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<SEC-DOCUMENT>0001362310-07-003243.txt : 20071204
<SEC-HEADER>0001362310-07-003243.hdr.sgml : 20071204
<ACCEPTANCE-DATETIME>20071204165219
ACCESSION NUMBER:		0001362310-07-003243
CONFORMED SUBMISSION TYPE:	PRE 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20080115
FILED AS OF DATE:		20071204
DATE AS OF CHANGE:		20071204

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PURE CYCLE CORP
		CENTRAL INDEX KEY:			0000276720
		STANDARD INDUSTRIAL CLASSIFICATION:	WATER SUPPLY [4941]
		IRS NUMBER:				840705083
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		PRE 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-08814
		FILM NUMBER:		071284317

	BUSINESS ADDRESS:	
		STREET 1:		8451 DELAWARE STREET
		CITY:			THORNTON
		STATE:			CO
		ZIP:			80260
		BUSINESS PHONE:		3032923456

	MAIL ADDRESS:	
		STREET 1:		8451 DELAWARE STREET
		CITY:			THORNTON
		STATE:			CO
		ZIP:			80260
</SEC-HEADER>
<DOCUMENT>
<TYPE>PRE 14A
<SEQUENCE>1
<FILENAME>c71715pre14a.htm
<DESCRIPTION>PRELIMINARY PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>Filed by Bowne Pure Compliance</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 14pt; margin-top: 6pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>SCHEDULE 14A</B>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 12pt">Proxy Statement Pursuant to Section&nbsp;14(a) of the Securities<BR>
Exchange Act of 1934 (Amendment No.&nbsp;&nbsp;)</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Filed by the Registrant <FONT face="wingdings" size="2">&#254;</FONT><BR>
Filed by a Party other than the Registrant <FONT face="wingdings" size="2">&#111;</FONT>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box:

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#254;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Preliminary Proxy Statement</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD><B>Confidential, for Use of the Commission Only (as permitted by Rule&nbsp;14a-</B><B>6(e)(2)</B><B>)</B></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Definitive Proxy Statement</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Definitive Additional Materials</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Soliciting Material Pursuant to &#167;240.14a-12</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 6pt">&nbsp;</DIV>

<DIV align="center">
<b>PURE CYCLE CORPORATION</b></DIV>
<DIV align="center" style="font-size: 10pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
(Name of Registrant as Specified In Its Charter)</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt">&nbsp;</DIV>

<DIV align="center">
</DIV>
<DIV align="center" style="font-size: 10pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Payment of Filing Fee (Check the appropriate box):

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#254;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>No fee required.</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(1)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Title of each class of securities to which transaction applies:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(2)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Aggregate number of securities to which transaction applies:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(3)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule&nbsp;0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(4)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Proposed maximum aggregate value of transaction:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(5)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Total fee paid:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Fee paid previously with preliminary materials.</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(1)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Amount Previously Paid:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(2)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Form, Schedule or Registration Statement No.:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(3)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Filing Party:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(4)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Date Filed:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>




<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt">PURE CYCLE CORPORATION<BR>
8451 Delaware Street<BR>
Thornton, Colorado 80260<BR>
(303)&nbsp;292-3456
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">NOTICE OF ANNUAL MEETING OF STOCKHOLDERS<BR>
To be held on January&nbsp;15, 2008
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">TO OUR STOCKHOLDERS:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">You are cordially invited to attend the annual meeting of the stockholders of Pure Cycle
Corporation. The meeting will be held at 1550 Seventeenth Street, Suite&nbsp;500, Denver, Colorado
80202, at the offices of Davis Graham &#038; Stubbs LLP, on January&nbsp;15, 2008 at 2 p.m. Mountain Time for
the following purposes:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">To elect a board of seven directors to serve until the next annual meeting of
stockholders, or until their successors have been duly elected and qualified;</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">To approve a proposal to change the state of incorporation of Pure Cycle Corporation
from the State of Delaware to the State of Colorado;</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">To ratify the appointment of GHP Horwath, P.C. as our independent registered public
accounting firm for the 2008 fiscal year; and</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">To transact such other business as may properly come before the meeting or any
adjournment(s) thereof.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Only stockholders of record as of 5:00 p.m. Mountain Time on December&nbsp;6, 2007 will be entitled to
notice of or to vote at this meeting or any adjournment(s) thereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR
PROXIES AND VOTE IN PERSON IF THEY SO DESIRE.</B>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">BY ORDER OF THE BOARD OF DIRECTORS<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Scott E. Lehman
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Scott E. Lehman, Secretary&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">December&nbsp;14, 2007
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PURE CYCLE CORPORATION<BR>
8451 Delaware Street<BR>
Thornton, Colorado 80260<BR>
(303)&nbsp;292-3456</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PROXY STATEMENT FOR THE<BR>
ANNUAL MEETING OF STOCKHOLDERS<BR>
To be held on January&nbsp;15, 2008</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ABOUT THE MEETING</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">This proxy statement is furnished to stockholders in connection with the solicitation of proxies by
the board of directors of PURE CYCLE CORPORATION (the &#147;Company&#148;) for use at the annual meeting of
stockholders of the Company (the &#147;Meeting&#148;) to be held at 1550 Seventeenth Street, Suite&nbsp;500,
Denver, Colorado 80202, at the offices of Davis Graham &#038; Stubbs LLP on January&nbsp;15, 2008 at 2 p.m.
Mountain Time or at any adjournment thereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Proxies were first mailed to stockholders on or about December&nbsp;14, 2007, and will be solicited
primarily by mail. The cost of soliciting proxies is being paid by the Company. In addition to
the mailings, the Company&#146;s officers, directors and other regular employees may, without additional
compensation, solicit proxies personally or by other appropriate means.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>What is the purpose of the Meeting?</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">At the Meeting, stockholders are asked to act upon the matters outlined above in the Notice of
Annual Meeting of Stockholders and as described in this proxy statement. The matters to be
considered are (i)&nbsp;the election of directors, (ii)&nbsp;the proposal to change the state of
incorporation of the Company from Delaware to Colorado (the &#147;reincorporation proposal&#148;), (iii)&nbsp;the
ratification of the appointment of the Company&#146;s independent auditors for the fiscal year ending
August&nbsp;31, 2008, and (iv)&nbsp;such other matters as may properly come before the Meeting.
Additionally, management will be available to respond to appropriate questions.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Who is entitled to vote?</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Only stockholders of record as of 5 p.m. Mountain Time on December&nbsp;6, 2007 (the &#147;Record Date&#148;), are
entitled to vote on matters presented at the Meeting. On December&nbsp;6, 2007, there are 20,206,566
shares of the Company&#146;s 1/3 of $.01 par value common stock (&#147;common stock&#148;) issued and outstanding.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>What are my voting rights?</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">If you were a stockholder on December&nbsp;6, 2007, you will be entitled to vote all of the shares that
you held on that date at the Meeting or any postponements or adjournments thereof. Whether you
hold shares directly as the stockholder of record or beneficially in street name, you may direct
how your shares are voted without attending the Meeting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Each outstanding share of the Company&#146;s common stock will be entitled to one vote on each matter
acted upon. There is no cumulative voting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>How do I vote?</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">If you are the stockholder of record, you may vote your shares by completing, signing and dating
the enclosed proxy card and then mailing it to the Company&#146;s transfer agent in the pre-addressed
envelope provided. You may also vote your shares by phone by calling the Company&#146;s transfer agent
at the number listed on the proxy card. If your shares are held beneficially in street name, you
may vote your shares by following the instructions provided by your broker.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-1-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Can I change or revoke my vote?</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">A proxy may be revoked by a stockholder any time prior to the exercise thereof by written notice to
the Secretary of the Company, by submission of another proxy bearing a later date or by attending
the Meeting and voting in person.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Is my vote confidential?</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Proxy instructions, ballots and voting tabulations that identify individual stockholders are
handled in a manner that protects your voting privacy. Your vote will not be disclosed within the
Company or to third parties, except: (1)&nbsp;as necessary to meet applicable legal requirements, (2)&nbsp;to
allow for the tabulation of votes and certification of the vote, and (3)&nbsp;to facilitate a successful
proxy solicitation. Occasionally stockholders provide written comments on their proxy cards, which
are forwarded to management of the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>What is a quorum?</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The presence, in person or by proxy, of the holders of a majority of the outstanding shares of
common stock constitutes a quorum at the Meeting for the election of directors and for the other
proposals. Abstentions and broker &#147;non-votes&#148; are counted for the purposes of determining whether
a quorum is present at Meeting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">A broker &#147;non-vote&#148; occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power with respect to
that item and has not received voting instructions from the beneficial owner.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>How many votes are required to approve the proposals?</I></B>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><I>Election of Directors &#151; </I>The election of directors requires the affirmative vote of a plurality of the votes
cast by shares represented in person or by proxy and entitled to vote for the election of directors. This means
that the nominees receiving the most votes from those eligible to vote will be elected. You may vote &#147;FOR&#148; all
of the nominees or your vote may be &#147;WITHHELD&#148; with respect to one or more of the nominees; however, a
&#147;withheld&#148; vote or a broker non-vote (defined above) will have no effect on the outcome of the election.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><I>Reincorporation of the Company in Colorado </I>&#151; Approval of proposal 2 requires the affirmative vote of the
majority of the shares of common stock issued and outstanding and entitled to vote at the Meeting. With respect
to the reincorporation proposal, you may vote &#147;FOR,&#148; &#147;AGAINST,&#148; or you may &#147;ABSTAIN.&#148; If you hold your shares
through a nominee such as a broker or bank (i.e., in street name), you must provide your broker with
instructions on how to vote the street name shares. Under the rules of The NASDAQ Stock Market (&#147;NASDAQ&#148;), if
your broker holds your shares in its name, your broker may not vote your shares on the reincorporation proposal
absent instruction from you. Consequently, without your voting instruction on this proposal, a broker non-vote
will occur. An abstention, a failure to vote, and a failure to instruct your broker how to vote shares held for
you in your broker&#146;s name will each have the same effect as a vote against the reincorporation proposal.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><I>Ratification of Auditors and Other Matters </I>&#151; An affirmative vote of the majority of the shares of common stock
represented and entitled to vote at the Meeting, is necessary for the approval of proposal 3, the ratification
of the appointment of independent auditors, and other matters. For proposal 3 and any other business matters to
be voted on, you may vote &#147;FOR,&#148; &#147;AGAINST,&#148; or you may &#147;ABSTAIN.&#148; For the purpose of determining whether such a
proposal has received a majority vote, abstentions will be included in the vote totals. An abstention has the
same effect as a negative vote. Broker non-votes will not be included in the vote totals and, therefore, will
have no effect on the vote.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">If no specification is made, then the shares will be voted &#147;FOR&#148; the directors nominated by the
board of directors and &#147;FOR&#148; proposals 2 and 3 and otherwise, in accordance with the
recommendations of the board of directors.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Does the Company expect there to be any additional matters presented at the Meeting?</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Other than the three items of business described in this proxy, the Company is not aware of any
other business to be acted upon at the Meeting. If you grant a proxy, the persons named as
proxy-holders, Mark W. Harding and Harrison H. Augur, have the discretion to vote your shares on
any additional matter properly presented for a vote at the Meeting. If for any unforeseen reason any of our director nominees are not available for
election at the date of the Meeting, the named proxy-holders will vote your shares for such other
candidates as may be nominated by the board.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-2-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>What if multiple stockholders are at the same address?</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company adopted a procedure approved by the Securities and Exchange Commission (the &#147;SEC&#148;),
called &#147;householding,&#148; which reduces printing and postage costs. Under this procedure,
stockholders of record who have the same address and last name will receive one copy of the annual
report and proxy statement unless one or more of these stockholders notify the Company that they
wish to continue receiving individual copies. Stockholders who do not participate in householding
will continue to receive separate copies of the annual report and proxy statement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">If a stockholder of record residing at such an address wishes to receive a separate document in the
future, he or she may contact our transfer agent at Computershare Trust Company, Inc., 350 Indiana
St., Suite #800, Golden, CO 80401, telephone (303)&nbsp;262-0600, or write to the Company&#146;s Secretary at
the Company&#146;s address set forth above. You also may request a copy of this annual report and proxy
material by notifying us at the same address or phone number, and we will undertake to deliver such
documents promptly. Stockholders of record receiving multiple copies of the annual report and
proxy statement can request householding by contacting us in the same manner. If shares are owned
through a bank, broker or other nominee, the holder may request householding by contacting the
nominee.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>When will the results of the voting being announced?</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company intends to announce preliminary results at the Meeting and will publish final results
in the Form 10-Q for the quarter ending February&nbsp;28, 2008.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-3-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following table presents the beneficial ownership of the Company&#146;s issued and outstanding
common stock at December&nbsp;1, 2007 for (i)&nbsp;each person who owns of record (or is known by the Company
to own beneficially) 5% or more of the common stock, (ii)&nbsp;each director of the Company and each
nominee for director, (iii)&nbsp;each executive officer and (iv)&nbsp;all directors and executive officers as
a group. Except as otherwise indicated, the Company believes that each of the beneficial owners of
the stock listed has sole investment and voting power with respect to such shares, based on
information filed by such person with the Securities and Exchange Commission or based on
information provided by such stockholders to the Company.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="8" style="border-bottom: 1px solid #000000"><B>COMMON STOCK</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Amount and nature of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Name and Address of Beneficial Owner</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">beneficial ownership</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Percent of Shares</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Mark W. Harding<br>
8451 Delaware St.<br>
Thornton, CO 80260</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">727,243 </TD>
    <TD nowrap align="right">&nbsp;1</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Harrison H. Augur<br>
PO Box 4389<br>
Aspen, CO 81611</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">99,051 </TD>
    <TD nowrap align="right">&nbsp;2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Mark D. Campbell<br>
7600 E. Orchard Road, Suite&nbsp;370 S<br>
Greenwood Village, CO 80111</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">812,500 </TD>
    <TD nowrap align="right">&nbsp;3</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Arthur G. Epker III<br>
One International Place, Suite&nbsp;2401<br>
Boston, MA 02110</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151; </TD>
    <TD nowrap align="right">&nbsp;4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Richard L. Guido<br>
8451 Delaware St.<br>
Thornton, CO 80260</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10,000 </TD>
    <TD nowrap align="right">&nbsp;5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Peter C. Howell<br>
15289 Russell Road<br>
Chagrin Falls, OH 44022</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8,000 </TD>
    <TD nowrap align="right">&nbsp;6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">George M. Middlemas<br>
225 W. Washington, #1500<br>
Chicago, IL 60606</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">30,000 </TD>
    <TD nowrap align="right">&nbsp;7</TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">All officers and directors as a group (6 persons)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1,686,794 </TD>
    <TD nowrap align="right">&nbsp;8</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">High Plains A&#038;M, LLC<br>
7600 E. Orchard Road, Suite&nbsp;370 S<br>
Greenwood Village, CO 80111</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3,000,000 </TD>
    <TD nowrap align="right">&nbsp;9</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">14.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Par Capital Management, Inc.<br>
Par Investment Partners, L.P.<br>
Par Group, L.P.<br>
One International Place, Suite&nbsp;2401<br>
Boston, MA 02110</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,620,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">13.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Wellington Management Company, LLP<br>
75 State Street<br>
Boston, MA 02109</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2,382,500 </TD>
    <TD nowrap align="right">&nbsp;10</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">11.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">TPC Ventures, LLC<br>
8451 Delaware Street<br>
Thornton, CO 80260</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1,239,705 </TD>
    <TD nowrap align="right">&nbsp;11</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Trigran Investments, Inc.<br>
630 Dundee Road, Suite&nbsp;230<br>
Northbrook, IL 60062</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1,147,231 </TD>
    <TD nowrap align="right">&nbsp;12</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">* Less than 1%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-4-<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 210,000 shares of common stock held by SMA Investments, LLLP, a limited
liability limited partnership controlled by Mr.&nbsp;Harding.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 10,000 shares purchasable by Mr.&nbsp;Augur under currently exercisable options.
Includes 10,000 shares of common stock held by Patience Partners, L.P., a limited partnership
in which a foundation controlled by Mr.&nbsp;Augur is a 60% limited partner and Patience Partners
LLC is a 40% general partner. Patience Partners LLC is a limited liability company in which
Mr.&nbsp;Augur owns a 50% membership interest. Includes 46,111 shares of common stock held by
Auginco, which is a corporation owned by Mr.&nbsp;Augur.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 2,500 shares purchasable by Mr.&nbsp;Campbell under currently exercisable options.
Excludes 2,190,000 shares owned by High Plains A&#038;M, LLC (&#147;HP A&#038;M&#148;). By reason of his status
as a member and manager of HP A&#038;M, Mr.&nbsp;Campbell has voting authority over the 3,000,000 shares
issued to HP A&#038;M, but does not have investment control. Mr.&nbsp;Campbell disclaims beneficial
ownership of the shares held by HP A&#038;M except to the extent of his pecuniary interest therein,
which is 27% or 810,000 shares of common stock.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Excludes 2,620,439 shares of common stock held directly by PAR Investment Partners,
L.P. (&#147;PIP&#148;). PAR Capital Management, Inc. (&#147;PCM&#148;), as the general partner of PAR Group, L.P.,
which is the general partner of PIP, has investment discretion and voting control over shares
held by PIP. No stockholder, director, officer or employee of PCM has beneficial ownership
(within the meaning of Rule&nbsp;13d-3 promulgated under the Exchange Act) of any shares held by
PIP. The shares held by PIP are part of a portfolio managed by Mr.&nbsp;Epker. As an employee of
PCM, Mr.&nbsp;Epker has the authority to trade the securities held by PIP, however, Mr.&nbsp;Epker
disclaims beneficial ownership of the shares held by PIP.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 10,000 shares purchasable by Mr.&nbsp;Guido under currently exercisable options.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 7,500 shares purchasable by Mr.&nbsp;Howell under currently exercisable options.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 10,000 shares purchasable by Mr.&nbsp;Middlemas under currently exercisable
options.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">8)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes the following shares:</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">210,000 shares held by SMA Investments, LLLP as described in number 1 above,</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">40,000 shares purchasable by directors and officers under currently exercisable
options, and</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">10,000 shares of common stock held by Patience Partners, L.P., and 46,111
shares of common stock held by Auginco, as described in number 2 above.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">9)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">By reason of the status of each of H. Hunter White, Mark D. Campbell and M. Walker Baus
as a member and manager of High Plains A&#038;M, LLC, each of them is deemed a beneficial owner of
these shares. Each of them disclaims beneficial ownership of the shares held by High Plains
A&#038;M, LLC, except to the extent of his pecuniary interest in the limited liability company.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">10)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">This disclosure is based on a Schedule&nbsp;13G filed by Wellington Management Company, LLP
on August&nbsp;10, 2007.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">11)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">By reason of his role as manager of TPC Ventures, LLC, Ryan T. Clark is deemed the
indirect beneficial owner of these shares.</DIV></TD>
</TR>

