate action, the shares’ total will be adjusted immediately after the close of trading on the date of the event. Whenever possible, changes will be announced at least two business days prior to its implementation. Changes in shares outstanding due to stock dividends, splits and other corporate actions also are adjusted immediately after the close of trading on the day they become effective.

Index Reconstitutions.  The Indexes are reconstituted on a quarterly basis, during which the Index Committee submits to Dow Jones a candidate list of all identifiable companies worldwide that are principally engaged in the business (as described above) including current Index constituents.  All candidates and current constituents are screened against the Composite ion criteria, and additions to and deletions from the Composite and related sub-indexes are determined.  Once the Committee has approved additions and deletions, the Indexes are rebalanced to reflect all changes.  The index rebalancing snapshot date is the first Monday following the thrird Friday of the month prior to the rebalancing month.
 
Additions and Deletions.  Additions to the Indexes are made 1) at the close of trading on the semi-annual reconstitution dates (third Fridays of June and December).  Additions are made to the Extra Liquid Series when an index vacancy is created by an index deletion at the close of trade on the date the deletion becomes effective.  Additions may be made to the Composite at the close of trading on the quarterly rebalancing dates (third Friday of last month of the calendar quarter) in the case of certain recent Initial Public Offerings that occurred more than 22 trading days prior to the rebalancing date.Deletions to the Indexes are made 1) at the close of trading on the semi-annual reconstitution dates (third Friday of June and third Friday of December) for companies that fail to meet the inclusion criteria and 2) at any time, in the event a company is de-listed, files for bankruptcy, is acquired or merges with another company.

Calculation of Index Values

1. The Calculation Agent will calculate index values using price data on each reported trade it receives on each component security.
   
   The Calculation Agent will distribute index values to vendors at set 15-second intervals, provided the index value has changed from the previously distributed value.
   
   The index calculations will start at 18:00 (EST - US) for the next trading day (opening price).  At that time, the index will begin changing as new prices or exchange rates are processed.
   
   Index calculation will cease each trading day at 17:00 (EST-US) and official summaries will be disseminated at approximately 17:40 (closing price).
   
   Each week, the indexes will be calculated starting Sunday night at 18:00 through Friday night at 17:00.
   
   If, during periods when the index is calculated, one or more markets are closed, the index calculation will continue using the last closing price for those stocks that trade on the closed exchange(s).
   
   Stocks denominated in foreign currencies will be converted to USD with each reported price using exchange rates derived from Reuters.  Official closing prices for the indexes will be calculated using the WM Rates (4PM London fixing).
   
   The indexes will also be calculated and disseminated in EUR.

Dissemination

Index values will be disseminated in US dollars via the Chicago Board of Trade using the following tickers:

Index                                                           Ticker

Ardour Global Index (Composite)                               AGIGL

Ardour Global Index (Extra Liquid)                             AGIXL

AGI North America                                                     AGINA

AGI North America Extra Liquid                                 AGINAXL

AGI EMEA                                                                  AGIEM

AGI EMEA                                                                 AGIEMXL

Ardour Solar Energy Index                                         SOLRX

 Index values will be disseminated in EUR via the Chicago Board of Trade using the following tickers:

             Index                                                             Ticker

 Ardour Global Index (Composite)                               AGIGLE

Ardour Global Index (Extra Liquid)                             AGIXLE

AGI North America                                                     AGINAE

AGI North America Extra Liquid                                 AGINAXLE

AGI EMEA                                                                  AGIEME

AGI EMEA                                                                 AGIEMXLE

Ardour Solar Energy Index                                         SOLERX