<TR style="font-size: 5pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">12)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">This disclosure is based on a Schedule&nbsp;13G filed by Trigran Investments, Inc., Douglas
Granat, Lawrence A. Oberman and Steven G. Simon on October&nbsp;10, 2007. By reason of their role
as controlling shareholders and sole directors of Trigan Investments, Inc., each of Douglas
Granat, Lawrence A. Oberman and Steven G. Simon may be considered the beneficial owners of
 shares beneficially owned by Trigran Investments Inc. Each of the parties&#146; names above
disclaims beneficial ownership of such shares.</DIV></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-5-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DIRECTORS AND EXECUTIVE OFFICERS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following table sets forth the names, ages and titles of the persons who are currently our
directors and executive officers, along with other positions they hold with us.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mark W. Harding
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap">Director, President, CEO and CFO</FONT></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Harrison H. Augur (1)(2)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">65</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mark D. Campbell
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">52</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Arthur G. Epker III
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Richard L. Guido (1)(2)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">63</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Peter C. Howell (1)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">58</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">George M. Middlemas (2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">61</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Member of the Audit Committee.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Member of the Compensation Committee.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Member of the Nominating and Corporate Governance Committee</DIV></TD>
</TR>

</TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Code of Ethics</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company has a code of business conduct and ethics for its directors, officers and employees,
which can be viewed on our website at <u>www.purecyclewater.com</u>.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>THE BOARD AND ITS COMMITTEES</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Committees and Meetings</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Audit Committee </I></B><B>&#151; </B>The Company has a separately designated-standing Audit Committee, which consists
of three non-employee directors, Mr.&nbsp;Howell (Chair) and Messrs.&nbsp;Augur and Guido. The board of
directors has determined that the Audit Committee members meet the independence standards of NASDAQ
established for audit committee members. In addition, the board has determined that Mr.&nbsp;Howell
meets the SEC criteria of an Audit Committee financial expert by reason of his understanding of
Accounting Principles Generally Accepted in the United States of America (&#147;GAAP&#148;) and the
application of GAAP, his education and his experiences in acquisitions and understanding of
financial statements. See Mr.&nbsp;Howell&#146;s biography under <I>Election of Directors (Proposal No.&nbsp;1) </I>for
additional information.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The functions to be performed by the Audit Committee include the appointment, retention,
compensation and oversight of the Company&#146;s independent auditors, including pre-approval of all
audit and non-audit services to be performed by such auditors. The Audit Committee Charter is
available on our website at <u>www.purecyclewater.com</u>. The Audit Committee met nine (9)&nbsp;times during
the fiscal year ended August&nbsp;31, 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Compensation Committee </I></B>&#151; Mr.&nbsp;Middlemas is the Chairman of the Compensation Committee and Messrs.
Augur and Guido are members of the Compensation Committee. The functions to be performed by the
Compensation Committee include establishing the compensation of officers and directors and
administering management incentive compensation plans. The Compensation Committee held two (2)
meetings during the year ended August&nbsp;31, 2007. The Company&#146;s Compensation Committee Charter can
be viewed at our website at <u>www.purecyclewater.com</u>.
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-6-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">
<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Nominating and Corporate Governance Committee </I></B>&#151; The Nominating and Corporate Governance Committee
(the &#147;Nominating Committee&#148;) consists of Messrs.&nbsp;Guido (Chairman), Howell and Augur. The board of
directors has determined that the members of the Nominating Committee meet the independence
standards of NASDAQ. In selecting nominees for the board, the Nominating Committee is seeking a
board with a variety of experience and expertise, and in selecting nominees it will consider
business experience in the industry in which the Company operates, financial expertise,
independence from the Company, experience with publicly traded companies, experience with relevant
regulatory matters in which the Company is involved, and a reputation for integrity and
professionalism. Nominees must be at least 21&nbsp;years of age and less than 70. The Nominating
Committee will consider nominations for director made by stockholders of record entitled to vote.
In order to make a nomination for election at the 2009 annual meeting, a stockholder must provide notice, along with supporting
information regarding such nominee, to the Company&#146;s Secretary by August&nbsp;15, 2008. The Nominating
Committee evaluates nominees recommended by stockholders utilizing the same criteria it uses for
other nominees. The Nominating Committee Charter is available on our website at
<u>www.purecyclewater.com</u>. The Nominating Committee held two (2)&nbsp;meetings during the fiscal year
ended August&nbsp;31, 2007.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Director Attendance at Annual Meeting </I></B><B>&#151; </B>All of our board members are expected to attend the annual
meetings. All of our board members attended the 2007 Annual Meeting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Board meetings held </I></B><I>&#151; </I>During the fiscal year ended August&nbsp;31, 2007, the board of directors held
six (6)&nbsp;meetings. All board members were present at at least 75% of the meetings except Mr.
Campbell.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Compensation Committee Interlocks and Insider Participation </I></B>&#151; No interlocking relationship exists
between any member of the board of directors or the Compensation Committee and any other company&#146;s
board of directors or compensation committee.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Stockholder Communications with the Board</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The board of directors has adopted a policy for stockholders to send communications to the board.
The policy is available on the Company&#146;s website at www.purecyclewater.com. Stockholders wishing to
send communications to the board may contact Mark W. Harding, President of Pure Cycle, at the
Company&#146;s principal place of business. All such communications shall be shared with the members of
the board, or if applicable, a specified committee or director.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Relationship of Directors and Officers</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">None of the current directors or officers, or nominees for director, is related to any other
officer or director of the Company or to any nominee for director.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Terms of Directors and Officers</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">All directors are elected for one-year terms which expire at the annual meeting of stockholders or
until their successors are elected and qualified. The Company&#146;s officers are elected annually by
the board of directors and hold office until their successors are elected and qualified.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Director Compensation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Directors who are employees of the Company receive no fees for board service. Currently, Mr.
Harding is the only director who is also an employee. Each non-employee director receives a
payment of $10,000 for each full year in which he or she serves as a director, with an additional
payment of $1,000 for each committee on which he or she serves, and $1,000 for serving as chairman
of the board. Directors receive $500 for attendance at each board meeting and, if committee
meetings are held separate from board meetings, each director receives $500 for attendance at such
committee meetings.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following table sets forth summary information concerning the compensation paid to our
non-employee directors in fiscal 2007 for services to the Company.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-7-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="28" style="border-bottom: 1px solid #000000"><B><I>Summary Director Compensation Table</I></B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Change in</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Pension Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fees</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Non-Equity</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Nonqualified</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Earned or</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Incentive Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">All other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Paid in</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cash ($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($) (1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">( c)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(d)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(e)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(f)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(g)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(h)</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Harrison H. Augur &#151; Chair (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">42,607</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mark D. Campbell (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,619</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Arthur G. Epker III (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,337</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Richard L. Guido (5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">42,607</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Peter C. Howell (6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">50,549</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">George M. Middlemas (7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">38,107</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">In addition to cash compensation, as part of the 2004 Incentive Plan approved by stockholders
at the 2004 Annual Meeting, each non-employee director receives an option to purchase 5,000
shares of common stock upon initial election or appointment to the board (which vest one half
at each of the first and second anniversary dates of the grant), and an option to purchase
2,500 shares for each subsequent full year in which he or she serves as a director, which
options vest one year from the date of grant. The amounts in this column represent the dollar
amount recognized as expense for financial reporting purposes with respect to the fiscal year
ended August&nbsp;31, 2007. The expense was calculated in accordance with Statement of Financial
Accounting Standards No.&nbsp;123 (revised) &#151; <I>Share Based Payment (as amended) </I>(&#147;SFAS 123(R)&#148;).
These amounts reflect options granted in fiscal 2007 as well as years prior to fiscal 2007.
See <I>Note 8 &#151; Stockholders&#146; Equity </I>in our Annual Report on Form 10-K for the year ended August
31, 2007, for more information about how we account for stock based compensation.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Mr.&nbsp;Augur received $14,000 for serving on the board, being the chairmen of the board, and
serving on three committees. Mr.&nbsp;Augur also received $4,500, or $500 for each board and
committee meeting he attended. Mr.&nbsp;Augur had 12,500 options outstanding as of August&nbsp;31, 2007,
of which 10,000 were exercisable.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Mr.&nbsp;Campbell received $1,500, or $500 for each board and committee meeting he attended. Mr.
Campbell had 7,500 options outstanding as of August&nbsp;31, 2007, of which 2,500 were exercisable.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Mr.&nbsp;Epker received $11,000 for joining the board on August&nbsp;2, 2007, and joining the CAA
Committee. Mr.&nbsp;Epker had 5,000 options outstanding as of August&nbsp;31, 2007, of which none were
exercisable.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Mr.&nbsp;Guido received $14,000 for serving on the board and four committees (this includes the
&#147;CAA Committee&#148; of the board which is not described above). Mr.&nbsp;Guido also received $4,500, or
$500 for each board and committee meeting he attended. Mr.&nbsp;Guido had 12,500 options
outstanding as of August&nbsp;31, 2007, of which 10,000 were exercisable.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Mr.&nbsp;Howell received $13,000 for serving on the board and three committees. Mr.&nbsp;Howell also
received $4,500, or $500 for each board and committee meeting he attended. Mr.&nbsp;Howell had
10,000 options outstanding as of August&nbsp;31, 2007, of which 7,500 were exercisable.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Mr.&nbsp;Middlemas received $11,000 for serving on the board and one committee. Mr.&nbsp;Middlemas also
received $3,000, or $500 for each board and committee meeting he attended. Mr.&nbsp;Middlemas had
12,500 options outstanding as of August&nbsp;31, 2007, of which 10,000 were exercisable.</DIV></TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-8-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXECUTIVE COMPENSATION</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Compensation Discussion and Analysis</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Compensation Philosophy</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company&#146;s executive compensation program is administered by the Compensation Committee of the
board of directors. The Compensation Committee is composed of Messrs.&nbsp;Middlemas, Augur and Guido,
three non-employee directors. The Compensation Committee reviews the performance and compensation
levels for the executive officers and determines equity grants under the 2004 Incentive Plan. The
executive officers may provide information to the committee regarding their compensation; however,
the Compensation Committee makes the final determination on executive compensation. Final
compensation determinations, including equity awards, are generally made in August at the end of
the Company&#146;s fiscal year end. The following outlines the philosophy and objectives of the
Company&#146;s compensation plans.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Q.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">What are the objectives of the Company&#146;s Compensation Committee?</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The objectives of the Compensation Committee are to correlate executive compensation with the
Company&#146;s business objectives and performance and to enable the Company to attract, retain and
reward executive officers who contribute to its long-term success.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Q.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">What is the Company&#146;s compensation plan designed to do?</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The Company&#146;s compensation plan is designed to attract, retain and motivate high quality
executive talent critical to the Company&#146;s success. The compensation plan is designed to
reward the executive officers of the Company with competitive total pay opportunities through
a compensation mix that emphasizes competitive cash and non-cash incentives and merit-based
salary increases, while de-emphasizing entitlements and perquisites. The compensation plan is
designed to create a mutuality of interest between executives and stockholders through equity
ownership programs and to focus the executive&#146;s attention on overall corporate objectives, in
addition to the executive&#146;s personal objectives.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Q.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">What are the goals of the Compensation Committee?</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The goals of the Compensation Committee are to provide a total compensation package that
considers the compensation practices of companies with which the Company competes, provides
variable compensation that is linked to achievement of financial and individual performance
goals, and aligns the interests of the executive officer and employees with those of the
stockholders of the Company by providing them with an equity ownership in the Company.
Compensation is designed to fall within the central tendency of the range of that paid to
comparable executives in corporations of similar size and in like industry.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Q.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">What are the basic elements of the executive officers&#146; pay and how do those fit into the
Company&#146;s compensation plan?</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Generally each executive officer receives a base cash salary, cash bonus, and long-term
equity incentives. The mixture of these cash and non-cash compensation items is designed to
provide the executive with a competitive total compensation package while not using an
excessive amount of the Company&#146;s cash or overly diluting the equity positions of our
stockholders. The compensation plan for the President is described below.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Q.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Does the Company offer any benefit plans to its executive officers?</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Each executive officer is eligible for the same benefits available to all Company employees.
Currently, this includes participation in a tax-qualified 401(k) plan, health and dental
plans.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Q.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Does the Company offer any perquisites to its executive officers?</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Company&#146;s executive officers do not receive any perquisites or personal benefits.</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-9-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Compensation of the Company&#146;s President</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The current compensation program for the Company&#146;s President consists of the following:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Base Salary&#151;</I>The Compensation Committee reviewed and approved a salary for the President during the
year ending August&nbsp;31, 2007. His base salary was established by the Compensation Committee based
upon competitive compensation data for similarly sized public companies, job responsibilities,
level of experience, individual performance and contribution to the business throughout his career
with the Company. In making base salary decisions, the committee exercised its discretion and
judgment based upon these factors. No specific formula was applied to determine the weight of each
factor. While the committee reviewed competitive compensation data, it did not benchmark Mr.
Harding&#146;s compensation to that of any other company. Base salary for fiscal year 2007 was
unchanged from fiscal 2006; however, Mr.&nbsp;Harding was granted a $50,000 increase in his base salary
effective September&nbsp;1, 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Incentive Bonus&#151;</I>The Compensation Committee approved the President&#146;s bonus. The Compensation
Committee&#146;s goal in granting incentive bonuses is to tie a portion of the President&#146;s compensation
to the performance of the Company and to the President&#146;s individual contribution to the Company.
Mr.&nbsp;Harding&#146;s 2007 bonus was determined by the Compensation Committee based on the performance of
Mr.&nbsp;Harding in completing the July&nbsp;2007 registered equity offering, his continued commitment to the
success of the Company and his efforts in marketing the Company to the investing public.
Additionally, Mr.&nbsp;Harding&#146;s bonus in 2007 was granted to allow him to exercise his remaining stock
options before they expired.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Long-Term Stock Incentives&#151;</I>The Compensation Committee provides the Company&#146;s President with
long-term equity incentive compensation through grants of stock options and restricted stock. The
goal of the long-term stock incentives is to align the interests of the President with those of the
Company&#146;s stockholders and to provide the President with a long-term incentive to manage the
Company from the perspective of an owner with an equity stake in the business. It is the belief of
the Compensation Committee that stock options and restricted stock grants directly motivate an
executive to maximize long-term stockholder value. The philosophy of administering the long-term
stock incentive plan is to tie the number of stock options and restricted stock awarded to each
employee in the plan to the performance of the Company and to the individual contribution of each
employee in the plan.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In August&nbsp;2007, Mr.&nbsp;Harding was granted 34,189 shares of restricted common stock. The amount of
restricted stock granted was based on the number of mature shares Mr.&nbsp;Harding utilized to exercise
his remaining options. This restricted stock grant was done to maintain Mr.&nbsp;Harding&#146;s level of
equity interest in the Company. Further details of the restricted stock are presented in the
tables below.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Harding was not granted any stock options during the year ended August&nbsp;31, 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Discussion with Respect to Qualifying Compensation for Deductibility</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Section&nbsp;162(m) of the Internal Revenue Code imposes a limit on tax deductions for annual
compensation (other than performance-based compensation) in excess of one million dollars paid by a
corporation to its chief executive officer and its other four most highly compensated executive
officers. The Company has not established a policy with regard to Section 162(m) of the Code,
because the Company does not currently anticipate paying cash compensation in excess of one million
dollars per annum to any employee. The Compensation Committee will continue to assess the impact
of Section 162(m) on its compensation practices and determine what further action, if any, is
appropriate.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-10-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Compensation Tables</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following tables set forth information required by Item&nbsp;402 of Regulation&nbsp;S-K. The Company&#146;s
President, Mr.&nbsp;Harding, is the Principal Executive Officer and the Principal Financial Officer of
the Company. Therefore, all tables contained in this section relate solely to Mr.&nbsp;Harding.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="36" style="border-bottom: 1px solid #000000"><B><I>Summary Compensation Table</I></B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Change in</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Penson Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">and Non-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Qualified</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Non-Equity</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left">Name and principal</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fiscal</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Base</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Incentive Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">All Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left">position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Year</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Salary</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Bonus</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(c)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(d)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(e)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(f)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(g)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(h)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(i)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(j)</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mark W. Harding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">259,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">759,495</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Principal Executive</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">450,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">and Financial Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">This represents the fair value of the 34,189 shares of restricted stock granted to the
named executive officer on August&nbsp;27, 2007. The restricted stock is subject to forfeiture
if Mr.&nbsp;Harding ceases to be an employee of the Company. The forfeiture restriction lapses
with respect to one half of the shares on the first anniversary date of the grant and with
respect to the remaining one half on the second anniversary date of the grant. Pursuant to
SFAS 123(R), the Company will recognize compensation expense on this grant based on the
grant date fair value of the stock. The grant date fair value of the restricted stock was
based upon the market price of the Company&#146;s common stock on the date of the grant. The
grant date fair value will be amortized to compensation expense over the vesting term of
two years, which is the period during which the forfeiture provisions lapse.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="44" style="border-bottom: 1px solid #000000"><B><I>Grants of Plan Based Awards</I></B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">Estimated Future Payouts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">Estimated Future Payouts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">All</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">Under Non-Equity Incentive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">Under Equity Incentive Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">All Other Option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Plan Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Awards:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Exercise</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Grant</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">or Base</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Date Fair</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Price of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Value of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">of Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Securities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Stock and</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Threshold</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Target</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Maximum</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Threshold</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Target</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Maximum</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">or Units</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Underlying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Option</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Grant Date</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Options (#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">($/sh)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(c)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(d)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(e)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(f)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(g)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(h)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(i)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(j)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(k)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(l)</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Harding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">August 27</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">259,495</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-11-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="36" style="border-bottom: 1px solid #000000"><B><I>Outstanding Equity Awards at Fiscal Year-End</I></B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000">Option Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Stock Awards</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Equity</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Equity</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Incentive Plan</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Equity Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Incentive Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards:</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Incentive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Market</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Market or</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Value of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Payout Value</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shares of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unearned</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">of Unearned</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Securities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Securities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Securities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shares or</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Units of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shares, Units</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shares, Units</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Underlying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Underlying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Underlying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Units of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">or Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">or Other</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unexercised</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unexercised</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unexercised</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Stock That</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">That Have</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Rights That</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Rights That</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Options (#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Options (#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unearned</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Exercise</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Expiration</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Have Not</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Not</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Have Not</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Have Not</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Exercisable</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unexercisable</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Options (#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Price ($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Date</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Vested (#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Vested ($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Vested (#) (1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Vested ($) (2)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(c)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(d)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(e)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(f)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(g)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(h)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(i)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(j)</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Harding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">261,204</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Forfeiture restrictions lapse with respect to one half of the restricted shares on the
first anniversary date of the grant and the remaining one half on the second anniversary
date of the grant.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Based on the closing market price of the Company&#146;s common stock on August&nbsp;31, 2007.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="16" style="border-bottom: 1px solid #000000"><B><I>Option Exercises and Stock Vested</I></B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Option Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Stock Awards</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Acquired on</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Value Realized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">shares Acquired</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Value Realized</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Exercise (#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">on Exercise ($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">on Vesting (#)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">on Vesting ($)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(c)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(d)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(e)</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mark W. Harding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">514,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,146,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Pension Benefits </I></B>&#151; The Company does not offer pension benefits. Therefore, the Company omitted
the Pension Benefits Table.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Non-Qualified Deferred Compensation </I></B>&#151; The Company does not have any non-qualified deferred
compensation plans. Therefore, the Company has omitted the Non-Qualified Deferred Compensation
Table.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Termination or Change-in-Control Plans </I></B>&#151; The Company does have any Termination of Change in
Control Plans. Therefore, the Company has eliminated the Termination of Change in Control Plans
Table.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-12-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Compensation Committee Report<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with
management, and based on the Committee&#146;s review and discussion with management, has recommended to
the full board of directors that the Compensation Discussion and Analysis be included in the
Company&#146;s Proxy Statement for the Annual Meeting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Respectfully submitted by the Compensation Committee of the Board of Directors
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">/s/ George M. Middlemas (Chairman)<BR>
/s/ Harry H. Augur<BR>
/s/ Richard L. Guido

</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>REPORT OF THE AUDIT COMMITTEE</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Audit Committee of the board of directors is comprised of three directors and operates under a
written charter adopted by the board of directors. The charter is reassessed and updated at least
annually, or as needed, in accordance with applicable rules of the Securities and Exchange
Commission and NASDAQ. Each of the members of the Audit Committee is a non-employee director and
is independent as defined by NASDAQ standards for independence.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Management is responsible for the Company&#146;s internal controls and financial reporting process. The
independent auditors are responsible for performing an independent audit of the Company&#146;s financial
statements in accordance with the standards of the Public Company Accounting Oversight Board
(United States) and issuing a report thereon. The Audit Committee&#146;s primary responsibility is to
monitor and oversee these processes and recommend to the board of directors the selection of the
Company&#146;s independent auditors. In fulfilling its oversight responsibilities, the Audit Committee
reviewed with management the Company&#146;s audited financial statements and discussed not only the
acceptability but also the quality of the accounting principles, the reasonableness of the
significant judgments and estimates, critical accounting policies and the clarity of disclosures in
the audited financial statements prior to issuance.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Audit Committee reviewed and discussed the audited financial statements as of and for the year
ended August&nbsp;31, 2007 with GHP Horwath P.C. (&#147;GHP&#148;) and discussed not only the acceptability but
also the quality of the accounting principles, the reasonableness of the significant judgments and
estimates, critical accounting policies and the clarity of disclosures in the audited financial
statements prior to issuance. The Audit Committee meets with GHP, with and without management
present, to discuss the results of their examination and their evaluation of the Company&#146;s internal
controls, and the overall quality of the Company&#146;s financial reporting. The Audit Committee
discussed with GHP matters required to be discussed by the Statement on Auditing Standards No.&nbsp;61
(Communication with Audit Committees) to the extent applicable. GHP provided the Audit Committee
the written disclosures required by Independence Standards Board Standard No.&nbsp;1 (Independence
Discussions with Audit Committees), and the Audit Committee discussed GHP&#146;s independence with GHP.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Based on the foregoing, the Audit Committee recommended to the board of directors that the
Company&#146;s audited financial statements be included in the Company&#146;s Annual Report on Form 10-K for
the fiscal year ended August&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">/s/ Peter C. Howell<BR>
/s/ Harrison H. Augur<BR>
/s/ Richard L. Guido
</DIV>

<DIV align="left">
<DIV style="font-size: 10pt; margin-top: 10pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>


<DIV style="margin-top: 1pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">These reports are not &#147;soliciting material,&#148;
are not deemed &#147;filed&#148; with the Commission and are not to be incorporated by
reference in any filing of the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, irrespective of
any general incorporation language in any such filing, except to the extent the
Company specifically references one of these reports.</DIV></TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-13-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Agreements with Related Parties</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Comprehensive Amendment Agreement No.&nbsp;1 (&#147;CAA&#148;) </I></B><B>&#151; </B>In July&nbsp;2007, the Company acquired the rights to
approximately $10.5&nbsp;million of CAA interests in exchange for cash payments of approximately $2.6
million, which was raised in the registered equity offering in July&nbsp;2007. Of the $10.5&nbsp;million of
CAA interests acquired, Mr.&nbsp;Middlemas (by reason of his role as partner of Apex Investment Fund II,
L.P.) and Mr.&nbsp;Augur held approximately $7.2&nbsp;million and $200,000, respectively. Because Mr.
Middlemas and Mr.&nbsp;Augur are deemed related parties, the gains of approximately $706,000 and $18,000
recorded on these purchases, respectively, were recorded as capital contributions.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Tap Participation Fee Payments </I></B><B>&#151; </B>On August&nbsp;31, 2006, pursuant to an Asset Purchase Agreement (the
&#147;Arkansas River Agreement&#148;) with HP A&#038;M, the Company purchased approximately 60,000 acre feet of
water rights in the Arkansas River and other assets. As consideration for these assets, the
Company issued HP A&#038;M 3,000,000 shares of its common stock. The Company also granted HP A&#038;M the
right to receive ten percent (10%) of gross proceeds, or the equivalent thereof, from the sale of
the next 40,000 water taps (the &#147;Tap Participation Fee&#148;), which was valued at approximately $45.6
million at the acquisition date. The Tap Participation Fee is due and payable once the Company
sells a water tap and receives the consideration due for such water tap. Although the Company did
not sell any water taps during the year ended August&nbsp;31, 2007, the Company did sell 509 Lower
Arkansas Water Management Association shares (&#147;LAWMA shares&#148;) in its second fiscal quarter. Pure
Cycle received a credit towards the Tap Participation Fee from the sale of the LAWMA shares of
approximately $849,700 or 505 taps. See <I>Note 3 &#151; Water, Water Systems and Service Agreements </I>in
the Company&#146;s Annual Report on Form 10-K for the year ended August&nbsp;31, 2007, for more information
on the LAWMA shares. As a result of the acquisition, HP A&#038;M owns 14.8% of the outstanding shares
of common stock of the Company. As a member and manager of HP A&#038;M, our director, Mr.&nbsp;Campbell, is
also deemed to own 14.8% of the common stock. Each of Mr.&nbsp;Campbell and HP A&#038;M is deemed a related
party.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Review and Approval of Related Party Transactions</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">It is our policy as set forth in writing in our Code of Business Conduct and Ethics that actual or
apparent conflicts of interest are to be avoided if possible and must be disclosed to the board of
directors. Pursuant to the Code of Business Conduct and Ethics, any transaction involving a
related party must be reviewed and approved by the Audit Committee. Additionally, the Audit
Committee Charter requires the Audit Committee to review any transaction involving the Company and
a related party at least once a year or upon any significant change in the transaction or
relationship. The Code also provides non-exclusive examples of conduct which would involve a
potential conflict of interest and requires any material transaction involving a potential conflict
of interest to be approved in advance by the board.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We annually require each of our directors and executive officers to complete a directors&#146; and
officers&#146; questionnaire that elicits information about related party transactions. Our board of
directors and outside legal counsel review all transactions and relationships disclosed in the
directors&#146; and officers&#146; questionnaire, and the board makes a formal determination regarding each
director&#146;s independence. If a director is determined to no longer be independent, such director,
if he or she serves on any of the Audit Committee, the Nominating and Corporate Governance
Committee, or the Compensation Committee, will be removed from such committee prior to (or
otherwise will not participate in) any future meeting of the committee. If the transaction
presents a conflict of interest, the board of directors will determine the appropriate response.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ELECTION OF DIRECTORS<BR>
(Proposal No.&nbsp;1)</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The current number of members of the board of directors is fixed at seven. The board of directors
nominates the following persons currently serving on the board for reelection to the board: Mark
W. Harding, Harrison H. Augur, Mark D. Campbell, Arthur G. Epker III, Richard L. Guido, Peter C.
Howell and George M. Middlemas. The board of directors has determined that Messrs.&nbsp;Augur, Epker,
Guido, Howell and Middlemas are independent as defined in the NASDAQ listing standards.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-14-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Set forth below are the names of all nominees for director, all positions and offices with the
Company held by each such person, the period during which each has served as such, and the
principal occupations and employment of such persons during at least the last five years:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Mark W. Harding. </I></B>Mr.&nbsp;Harding joined the Company in April&nbsp;1990 as Corporate Secretary and Chief
Financial Officer. He was appointed President of the Company in April&nbsp;2001, CEO in April&nbsp;2005, and
a member of the board of directors in February&nbsp;2004. Mr.&nbsp;Harding brings a background in investment
banking and public finance, having worked from 1988 to 1990 for Price Waterhouse&#146;s management
consulting services where he assisted clients in public finance and other investment banking
related services. Mr.&nbsp;Harding is the President and a board member of the Rangeview Metropolitan
District and serves on a number of advisory boards relating to water and wastewater issues in the
Denver region, including a statewide roundtable created by the Colorado legislature charged with
identifying ways in which Colorado can address the water shortages facing Front Range cities
including Denver and Colorado Springs. Mr.&nbsp;Harding earned a B.S. Degree in Computer Science and a
Masters in Business Administration in Finance from the University of Denver.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Harrison H. Augur. </I></B>Mr.&nbsp;Augur joined the board and was elected Chairman in April&nbsp;2001. For more than
20&nbsp;years, Mr.&nbsp;Augur has been involved with investment management and venture capital investment
groups. Mr.&nbsp;Augur has been a general partner of CA Partners since 1987, and general partner of
Patience Partners LLC since 1999. Mr.&nbsp;Augur received a Bachelor of Arts degree from Yale
University, an LLB degree from Columbia University School of Law, and an LLM degree from New York
University School of Law.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Mark D. Campbell. </I></B>Mr.&nbsp;Campbell joined the board on August&nbsp;31, 2006. Mr.&nbsp;Campbell has spent the past
eight years as President of Southwestern Investment Group, Inc. (and its predecessor), a developer
of land, shopping centers, water assets and water storage facilities. Since August&nbsp;2001, Mr.
Campbell has also been a manager of High Plains A&#038;M, LLC, a real estate and water rights investment
company in the Denver metropolitan area. Mr.&nbsp;Campbell graduated in 1977 with a Bachelor of Science
in Business Administration from Colorado State University and became a CPA in 1978. Mr.&nbsp;Campbell
also serves as a director of several special districts in Colorado. Mr.&nbsp;Campbell is active in
supporting the communities in which he does business, organizations that support people with
disabilities, programs for troubled teens and areas that enhance education.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Arthur G. Epker III. </I></B>Mr.&nbsp;Epker was appointed to the board on August&nbsp;2, 2007. Upon his appointment,
Mr.&nbsp;Epker was elected to chair the CAA Committee. Since 1992, Mr.&nbsp;Epker has been a partner with Par
Capital Management, Inc., a private investment company located in Boston, MA. Mr.&nbsp;Epker received
his Bachelor of Science from the University of Michigan and received a Master of Business
Administration from Harvard Business School.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Richard L. Guido</I></B>. Mr.&nbsp;Guido served as a member of the Company&#146;s board from July&nbsp;1996 through August
31, 2003, and rejoined the board in 2004. Mr.&nbsp;Guido was Associate General Counsel of DeltaCom,
Inc., a telecommunications company, from March&nbsp;2006 to March&nbsp;2007 and was an employee of Inco
Limited, a Canadian mining company (now known as Vale Inco), from 1980 through February&nbsp;2004. He
previously served on the Company&#146;s board pursuant to a voting agreement between Inco and the
Company. That agreement is no longer in effect. Mr.&nbsp;Guido was Associate General Counsel of Inco
Limited and President, Chief Legal Officer and Secretary of Inco United States, Inc. Mr.&nbsp;Guido
received a Bachelor of Science degree from the United States Air Force Academy, a Master of Arts
degree from Georgetown University, and a Juris Doctor degree from the Catholic University of
America.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Peter C. Howell. </I></B>Mr.&nbsp;Howell was appointed to fill a vacancy on the board on February&nbsp;3, 2005. From
1997 to present, Mr.&nbsp;Howell has served as an advisor to various business enterprises in the area of
acquisitions, marketing and financial reporting. From August&nbsp;1994 to August&nbsp;1997, Mr.&nbsp;Howell served
as the Chairman and Chief Executive Officer of Signature Brands USA, Inc. (formerly known as
Health-O-Meter) and from 1989 to 1994 Mr.&nbsp;Howell served as Chief Executive Officer and a director
of Mr.&nbsp;Coffee, Inc. Mr.&nbsp;Howell is a member of the board of directors of Libbey, Inc. and a number
of privately held companies. Mr.&nbsp;Howell received a Master of Arts degree in Economics from
Cambridge University.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>George M. Middlemas. </I></B>Mr.&nbsp;Middlemas has been a director since April&nbsp;1993. Mr.&nbsp;Middlemas has been a
general partner with Apex Venture Partners, a diversified venture capital management group, since
1991. From 1985 to 1991, Mr.&nbsp;Middlemas was Senior Vice President of Inco Venture Capital
Management, primarily involved in venture capital investments for Inco Securities Corporation. From
1979 to 1985, Mr.&nbsp;Middlemas was Vice President and a member of the Investment Committee of Citicorp Venture Capital Ltd., where he sourced,
evaluated and completed investments for Citicorp. Mr.&nbsp;Middlemas is a member of the Pennsylvania
State University-Library Development Board and Athletic Committee and is a board member of the
Joffrey Ballet of Chicago. Mr.&nbsp;Middlemas received a Bachelors degree in History and Political
Science from Pennsylvania State University, a Masters degree in Political Science from the
University of Pittsburgh and a Master of Business Administration from Harvard Business School.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-15-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Proxy cannot be voted for more than the seven nominees named. Directors are elected for
one-year terms or until the next annual meeting of the Stockholders and until their successors are
elected and qualified. All of the nominees have expressed their willingness to serve, but if
because of circumstances not contemplated, one or more nominees is not available for election, the
proxy holders named in the enclosed proxy card intend to vote for such other person or persons as
the Nominating Committee may nominate.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Campbell was designated as a nominee to the board of directors pursuant to the Arkansas River
Agreement, which agreement obligates the Company to nominate and solicit proxies for a director
nominee designated by HP A&#038;M through the earlier of (i)&nbsp;the annual meeting of the Company&#146;s
stockholders held following the fiscal year ended August&nbsp;31, 2010, (ii)&nbsp;the date on which the
Company fully discharges its obligation to pay the Tap Participation Fee, or (iii)&nbsp;August&nbsp;31, 2011.
In addition, Mr.&nbsp;Harding agreed to vote his shares of common stock in favor of the director
nominee of HP A&#038;M pursuant to a Voting Agreement for the same period that the Company is obligated
to solicit proxies for the HP A&#038;M director nominee.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Middlemas was designated as a nominee to the board of directors pursuant to the Environmental
Private Equity Fund II, L.P. (&#147;EPEF&#148;) Voting Agreement, which agreement obligated TPC Ventures, LLC
(by reason of the transfer of Mr.&nbsp;Clark&#146;s shares in the Company for estate planning purposes); Ms.
Hansson, a former director of the Company; and Fletcher Byrom, a former director of the Company, to
vote for the designee of the EPEF. This agreement terminated in July&nbsp;2007, when EPEF sold all of
its remaining shares of Company common stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE &#147;FOR&#148; THE ELECTION AS DIRECTORS OF THE
SEVEN PERSONS NOMINATED.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><DIV align="center"><DIV style="font-size: 10pt; margin-top: 20pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CHANGE OF THE COMPANY&#146;S STATE OF INCORPORATION<BR>
FROM DELAWARE TO COLORADO<BR>
(Proposal No.&nbsp;2)</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>General</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The board of directors has unanimously approved and recommends that the stockholders approve the
change of the Company&#146;s state of incorporation from Delaware to Colorado. In order to change the
Company&#146;s state of incorporation, the Company has formed a wholly owned subsidiary in Colorado
named Pure Cycle Water Corporation (&#147;Pure Cycle Colorado&#148;). The Company will change its state of
incorporation, <I>i.e. </I>reincorporate, pursuant to an Agreement and Plan of Merger, dated as of
November&nbsp;30, 2007 (the &#147;Merger Agreement&#148;), by and between the Company and Pure Cycle Colorado.
The Merger Agreement is attached as <B>Appendix&nbsp;A </B>to this proxy statement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>No Change in Business, Jobs, Physical Location, Etc.</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">After the merger, the Company will be a Colorado corporation. The reincorporation merger will not
result in any change in the Company&#146;s name, headquarters, business, jobs, management, location of
any of the Company&#146;s offices or facilities, number of employees, taxes payable to the State of
Colorado, assets, liabilities or net worth (other than as a result of the costs incident to the
reincorporation merger). Company management, including all directors and officers, will remain the
same in connection with the reincorporation merger and will assume identical positions with Pure
Cycle Colorado. Upon the effective time of the reincorporation merger, your shares of the
Company&#146;s common stock will be automatically converted into an equal number of shares of common
stock in Pure Cycle Colorado, and such shares will continue to trade on the NASDAQ Capital Market
under the symbol &#147;PCYO.&#148;
</DIV>
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<P align="center" style="font-size: 10pt"><!-- Folio -->-16-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Reasons for the Reincorporation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">A principle reason for the proposed reincorporation is to save the Company money. Delaware charges
an annual franchise tax on the Company which has been as high as $165,000 per year. Colorado does
not have a franchise tax. Reincorporating in Colorado will enable the Company to devote more
resources to activities directly related to growing the business.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In addition, all of the Company&#146;s business activities and assets are located in Colorado. While
Delaware courts have a reputation for their expertise in business law, the Company&#146;s water rights
are subject to laws unique to Colorado and the Colorado courts are better positioned to evaluate
the decisions the Company makes with respect to its water rights and its water service activities.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">It should be noted that in some instances shareholders of a Colorado corporation have greater
rights and hence more protection under Colorado law than under Delaware law. After considering the
advantages and disadvantages of the reincorporation proposal, the board of directors concluded that
the benefits of being incorporated in Colorado outweighed the benefits of remaining in Delaware,
including the continuing expense of Delaware&#146;s annual franchise tax.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Pure Cycle Colorado</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Pure Cycle Colorado, the Company&#146;s wholly owned subsidiary, was incorporated under the Colorado
Business Corporation Act (&#147;CBCA&#148; or &#147;Colorado law&#148;) under the name &#147;Pure Cycle Water Corporation&#148;
exclusively for the purpose of merging with the Company to change its state of incorporation. The
address and phone number of Pure Cycle Colorado&#146;s principal office are the same as those of the
Company. Prior to the reincorporation merger, Pure Cycle Colorado will have no material assets or
liabilities and will not have carried on any business.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Upon completion of the reincorporation merger, your rights as a shareholder of the Company will be
governed by Colorado law and the articles of incorporation and bylaws of Pure Cycle Colorado (the
&#147;Colorado Articles of Incorporation&#148; and the &#147;Colorado Bylaws,&#148; respectively). The Colorado
Articles and Colorado Bylaws were modeled on the Company&#146;s Certificate of Incorporation and Bylaws
currently in effect (the &#147;Delaware Certificate of Incorporation&#148; and the &#147;Delaware Bylaws,&#148;
respectively). The Colorado Articles of Incorporation and the Colorado Bylaws are attached to this
proxy statement as <B>Appendices B </B>and <B>C</B>, respectively. There are some differences between the
Colorado Articles of Incorporation and Bylaws and the Delaware Certificate of Incorporation and
Bylaws, the most significant of which are described below under the heading &#147;Comparison of
Stockholder Rights Before and After the Reincorporation.&#148;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>The Merger Agreement</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Merger Agreement provides that the Company will merge with and into Pure Cycle Colorado, with
Pure Cycle Colorado being the surviving corporation. Pursuant to the Merger Agreement, Pure Cycle
Colorado will change its name to Pure Cycle Corporation and it will own all assets and liabilities
of the Company, including obligations under its outstanding contracts. The Company&#146;s existing
board of directors and officers will become the board of directors and officers of Pure Cycle
Colorado for identical terms of office.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">At the effective time of the reincorporation merger, each outstanding share of the Company&#146;s common
stock will automatically be converted into one share of one-third of $.01 par value common stock of
Pure Cycle Colorado (&#147;Colorado Common Stock&#148;), and each outstanding share of the Company&#146;s Series&nbsp;B
convertible preferred stock will automatically be converted into one share of $.001 par value
Series&nbsp;B convertible preferred stock of Pure Cycle Colorado (the &#147;Colorado Series&nbsp;B Preferred
Stock&#148;). You will not have to exchange your existing stock certificates of the Company for stock
certificates of Pure Cycle Colorado. However, after consummation of the reincorporation merger,
any stockholder desiring a new form of stock certificate (which will replace the word &#147;Delaware&#148;
with &#147;Colorado&#148;) may submit the existing stock certificate to our transfer agent for cancellation
and obtain a new certificate.
</DIV>
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<P align="center" style="font-size: 10pt"><!-- Folio -->-17-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Pursuant to the reincorporation merger, the Company&#146;s 2004 Incentive Plan will remain in effect.
Each award of shares of the Company&#146;s common stock under the 2004 Incentive Plan will be converted
into an award of shares of Colorado Common Stock on the same terms and conditions as in effect
immediately prior to the reincorporation, and each outstanding option to purchase shares of the Company&#146;s common stock under the 2004 Incentive
Plan will be converted into an option to purchase the same number of shares of Colorado Common
Stock on the same terms and conditions as in effect immediately prior to the reincorporation.
Options and rights granted under the 2004 Incentive Plan in the future will be for shares of
Colorado Common Stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Merger Agreement was unanimously approved by the board of directors of the Company and the
board of directors of Pure Cycle Colorado (consisting of our President, Mr.&nbsp;Harding) and
subsequently was adopted by the Company, as the sole stockholder of Pure Cycle Colorado. Approval
of the reincorporation proposal (which constitutes approval of the Merger Agreement) requires the
affirmative vote of the holders of a majority of all of the shares issued and outstanding and
entitled to vote on the proposal.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">A vote in favor of the reincorporation proposal is a vote to approve the Merger Agreement and
therefore the reincorporation merger. A vote in favor of the reincorporation proposal is also
effectively a vote in favor of the Colorado Articles of Incorporation and the Colorado Bylaws.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Effective Time</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">If the reincorporation proposal is approved, the reincorporation merger, and consequently the
reincorporation will become effective at the time set forth in each of the Statement of Merger to
be filed with the Secretary of State of Colorado in accordance with Section&nbsp;7-111-104.5 of the CBCA
and the Certificate of Ownership and Merger to be filed with the Secretary of State of Delaware in
accordance with Section&nbsp;253 of the Delaware General Corporation Law (&#147;DGCL&#148; or &#147;Delaware law&#148;).
The Company anticipates filing these documents shortly after the Meeting. However, the Merger
Agreement may be terminated and abandoned by action of the board of directors of the Company at any
time prior to the effective time of the reincorporation merger, whether before or after the
approval by holders of shares of the Company&#146;s common stock, if the board of directors determines
for any reason, in its sole judgment and discretion, that the consummation of the reincorporation
merger would be inadvisable or not in the best interests of the Company and its stockholders.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Effect of Not Obtaining the Required Vote for Approval</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">If the reincorporation proposal fails to obtain the requisite vote for approval, the
reincorporation merger will not be consummated and the Company will continue to be incorporated in
Delaware.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Comparison of Stockholder Rights Before and After the Reincorporation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Because of differences between Delaware law and Colorado law, as well as differences between the
Company&#146;s governing documents before and after the reincorporation, the reincorporation will effect
some changes in the rights of the Company&#146;s stockholders. Summarized below are the most
significant differences between the rights of the stockholders of the Company before and after the
reincorporation. The summary below is not an exhaustive list of all differences or a complete
description of the differences described, and is qualified in its entirety by reference to the
DGCL, the Delaware Certificate of Incorporation, the Delaware Bylaws, the CBCA, the Colorado
Articles of Incorporation, and the Colorado Bylaws.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Delaware</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Colorado</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Removal of Directors</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Under Delaware law,
directors may be
removed by
stockholders with
or without cause by
the affirmative
vote of the holders
of a majority of
the issued and
outstanding shares
of capital stock
entitled to vote
for the election of
directors.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify"> The Colorado Articles of
Incorporation are identical to
Delaware with respect to the removal
of directors by the shareholders
without cause. However, under
Colorado law, a lesser vote is
required to remove directors with
cause. Directors may be removed with
cause if the number of votes cast in
favor of removal exceeds the number
of votes cast against removal.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Vacancies on the
Board of Directors</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Under Delaware law
and the Delaware
Bylaws, vacancies
on the board of
directors of the
Company may be
filled by the
remaining directors
or, if there are no
remaining
directors, by the
stockholders.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Under Colorado law, because the
Colorado Articles of Incorporation do
not provide otherwise, any vacancies
on the board of directors may be
filled either by the remaining
directors or the shareholders.</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-18-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Delaware</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Colorado</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Stockholders&#146; Power
to Call Special
Meetings</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The Delaware Bylaws
provide that a
special meeting of
shareholders must
be called upon the
request of holders
of not less than
20% of the
outstanding shares
of the Company.
The board of
directors has the
right to amend or
remove this
provision.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The Colorado Bylaws provide that a
special meeting of shareholders must
be called upon the request of holders
of not less than 10% of the
outstanding shares of Pure Cycle
Colorado. This provision is required
by Colorado law.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Notice of
Stockholder
Nominations for
Directors and
Business to be
Brought Before
Meetings</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The Delaware Bylaws
provide that no
business may be
brought before the
annual meeting of
stockholders,
including the
nomination or
election of persons
to the board of
directors, by a
stockholder unless
the stockholder
satisfies certain
advance notice
requirements.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The Colorado Bylaws contain identical
provisions regarding advance notice
of shareholder nominations of
directors or notice of business to be
brought before the annual meeting of
shareholders, except that the
Colorado Bylaws include a provision
that the shareholder must be eligible
to submit a proposal pursuant to Rule
14a-8 under the Securities Exchange
Act of 1934. In order to be eligible
under Rule&nbsp;14a-8 to submit a
proposal, a shareholder must have
continuously held at least $2000 in
market value, or 1%, of the
securities entitled to be voted on
the proposal at the meeting for at
least one year prior to the date of
submitting the proposal.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Indemnification</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The Delaware
Certificate of
Incorporation
provides for
mandatory
indemnification of
officers and
directors of the
Company, provided
they satisfy
certain standards
of conduct
identified by the
DGCL. Under
Delaware law, a
person seeking
indemnification is
generally required
to have acted in a
manner he or she
reasonably believed
to be in, or not
opposed to, the
best interests of
the Company.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The Colorado Articles of
Incorporation provide for mandatory
indemnification of the officers and
directors to the fullest extent
permitted by Colorado law. Under
Colorado law, a person seeking
indemnification is generally required
to have acted in a manner he or she
reasonably believed to have been in
the best interests of the
corporation.</DIV><br>
<DIV style="text-align: justify">In addition, Colorado law requires us
to give shareholders, with or before
the next shareholders&#146; meeting, a
notice of all indemnification of, or
advancement of expenses to, directors
in connection with a proceeding by or
in the right of the corporation.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Amendment to the
(Certificate)
Articles of
Incorporation</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Under the DGCL, a
proposed amendment
to the Delaware
Certificate of
Incorporation may
not be submitted to
a vote of
stockholders
without the prior
approval of the
board of directors.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Pursuant to the CBCA, amendments to
the Colorado Articles, other than
ministerial amendments authorized by
the directors without shareholder
action, may be proposed either by the
board of directors or by the holders
of shares representing at least 10%
of all of the votes entitled to be
cast on the amendment.</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-19-<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Delaware</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Colorado</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Business <BR>
Combination Statute</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Section&nbsp;203 of the
DGCL provides for a
three-year
moratorium on
certain business
combination
transactions with
&#147;interested
stockholders&#148;
(generally, persons
who beneficially
own 15% or more of
the corporation&#146;s
outstanding voting
stock).</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The CBCA does not contain any
business combination provisions.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Examination of
Books and Records</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Under Delaware law,
any record holder
of the Company may,
upon written demand
under oath stating
the purpose,
inspect certain
records of the
Company during
usual business
hours, provided the
demand is made for
a purpose
reasonably related
to such person&#146;s
interest as a
stockholder.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Under Colorado law, any record or
beneficial shareholder of a
corporation may, upon properly
submitted demand, inspect the
articles and bylaws of the
corporation, and the past three (3)
years of (i)&nbsp;minutes of shareholder
actions and meetings, (ii)
communications with shareholders, and
(iii)&nbsp;financial statements. In
addition, if a shareholder either (i)
has been a shareholder for at least
three (3)&nbsp;months or (ii)&nbsp;is a
shareholder of at least 5% of all
outstanding shares of any class of
shares, such shareholder may inspect
the list of shareholders and certain
other corporate records, including
excerpts of minutes of the meetings
of the board of directors, provided
that the demand is made in good faith
for a proper purpose reasonably
related to such person&#146;s interest as
a shareholder.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Dissenters&#146;
(Appraisal) Rights</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Delaware law
provides appraisal
rights only in the
case of a
stockholder
objecting to
certain mergers or
consolidations.
Thus, under the
DGCL, stockholders
have no appraisal
rights in a sale,
lease or exchange
of all or
substantially all
of a corporation&#146;s
assets.</DIV><br>
<DIV style="text-align: justify">Appraisal rights in
Delaware are
available to record
holders only.<br>
Appraisal rights
are not applicable
to the Merger.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">Under Colorado law, shareholders are
entitled to exercise dissenters&#146;
rights in the event of certain
mergers, share exchanges, and sales,
leases, exchanges or other
dispositions of all or substantially
all of the property of the
corporation. Shareholders also may
dissent in the case of a reverse
stock split that reduces the number
of shares owned to a fraction of a
share or to scrip if such scrip is to
be acquired for cash or voided.</DIV><br>
<DIV style="text-align: justify">Dissenters&#146; rights in Colorado are
available to both record holders and
beneficial holders.</DIV><br>
<DIV style="text-align: justify">Appraisal rights are not applicable
to the Merger.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Franchise Tax</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">The DGCL requires
corporations to pay
franchise tax
annually (the
current maximum is
$165,000 per year).</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="text-align: justify">There is no franchise tax in Colorado.</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-20-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Federal Income Tax Consequences of the Reincorporation Merger</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following discussion addresses the material federal income tax consequences of the
reincorporation merger that are applicable to holders of shares of the Company&#146;s common stock. The
discussion does not address all federal income tax consequences that may be relevant to a
particular holder of shares of the Company&#146;s common stock, or any foreign, state or local tax
considerations. <B>Accordingly, holders of the Company&#146;s common stock are urged to consult their own
tax advisors as to the specific federal, foreign, state and local tax consequences to them as a
result of the reincorporation merger.</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following discussion is based upon the Internal Revenue Code of 1986, as amended (the &#147;Code&#148;),
applicable Treasury Regulations, judicial authority and administrative rulings and practice, all as
of the date hereof. The Company has not and will not request a ruling from the Internal Revenue
Service regarding the tax consequences of the reincorporation merger.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We believe that the reincorporation merger and the resulting reincorporation of the Company from
Delaware to Colorado will constitute a tax-free reorganization within the meaning of Section 368(a)
of the Code. Accordingly, for federal income tax purposes, (i)&nbsp;no gain or loss will be recognized
by the holders of shares of the Company&#146;s common stock or Series&nbsp;B convertible preferred stock upon
consummation of the reincorporation merger, (ii)&nbsp;the aggregate tax basis of shares of Colorado
Common Stock and Colorado Series&nbsp;B Preferred Stock received in the reincorporation merger will be
the same as the aggregate tax basis of shares of the Company&#146;s common stock and Series&nbsp;B
convertible preferred stock exchanged in the reincorporation merger and (iii)&nbsp;the holding period of
the shares of Colorado Common Stock and Colorado Series&nbsp;B Preferred Stock received in the
reincorporation merger will include the period for which shares of the Company&#146;s common stock and
Series&nbsp;B convertible preferred stock were held.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Accounting Treatment of the Reincorporation Merger</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The historical financial statements of the Company, previously reported to the SEC on Forms 10-K
and 10-Q, among others, as of and for all periods through the date of this proxy statement, will
continue to be treated as the Company&#146;s financial statements following the merger.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Regulatory Approval</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">To the Company&#146;s knowledge, the only required regulatory or governmental approval or filing
necessary to consummate the reincorporation merger will be the filing of the Statement of Merger
with the Secretary of State of Colorado and the filing of the Certificate of Merger with the
Secretary of State of Delaware.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE &#147;FOR&#148; THE REINCORPORATION OF THE
COMPANY IN COLORADO.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><DIV align="center"><DIV style="font-size: 10pt; margin-top: 20pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS<BR>
(Proposal No.&nbsp;3)</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Action is to be taken by the stockholders at the Meeting with respect to the ratification and
approval of the selection by the Audit Committee of the Company&#146;s board of directors of GHP
Horwath, P.C. (&#147;GHP&#148;) to be the independent auditors of the Company for the fiscal year ending
August&nbsp;31, 2008. In the event of a negative vote on such ratification, the Audit Committee of the
board of directors will reconsider its selection. A representative of GHP is expected to be
present at the Meeting. The GHP representative will have the opportunity to make a statement if he
or she desires to do so, and is expected to be available to respond to appropriate questions.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Change in Auditors </I></B>&#151; On December&nbsp;15, 2006, the Company replaced Anton Collins Mitchell LLP (&#147;ACM&#148;)
as its independent registered public accountant. The decision to replace ACM was approved by the
Audit Committee of the board of directors. ACM did not, for either of the fiscal years ended
August&nbsp;31, 2006 or 2005, or to the date of the change of auditors, produce a report on the
Company&#146;s financial statements which contained an adverse opinion or disclaimer of opinion. ACM&#146;s
reports were not modified as to uncertainty, audit scope or accounting principles.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-21-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">For either of the two fiscal years ended August&nbsp;31, 2006 and 2005, and to the date of the change in
auditors, there were no reportable events as described in Regulation&nbsp;S-K 229.304(a)(1)(v). During
the fiscal years ended August&nbsp;31, 2006 and 2005, and the subsequent interim period through December
15, 2006 (the date of the change in auditors), there were (i)&nbsp;no disagreements with ACM on any
matter of accounting principles or practices, financial statement disclosure, or auditing scope or
procedures which, if not resolved to ACM&#146;s satisfaction, would have caused ACM to make reference to
the subject matter of such disagreement in connection with its reports on the financial statements
of the Company except as described below, and (ii)&nbsp;no reportable events as listed in Item
304(a)(1)(v) of Regulation&nbsp;S-K.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As discussed in Item&nbsp;9 in the Company&#146;s Annual Report on Form 10-K for the year ended August&nbsp;31,
2007, certain of the properties acquired from HP A&#038;M pursuant to the Arkansas River Agreement,
entered into on August&nbsp;31, 2006, are subject to outstanding promissory notes (the &#147;Promissory
Notes&#148;) which are secured by deeds of trust on the properties. The Company did not assume the
Promissory Notes and they remain the obligation of HP A&#038;M. The Promissory Notes had principal and
accrued interest totaling approximately $13.9&nbsp;million and $14.6 at August&nbsp;31, 2007 and 2006,
respectively. Because the Company would lose a portion of the land and water rights acquired from
HP A&#038;M if any defaults on such Promissory Notes are not cured, the Company originally recorded the
outstanding balance of the Promissory Notes as a liability on its August&nbsp;31, 2006 balance sheet.
In December&nbsp;2006, the Company was informed by ACM of their intent to not stand for re-election. At
the time, it was ACM&#146;s position that for periods commencing after August&nbsp;31, 2006, the acquisition
date, interest accrued on the Promissory Notes should be treated as an expense paid by a principal
shareholder in accordance with Staff Accounting Bulletin No.&nbsp;79, <I>Accounting for Expenses or
Liabilities by Principal Stockholder(s)</I>, whereby the Company would record interest expense, which
would have been approximately $950,000 in fiscal 2007, with a corresponding increase to additional
paid in capital. Since the Company did not concur with this position, the Company requested the
Staff of the Office of the Chief Accountant of the Securities and Exchange Commission (the &#147;Staff&#148;)
to review its proposed treatment of the Promissory Notes. As described in the Company&#146;s First
Amendment to its August&nbsp;31, 2006 Form 10-K, following the consultations with the Staff, the Company
removed the liability related to the Promissory Notes from its August&nbsp;31, 2006 balance sheet.
Further information can be obtained from the First Amendment to the August&nbsp;31, 2006 Annual Report
on Form 10-K filed with the Commission on April&nbsp;16, 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">ACM&#146;s report on effectiveness of the Company&#146;s internal control over financial reporting as of
August&nbsp;31, 2006, identified a material weakness in that the Company&#146;s closing process failed to
identify all necessary accounting adjustments for certain transactions.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">On December&nbsp;15, 2006, the Company engaged its new independent registered public accountant, GHP.
The decision to engage GHP was approved by the Audit Committee of the Board. Since its
appointment, the Company has not consulted with GHP on matters of the type contemplated by Item
304(a)(2) of Regulation&nbsp;S-K. GHP reported that the Company maintained, in all material respects,
effective internal control over financial reporting as of August&nbsp;31, 2007, based on criteria
established in <I>Internal Control&#151;Integrated Framework </I>issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">GHP has no direct or indirect financial interest in the Company and does not have any connection
with the Company in the capacity of promoter, underwriter, voting trustee, director, officer or
employee. Neither the Company, nor any officer, director or associate of the Company has any
interest in GHP.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Fees </I></B>&#151; For the fiscal years ended August&nbsp;31, the Company was billed the following audit,
audit-related, tax and other fees by GHP and ACM. The Audit Committee approved 100% of these fees
in accordance with the Audit Committee Charter. The audit related fees related to the internal
control audits pursuant to the Sarbanes-Oxley Act of 2002, the registered equity offering in July
2007 and the consultations with the Staff of the SEC.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Fiscal year ended August 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">52,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit Related Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">146,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All Other Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-22-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Pre-Approval Policy </I></B>&#151; The Audit Committee has established a pre-approval policy in its Charter.
In accordance with the policy, the Audit Committee pre-approves all audit, non-audit and internal
control related services provided by the independent auditors prior to the engagement of the
independent auditors with respect to such services.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>THE BOARD OF DIRECTORS RECOMMENDS A VOTE &#147;FOR&#148; THE RATIFICATION OF THE INDEPENDENT AUDITORS.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ACTION TO BE TAKEN UNDER THE PROXY</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The accompanying Proxy will be voted &#147;FOR&#148; approval of proposals 2 and 3 and &#147;FOR&#148; the directors
nominated by the board, unless the Proxy is marked in such a manner as to withhold authority to so
vote. The accompanying Proxy will also be voted in connection with the transaction of such other
business as may properly come before the Meeting or any adjournment or adjournments thereof.
Management knows of no other matters, other than the matters set forth above, to be considered at
the Meeting. If, however, any other matters properly come before the Meeting or any adjournment
thereof, the persons named in the accompanying Proxy will vote such Proxy in accordance with their
best judgment on any such matter. The persons named in the accompanying Proxy will also, if in
their judgment it is deemed to be advisable, vote to adjourn the Meeting from time to time.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>OTHER INFORMATION</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Section&nbsp;16 (a)&nbsp;beneficial ownership reporting compliance</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company&#146;s directors and executive officers and persons who are beneficial owners of more than
10% of common stock are required to file reports of their holdings and transactions in common stock
with the Securities and Exchange Commission and furnish the Company with such reports. Based
solely upon the review of the copies received by the Company, or upon written representations from
these persons, the Company believes that, during the fiscal year ended August&nbsp;31, 2007, all the
directors, executive officers, and 10% beneficial owners had complied with the applicable Section
16(a) filing requirements, except that Mr.&nbsp;Campbell and Mr.&nbsp;Epker each filed a late Form&nbsp;3 and a
late Form&nbsp;4 for his option grant from the Company upon becoming a director, and Mr.&nbsp;Middlemas filed
a late Form&nbsp;4 for one transaction.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Stockholder Proposals</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Stockholder proposals for inclusion in the Proxy Statement for the 2009 Annual Meeting of
Stockholders must be received at the principal executive offices of the Company by August&nbsp;15, 2008
but not before June&nbsp;16, 2008. For more information refer to the Company&#146;s Bylaws which were filed
as Appendix&nbsp;C to the Registration Statement on Form SB-2/A filed on June&nbsp;10, 2004. The Company is
not required to include proposals received outside of these dates in the proxy materials for the
2009 Annual Meeting of Stockholders, and any such proposals shall be considered untimely.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Form&nbsp;10-K Exhibits</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company has included with this Proxy Statement a copy of its Form 10-K which is part of the
Annual Report for the fiscal year ending August&nbsp;31, 2007, including the financial statements,
schedules and list of exhibits. The Company will mail without charge, upon written request or by
sending an email to info@purecyclewater.com<B>, </B>a copy of its Form 10-K exhibits. Requests should be
sent to Pure Cycle Corporation, 8451 Delaware Street, Thornton, CO 80260. They are also available,
free of charge, at the SEC&#146;s web site, <u>www.sec.gov</u> which can also be accessed through the Company&#146;s
website at <u>www.purecyclewater.com</u>.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-23-<!-- /Folio -->
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Appendix&nbsp;A</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">AGREEMENT AND PLAN OF MERGER
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">THIS AGREEMENT AND PLAN OF MERGER, dated as of November&nbsp;30, 2007 (this &#147;Agreement&#148;), is to
provide for the merger of Pure Cycle Corporation, a Delaware corporation (&#147;PCY Delaware&#148;), into
Pure Cycle Water Corporation, a Colorado corporation (&#147;PCY Colorado&#148;). PCY Delaware and PCY
Colorado are sometimes hereafter together referred to as the &#147;Constituent Corporations.&#148;
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U>RECITALS</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A.&nbsp;PCY Colorado is a corporation duly organized and existing under the laws of the State of
Colorado, having an authorized capital stock of 65,000,000 shares consisting of 40,000,000 shares
of common stock, one-third of one cent ($.00333) par value (the &#147;PCY Colorado Common Stock&#148;), and
25,000,000 shares of preferred stock, one-tenth of one cent ($.001) par value (the &#147;PCY Colorado
Preferred Stock&#148;).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">B.&nbsp;1,000 shares of PCY Colorado Common Stock are issued and outstanding and owned by PCY
Delaware and are the only shares of capital stock of PCY Colorado issued and outstanding.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">C.&nbsp;PCY Delaware is a corporation duly organized and existing under the laws of the State of
Delaware, having an authorized capital stock of 65,000,00 shares consisting of 40,000,000 shares of
common stock, one-third of one cent ($.00333) par value (the &#147;PCY Delaware Common Stock&#148;), and
25,000,000 shares of preferred stock, one-tenth of one cent ($.001) par value (the &#147;PCY Delaware
Preferred Stock&#148;).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">D.&nbsp;The respective boards of directors of PCY Colorado and PCY Delaware have determined that it
is advisable and in the best interests of such corporations that PCY Delaware merge with and into
PCY Colorado as authorized by the statutes of the states of Delaware and Colorado and upon the
terms and subject to the conditions of this Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">E.&nbsp;The respective boards of directors of PCY Colorado and PCY Delaware have, by resolutions
duly adopted, approved this Agreement, PCY Delaware has approved this Agreement as the sole
stockholder of PCY Colorado, and the board of directors of PCY Delaware has directed that this
Agreement be submitted to a vote of its stockholders.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U>AGREEMENT</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In consideration of the premises and the mutual agreements and covenants set forth herein, the
parties hereby agree as follows:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">1.&nbsp;<U>Merger</U>. Upon the terms and subject to the conditions set forth in this Agreement,
PCY Delaware shall be merged with and into PCY Colorado (the &#147;Merger&#148;), and PCY Colorado shall be
the surviving corporation (sometimes hereafter referred to as the &#147;Surviving Corporation&#148;). The
name of the Surviving Corporation shall be Pure Cycle Corporation.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">2.&nbsp;<U>Effective Time</U>. The Merger shall become effective (the &#147;Effective Time&#148;) upon the
time and date of filing of such documents as required under applicable law.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3. <U>Governing Documents</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;The articles of incorporation of PCY Colorado, as in effect immediately prior to the
Effective Time, shall be the articles of incorporation of the Surviving Corporation without change
or amendment until thereafter amended in accordance with applicable law, except that as of the
Effective Time, the name of the Surviving Corporation shall be changed from Pure Cycle Colorado,
Inc. to Pure Cycle Corporation.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;The bylaws of PCY Colorado, as in effect immediately prior to the Effective Time, shall be
the bylaws of the Surviving Corporation without change or amendment until thereafter amended in
accordance with applicable law.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;References to &#147;the Corporation&#148; in Article&nbsp;VI of the bylaws of PCY Colorado shall include
PCY Delaware, in addition to PCY Colorado, so that any person who was a director or officer of PCY
Delaware or is or was serving at the request of PCY Delaware as a director, employee, or agent of
another corporation, partnership, joint venture, trust, association, or other entity shall stand in
the same position under the provisions of said Article&nbsp;VI with respect to PCY Colorado as such
person would if such person had served PCY Colorado in the same capacity or is or was so serving
such other entity at the request of PCY Colorado, as the case may be.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">4. <U>Effects of Merger; Officers and Directors</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;At the Effective Time, the separate corporate existence of PCY Delaware shall cease, and
PCY Colorado as the Surviving Corporation shall possess all the rights, privileges, powers and
franchises of a public and private nature and be subject to all the restrictions, disabilities and
duties of PCY Delaware; and all rights, privileges, powers and franchises of PCY Delaware, and all
property, real, personal and mixed, and all debts due to PCY Delaware on whatever account, as well
as for share subscriptions and all other things in action belonging to PCY Delaware, shall be
vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises,
and all and every other interest shall be thereafter as effectively the property of the Surviving
Corporation as they were of PCY Delaware, and the title to any real estate vested by deed or
otherwise in PCY Delaware, shall not revert or be in any way impaired by reason of the Merger; but
all rights of creditors and all liens upon any property of PCY Delaware shall be preserved
unimpaired, and all debts, liabilities and duties of PCY Delaware shall thenceforth attach to the
Surviving Corporation and may be enforced against it to the same extent as if such debts,
liabilities and duties had been incurred or contracted by the Surviving Corporation. All corporate
acts, plans, policies, agreements, arrangements, approvals and authorizations of PCY Delaware and
its stockholders, board of directors and committees thereof, officers and agents which were valid
and effective immediately prior to the Effective Time, shall be taken for all purposes as the acts,
plans, policies, agreements, arrangements, approvals and authorizations of PCY Colorado and shall
be as effective and binding thereon as the same were with respect to PCY Delaware.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->A-2<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;At the Effective Time, the officers and directors of PCY Delaware shall become the
officers and directors of the Surviving Corporation to hold the positions in the Surviving
Corporation to which they have been elected as officers of PCY Delaware and to serve in accordance
with the bylaws of the Surviving Corporation.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">5.&nbsp;<U>Further Assurances</U>. From time to time, as and when required by PCY Colorado, or by
its successors and assigns, there shall be executed and delivered on behalf of PCY Delaware such
deeds and other instruments, and there shall be taken or caused to be taken by it all such further
and other action, as shall be appropriate or necessary in order to vest, perfect or confirm, of
record or otherwise, in PCY Colorado the title to and possession of all property, interests,
assets, rights, privileges, immunities, powers, franchises and authority of PCY Delaware, and
otherwise to carry out the purposes of this Agreement, and the officers and directors of PCY
Colorado are fully authorized in the name and on behalf of PCY Delaware or otherwise, to take any
and all such action and to execute and deliver any and all such deeds and other instruments.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">6.&nbsp;<U>Conversion of Securities in the Merger</U>. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;Each one (1)&nbsp;share of PCY Delaware Common Stock issued and outstanding immediately prior
to the Effective time (excluding shares of PCY Delaware Common Stock held by stockholders who have
properly exercised their dissenters&#146; rights under the General Corporation Law of Delaware) shall be
converted (without the surrender of stock certificates or any other action) into one (1)&nbsp;fully paid
and nonassessable share of PCY Colorado Common Stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;Each one (1)&nbsp;share of PCY Delaware Preferred Stock issued and outstanding immediately
prior to the Effective time shall be converted (without the surrender of stock certificates or any
other action) into one (1)&nbsp;fully paid and nonassessable share of PCY Colorado Preferred Stock with
the same rights and preferences afforded to the PCY Delaware Preferred Stock prior to the Effective
Time.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;Each option, warrant, purchase right or other security of PCY Delaware issued and
outstanding immediately prior to the Effective Time shall be converted into and shall be an
identical security of PCY Colorado. The same number of shares of PCY Colorado Common Stock shall
be reserved for purposes of the exercise of such options, warrants, purchase rights, or other
securities as is equal to the number of shares of the PCY Delaware Common Stock so reserved as of
the Effective Time.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(d)&nbsp;The shares of PCY Colorado Common Stock issued in the name of PCY Delaware shall be
cancelled and retired and shall resume the status of authorized and unissued shares of PCY Colorado
Common stock and no securities of PCY Colorado shall be issued in respect thereof.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->A-3<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">7.&nbsp;<U>Certificates</U>. At and after the Effective Time, all of the outstanding certificates
which immediately prior thereto represented shares of PCY Delaware Common Stock, PCY Delaware
Preferred Stock, or options, warrants, purchase rights or other securities of PCY Delaware shall be deemed for all purposes to evidence ownership of and to represent the shares
of the respective PCY Colorado Common Stock, PCY Colorado Preferred Stock, or options, warrants,
purchase rights, or other securities of PCY Colorado, as the case may be, into which the shares of
PCY Delaware Common Stock, PCY Delaware Preferred Stock, or options, warrants, purchase rights or
other securities of PCY Delaware represented by such certificates have been converted as herein
provided and shall be so registered on the books and records of the Surviving Corporation or its
transfer agent. The registered owner of any such outstanding certificate shall, until such
certificate shall have been surrendered for transfer or otherwise accounted for to the Surviving
Corporation or its transfer agent, have and be entitled to exercise any voting and other rights
with respect to, and to receive any dividends and other distributions upon, the shares of PCY
Colorado Common stock, PCY Colorado Preferred Stock, or options, warrants, purchase rights or other
securities of PCY Colorado, as the case may be, evidenced by such outstanding certificate, as above
provided.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">8.&nbsp;<U>Amendment</U>. Subject to applicable law, this Agreement may be amended, modified or
supplemented by written agreement of the parties at any time prior to the Effective Time.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">9.&nbsp;<U>Abandonment</U>. At any time prior to the Effective Time, this Agreement may be
terminated and the Merger may be abandoned by the board of directors of either PCY Colorado or PCY
Delaware, or both, notwithstanding approval of this Agreement by the stockholders of PCY Delaware,
if circumstances arise which, in the opinion of the board of directors of either Constituent
Corporation, make the Merger inadvisable.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">10.&nbsp;<U>Counterparts</U>. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and the same agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">11.&nbsp;<U>No Third Party Beneficiaries</U>. This Agreement is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">12.&nbsp;<U>Governing Law</U>. This Agreement shall be governed by and construed in accordance
with the laws of the State of Colorado without regard to the conflict of law principles thereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">13.&nbsp;<U>Agreement for Service of Process; Dissenting Stockholders</U>. The surviving
Corporation, from and after the Effective Time, agrees that it may be sued and served with process
in the State of Colorado at 8451 Delaware Street, Thornton, Colorado 80260, in any proceeding for
the enforcement of any obligation of PCY Delaware and in any proceeding for the enforcement of any
obligation of the Surviving Corporation or PCY Delaware arising from the merger. The Surviving
Corporation irrevocably appoints the Secretary of State of the State of Delaware as its agent to
accept service of process in any such proceeding.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->A-4<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of Merger to be signed by
its duly authorized officers as of the date first above written.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">ATTEST:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Pure Cycle Water Corporation</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Scott Lehman
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Mark W. Harding</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Scott Lehman, Secretary
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mark W. Harding, President</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD colspan="3" valign="top" align="left">ATTEST:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Pure Cycle Corporation, a Delaware corporation</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Scott Lehman
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Mark W. Harding</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Scott Lehman, Secretary
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mark W. Harding, President</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->A-5<!-- /Folio -->
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Appendix&nbsp;B</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLES OF INCORPORATION</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>OF</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PURE CYCLE WATER CORPORATION</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE I</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>NAME</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The name of the corporation is Pure Cycle Water Corporation (the &#147;Corporation&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE II</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ACT</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">This Corporation is incorporated under the Colorado Business Corporation Act (the &#147;Act&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE III</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PURPOSES AND POWERS</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The purposes for which the Corporation is organized and its powers are as follows:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;3.1 </B><U>Purposes</U>. To engage in the transaction of all lawful business or pursue
any other lawful purpose or purposes for which a corporation may be organized under Colorado law.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;3.2 </B><U>Powers</U>. To have, enjoy, and exercise all of the rights, powers and
privileges conferred upon corporations incorporated pursuant to Colorado law, whether now or
hereafter in effect, and whether or not herein specifically mentioned.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The foregoing enumeration of purposes and powers shall not limit or restrict in any manner the
transaction of other business, the pursuit of other purposes or the exercise of other and further
rights and powers that may now or hereafter be permitted or provided by law.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE IV</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CAPITAL STOCK</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;4.1 </B><U>Authorized Shares</U>. The number of shares of capital stock of all classes
which the Corporation shall have authority to issue is sixty-five million (65,000,000) shares, of
which forty million (40,000,000) shares shall be of a class designated as &#147;common stock,&#148; with a
par value of one-third of one cent ($.00333) per share, and twenty-five million (25,000,000)
shares shall be of a class designated as &#147;preferred stock,&#148; with a par value of one-tenth of one
cent ($.001) per share.
</DIV>
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</DIV>

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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;4.2 </B><U>Designations, Powers and Preferences</U>. The designations and the powers,
preferences and rights, and the qualifications, limitations or restrictions of the shares of each
class of stock are as follows:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">A.&nbsp;<U>Common Stock</U>. Except for and subject to those preferences, rights, and privileges
expressly granted to the holders of preferred stock, and except as may be provided by the laws of
the State of Colorado, the holders of common stock shall have exclusively all rights of
shareholders of the Corporation, including, but not by way of limitation, (i)&nbsp;unlimited voting
rights, (ii)&nbsp;the right to receive dividends, when and as declared by the board of directors out of
assets lawfully available therefor, (iii)&nbsp;the right to vote for the election of directors and on
all other matters requiring shareholder action, each share being entitled to one vote, and (iv)&nbsp;in
the event of any distribution of assets upon the dissolution and liquidation of the Corporation,
the right to receive ratably and equally the net assets of the Corporation remaining after the
payment to the holders of preferred stock of the specific amounts, if any, which they are entitled
to receive as may be provided herein or pursuant hereto.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">B.&nbsp;<U>Preferred Stock</U>. Shares of preferred stock may be issued in one or more series at
such time or times as the board of directors may determine. All shares of any one series of
preferred stock shall be of equal rank and identical in all respects except as to the dates from
and after which dividends thereon shall cumulate, if cumulative. Subject to the limitations hereof
and the limitations prescribed by law, the board of directors is expressly authorized to fix from
time to time, in whole or in part, by resolution or resolutions adopted prior to the issuance of
and providing for the establishment and/or issuance of any series of preferred stock, the
designation of such series and the powers, preferences, and rights of such series, and the
qualifications, limitations or restrictions thereof. The authority of the board of directors with
respect to each such series shall include, but shall not be limited to, determination of the
following:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(i)&nbsp;The distinctive serial designation and number of shares comprising each such series
(provided that the aggregate number of shares constituting all series of preferred stock
shall not exceed twenty-five million (25,000,000)), which number may (except where otherwise
provided by the board of directors in creating such series) be increased or decreased (but
not below the number of shares of such series then outstanding) from time to time by action
of the board of directors;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(ii)&nbsp;The rate of dividends, if any, on the shares of that series, whether dividends
shall be non-cumulative, cumulative to the extent earned or cumulative (and, if cumulative,
from which date or dates), whether dividends shall be payable in cash, property, or rights,
or in shares of the Corporation&#146;s capital stock, and the relative priority, if any, of
payment of dividends on shares of that series over shares of any other series;
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(iii)&nbsp;Whether the shares of that series shall be redeemable and, if so, the terms and
conditions of such redemption, including the date or dates upon or after which they shall be
redeemable, the event or events upon or after which they shall be redeemable or at whose
option they shall be redeemable, and the amount per share payable in case of redemption
(which amount may vary under different conditions and at different redemption dates) or the
property or rights, including securities of any other corporation, payable in case of
redemption;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(iv)&nbsp;Whether that series shall have a sinking fund for the redemption or purchase of
 shares of that series and, if so, the terms and amounts payable into such sinking fund;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(v)&nbsp;The rights to which the holders of the shares of that series shall be entitled in
the event of voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, and the relative rights of priority, if any, of payment of shares of that
series in any such event;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(vi)&nbsp;Whether the shares of that series shall be convertible into or exchangeable for
 shares of stock of any other class or any other series and, if so, the terms and conditions
of such conversion or exchange, including the rate or rates of conversion or exchange, the
date or dates upon or after which they shall be convertible or exchangeable or at whose
option they shall be convertible or exchangeable, and the method, if any, of adjusting the
rates of conversion or exchange in the event of a stock split, stock dividend, combination
of shares or similar event;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(vii)&nbsp;Whether the issuance of any additional shares of such series shall be subject to
restrictions, or whether any shares of any other series shall be subject to restrictions as
to issuance, or as to the powers, preferences or rights of any such other series;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(viii)&nbsp;Voting rights, if any, including, without limitation, the authority to confer
multiple votes per share, voting rights as to specified matters or issues or, subject to the
provisions of these Articles of Incorporation, voting rights to be exercised either together
with holders of common stock as a single class, or independently as a separate class; and
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(ix)&nbsp;Any other preferences, privileges and powers and relative, participating, optional
or other special rights and qualifications, limitations or restrictions of such series, as
the board of directors may deem advisable and as shall not be inconsistent with the
provisions of these Articles of Incorporation and to the full extent now or hereafter
permitted by the laws of the State of Colorado.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">C. <U>Series&nbsp;B Preferred Stock</U>.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(i) <U>Number of Shares and Designation</U>. 432,514 shares of the preferred stock,
$.001 par value, of the Corporation are hereby constituted as a series of preferred stock of
the Corporation designated as Series&nbsp;B Convertible Preferred Stock (the &#147;Series&nbsp;B Preferred
Stock&#148;).
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%">(ii) <U>Liquidation</U>.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">1. <U>Liquidation Value</U>. Upon any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders of the Series&nbsp;B
Preferred Stock will be entitled to be paid, before any distribution or payment is
made upon any other equity securities of the Corporation, the amount of $1.00 per
share less an amount equal to all dividends paid thereon (the &#147;Liquidation Value&#148;).
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">2. <U>Notice of Liquidation</U>. The Corporation will mail written notice of
any distribution in connection with such liquidation, dissolution or winding up, not
less than 60&nbsp;days prior to the payment date stated therein, to each record holder of
Series&nbsp;B Preferred Stock. Neither the consolidation or merger of the Corporation
into or with any other corporation or corporations, nor the sale or transfer by the
Corporation of all or any part of its assets, nor the reduction of the capital stock
of the Corporation, will be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this Section (ii).
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%">(iii) <U>Dividends</U>.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">1. <U>General Obligations</U>. The holders of the Series&nbsp;B Preferred Stock
shall be entitled to receive cash dividends when and as declared by the board of
directors out of funds legally available for such purpose in a total amount of $1.00
per share, and no more. Each share of Series&nbsp;B Preferred Stock shall earn and
accrue a dividend if and when the Corporation receives proceeds from (i)&nbsp;the
retirement of the Rangeview Bonds whether for cash or for new bonds or other debt
obligations of the District or (ii)&nbsp;the marketing, sale or other distribution of the
Rangeview Water Right or the water underlying such right in an amount greater than
$35,000,000 plus PPI (a &#147;Qualifying Sale&#148;). Such dividend shall be paid when and as
declared by the board of directors and upon completion of any Qualifying Rangeview
Sale unless payment is prohibited by Colorado law. No dividends shall be paid on
common stock unless all dividends accrued on the Series&nbsp;B Preferred Stock have been
paid.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">2. <U>Distribution of Partial Dividend Payment</U>. If at any time less than
the total amount of dividends have accrued with respect to the Series&nbsp;B Preferred
Stock, any payment of such dividends declared by the board of directors will be
distributed ratably among the holders of the Series&nbsp;B Preferred Stock based upon the
number of shares held by such holders, respectively.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%">(iv) <U>Optional Redemption</U>.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">1. <U>Redemption</U>. The Series&nbsp;B Preferred Stock may be redeemed by the
Corporation at its option on any date set by the board of directors, in whole or in
part, out of funds legally available therefor, at any time or from time to time, at
a redemption price equal to the Liquidation Value.
</DIV>
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</DIV>

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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">2. <U>As Alternative to Dividend</U>. In lieu of payment of a dividend
accruing from a Qualifying Rangeview Sale, the board of directors may alternatively
cause the Corporation to redeem shares of the Series&nbsp;B Preferred Stock, on any date
set by the board of directors, in whole or in part, out of funds legally available
therefor, at any time or from time to time, at a redemption price equal to the
Liquidation Value. If the Corporation elects to redeem shares of Series&nbsp;B Preferred
Stock in lieu of paying an accrued dividend, the Corporation must redeem the full
number of shares purchasable with the aggregate dividend accrued.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">3. <U>Limitation on Use Rangeview Assets</U>. The Series&nbsp;B Preferred Stock
may not be redeemed utilizing the Rangeview Assets or proceeds therefrom unless it
would be permissible under Section (iii)(3) hereof to use such assets to pay a
dividend on the Series&nbsp;B Preferred Stock.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">4. <U>Notice of Redemption</U>. Notice of any proposed redemption of shares
of Series&nbsp;B Preferred Stock shall be sent to the holders of record of the shares of
Series&nbsp;B Preferred Stock to be redeemed, at their respective addresses then
appearing on the books of the Corporation, at least 20, but not more than 60&nbsp;days
prior to the date fixed for such redemption (herein referred to as the &#147;Redemption
Date&#148;). Each such notice shall specify (i)&nbsp;the Redemption Date, (ii)&nbsp;the Redemption
Price, (iii)&nbsp;the place for payment and for delivering the stock certificate(s) and
transfer instrument(s) in order to collect the Redemption Price, and (iv)&nbsp;the number
of shares to be redeemed. If less than all the outstanding shares of Series&nbsp;B
Preferred Stock are to be redeemed, the Corporation shall redeem (or offer to
redeem) the outstanding shares of Series&nbsp;B Preferred Stock on a pro rata basis. In
order to facilitate the redemption of the shares of Series&nbsp;B Preferred Stock, the
board of directors may fix a record date for determination of holders of Series&nbsp;B
Preferred Stock to be redeemed, which date shall not be more than 60 (nor less than
10) days prior to the Redemption Date with respect thereto.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">5. <U>Return of Stock Certificates</U>. The holder of any shares of Series&nbsp;B
Preferred Stock that are redeemed shall not be entitled to receive payment of the
Redemption Price for such shares until such holder shall cause to be delivered to
the place specified in the notice given with respect to such redemption (i)&nbsp;the
certificate(s) representing such shares of Series&nbsp;B Preferred Stock, and (ii)
transfer instrument(s) satisfactory to the Corporation and sufficient to transfer
such shares of Series&nbsp;B Preferred Stock to the Corporation free of any adverse
interest. No interest shall accrue on the Redemption Price of any share of Series&nbsp;B
Preferred Stock after its Redemption Date.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">6. <U>Extinguishment of Rights</U>. At the close of business on the
Redemption Date for any share of Series&nbsp;B Preferred Stock to be redeemed, such share
shall (provided the Redemption Price of such share has been paid or properly
provided for) be deemed to cease to be outstanding and all rights of any person
other than the Corporation in such share shall be extinguished on the Redemption
Date for such share except for the right to receive the Redemption
Price, without interest, for such share in accordance with the provisions of
this Section (iv), subject to applicable escheat laws.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">7. <U>Open Market Purchases</U>. The Corporation shall have the right to
purchase shares of Series&nbsp;B Preferred Stock in the public market at such prices as
may then be available in the public market for such shares and shall have the right
at any time to acquire any Series&nbsp;B Preferred Stock from the owner of such shares on
such terms as may be agreeable to such owner. Shares of Series&nbsp;B Preferred Stock
may be acquired by the Corporation from any shareholder pursuant to this Section
(iv)(7) without offering any other shareholder an equal opportunity to sell his or
her stock to the Corporation, and no purchase by the Corporation from any
shareholder pursuant to this Section (iv)(7) shall be deemed to create any right on
the part of any shareholder to sell any shares of Series&nbsp;B Preferred Stock (or any
other stock) to the Corporation. The purchase by the Corporation of shares of
Series&nbsp;B Preferred Stock pursuant to this Section (iv)(7) shall not be deemed for
any purpose to be a redemption. Such shares shall not be entitled to receive
dividends while held by the Corporation.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">8. <U>Limitations on Redemption Right</U>. Notwithstanding the foregoing
provisions of this Section (iv), and subject to the provisions of Section (iii)
hereof, if a dividend upon any shares of Series&nbsp;B Preferred Stock is past due, the
Corporation shall not purchase or otherwise acquire any shares of Series&nbsp;A-1
Preferred Stock, except pursuant to a purchase or exchange offer made on the same
terms to all holders of the Series&nbsp;A-1 Preferred Stock.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">9. <U>Mandatory Redemption</U>. No holder of Series&nbsp;B Preferred Stock shall
have any right to require the Corporation to redeem any or all of the shares of
Series&nbsp;B Preferred Stock.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%">(v) <U>Voting</U>.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">1. <U>General</U>. The holders of Series&nbsp;B Preferred Stock will not have any
voting rights except as set forth below or as otherwise from time to time required
by law. In connection with any right to vote, each holder of Series&nbsp;B Preferred
Stock will have one vote for each such share held. Any shares of Series&nbsp;B Preferred
Stock held by the Corporation or any entity controlled by the Corporation shall not
have voting rights hereunder and shall not be counted in determining the presence of
a quorum.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">2. <U>Default Voting Rights</U>. Whenever dividends on the Series&nbsp;B Preferred
Stock shall have accrued pursuant to Section (iii)(1), but have not been declared by
the board of directors, the holders of the Series&nbsp;B Preferred Stock shall be
entitled to vote with the holders of the common stock at any meeting of the
shareholders of the Corporation held during the period such dividends remain in
arrears. Each share of Series&nbsp;B Preferred Stock shall have one vote when voting
with the common stock. The right of the holders of the Series&nbsp;B Preferred Stock to
vote with the common stock shall terminate when all accrued and unpaid dividends on the Series&nbsp;B Preferred Stock have been declared
and paid or set apart for payment. Cumulative voting shall not be permitted in the
election of directors or otherwise.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">3. <U>Class&nbsp;Voting Rights</U>. So long as the Series&nbsp;B Preferred Stock is
outstanding, the Corporation shall not, without the affirmative vote or consent of
the holders of at least 66-2/3% (or such higher percentage, if any, as may then be
required by applicable law) of all outstanding shares of the Series&nbsp;B Preferred
Stock voting separately as a class, (i)&nbsp;amend, alter or repeal any provision of the
Articles of Incorporation or the By-Laws of the Corporation, so as to affect
adversely the relative rights, preferences, qualifications, limitations or
restrictions of the Series&nbsp;B Preferred Stock or (ii)&nbsp;create, authorize, issue, or
increase the amount of any class or series of stock, or any security convertible
into stock of such class or series, ranking senior to the Series&nbsp;B Preferred Stock
as to dividend or liquidation rights. A class vote on the part of the Series&nbsp;B
Preferred Stock shall, without limitation, specifically not be deemed to be required
(except as otherwise required by law or resolution of the board of directors) in
connection with: (a)&nbsp;the authorization, issuance or increase in the authorized
amount of any shares of any other class or series of stock which ranks junior to, or
on a parity with, the Series&nbsp;B Preferred Stock in respect of the payment of
dividends and distributions upon liquidation, dissolution or winding up of the
Corporation; or (b)&nbsp;the authorization, issuance or increase in the amount of any
notes, commercial paper, bonds, mortgages, debentures or other obligations of the
Corporation.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">4. <U>Preemptive Rights</U>. The holders of shares of Series&nbsp;B Preferred
Stock are not entitled to any preemptive or subscription rights in respect of any
securities of the Corporation.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%">(vi) <U>Definitions</U>.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">1. &#147;Option Agreements&#148; shall mean a certain Option and Purchase Agreement
between Inco Securities Corporation and OAR, Incorporated and a certain Option and
Purchase Agreement between Inco Securities Corporation and Colorado Water
Consultants, Incorporated, each dated November&nbsp;8, 1990, and amended February&nbsp;12,
1991, and further amended August&nbsp;12, 1992, and as many be further amended from time
to time.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">2. &#147;PPI&#148; shall mean interest at the annual rate of 9% on $8,084,000.00 (which
has been accruing since August&nbsp;12, 1992) which represents the remaining adjusted
purchase price of the Rangeview Bonds pursuant to the Option Agreements.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">3. &#147;Rangeview Assets&#148; shall mean the Rangeview Bonds and Rangeview Water Rights
which the Corporation has rights to market and develop pursuant to a Water Rights
Commercialization Agreement (the &#147;Commercialization Agreement&#148;) with Inco Securities
Corporation dated as of December&nbsp;11, 1990, and amended February&nbsp;12, 1991, and further amended August
12, 1992, and as may be further amended from time to time.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">4. &#147;Rangeview Bonds&#148; shall mean the certain notes and bonds issued by the
Rangeview Metropolitan District, a quasi-municipal corporation and political
subdivision of the State of Colorado (the &#147;District&#148;), having a par value of
$24,914,058.00, which Inco Securities Corporation and the Corporation have purchased
in part and the remainder of which Inco Securities Corporation has an option to
purchase pursuant to the Option Agreements as may be further amended from time to
time.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 7%">5. &#147;Rangeview Water Right&#148; shall mean the certain 10,000 acre-foot water
production right which Inco Securities Corporation has an option to acquire from the
District pursuant to a certain Option Agreement For Sale and Operation of Production
Right, dated as of November&nbsp;14, 1990, and amended February&nbsp;12, 1991, and as may be
further amended from time to time.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(vii) <U>Notices</U>. Any notice required hereby to be given to the holders of shares
of Series&nbsp;B Preferred Stock shall be sufficiently given if sent by telecopier, registered or
certified mail, postage prepaid, by express mail or by other express courier addressed to
each holder of record at his or her address appearing on the books of the Corporation. All
notices and other communications shall be effective (i)&nbsp;if mailed, when received or three
(3)&nbsp;days after mailing, whichever is earlier; (ii)&nbsp;if sent by express mail or courier, when
delivered; and (iii)&nbsp;if telecopied, when received by the telecopier to which transmitted (a
machine-generated transaction report produced by sender bearing recipient&#146;s telecopier
number being prima facie proof of receipt).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;4.3 </B><U>Cumulative Voting</U>. Cumulative voting shall not be permitted in the
election of directors or otherwise.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;4.4 </B><U>Action Without a Meeting</U>. Any action required or permitted to be taken by
the shareholders may be taken without a meeting if shareholders holding shares having not less than
the minimum number of votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted consent to such action in
writing.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE V</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DIRECTORS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;5.1 </B><U>Initial Director</U>. The initial board of directors shall consist of the
following person, who shall serve until the next annual meeting of shareholders and until his
successor is duly elected and qualified:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Mark W. Harding<BR>
8451 Delaware Street<BR>
Thornton, Colorado 80260
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->B-8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;5.2 </B><U>Removal</U>. The shareholders may not remove a director from office without
cause, except by the affirmative vote of a majority of the capital stock issued and outstanding and
entitled to vote on the election of directors at a meeting called for that purpose. The
shareholders may remove a director from office with cause at a meeting called for that purpose if
the number of votes cast in favor of removal exceeds the number of votes against removal. The
shareholder meeting notice shall state that the purpose, or one of the purposes, of the meeting is
removal of the director.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE VI</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>INDEMNIFICATION</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;6.1 </B><U>Indemnity</U>. The Corporation shall indemnify, to the fullest extent
permitted by law, any person against all liability and expense (including attorneys&#146; fees) incurred
by reason of the fact that such person is or was a director or officer of the Corporation, or who,
while a director or officer, is or was serving at the request of the Corporation as a director,
officer, partner, manager, member, trustee, employee, fiduciary or agent of, or in any similar
managerial or fiduciary position of, another domestic or foreign entity or of an employee benefit
plan. The Corporation shall also indemnify any person who is serving or has served the Corporation
as a director, officer, employee, fiduciary, or agent to the extent and in the manner provided in
any bylaw, agreement, insurance policy, vote of shareholders or disinterested directors, or
otherwise, so long as such provision is legally permissible.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;6.2 </B><U>Insurance</U>. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee, fiduciary or agent
of the Corporation, or who, while a director, officer, employee, fiduciary, or agent of the
Corporation, is or was serving at the request of the corporation as a director, officer, partner,
manager, member, trustee, employee, fiduciary or agent of another domestic or foreign entity or of
an employee benefit plan, against any liability asserted against or incurred by the person in any
such capacity or arising out of the person&#146;s status as such, whether or not the Corporation would
have the power or would be required to indemnify the person against such liability under the
provisions of this Article&nbsp;VI, the Act or under any other applicable law.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Section&nbsp;6.3 </B><U>Definition</U>. For the purpose of this Article&nbsp;VI, references to &#147;the
Corporation&#148; include all constituent corporations absorbed in a consolidation or merger as well as
the resulting or surviving corporation so that any person who is or was a director, officer,
employee, fiduciary or agent of such a constituent corporation or is or was serving at the request
of such constituent corporation as a director, officer, partner, manager, member, trustee,
employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other
entity or employee benefit plan shall stand in the same position under the provisions of this
Article&nbsp;VI with respect to the resulting or surviving corporation as such person would if such
person had served the resulting or surviving corporation in the same capacity.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->B-9<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE VII</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>BYLAWS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The board of directors of the corporation shall have the power to adopt bylaws for the
governance of the corporation and to amend the bylaws at any time to add, change or delete a
provision, unless (i)&nbsp;the Act or the Articles of Incorporation reserve such power exclusively to
the shareholders in whole or in part or (ii)&nbsp;a particular bylaw expressly prohibits the board of
directors from doing so.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE VIII</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>LIMITATION OF DIRECTOR LIABILITY</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A director of the Corporation shall not be personally liable to the Corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director, except for the
liability of the director to the corporation or to its shareholders for monetary damages for: (i)
any breach of the director&#146;s duty of loyalty to the Corporation or its shareholders; (ii)&nbsp;acts or
omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
(iii)&nbsp;acts specified in Section&nbsp;7-108-403 of the Act; or (iv)&nbsp;any transaction from which the
director derived any improper personal benefit. If the Act hereafter is amended to eliminate or
further limit the liability of a director, then the liability of each director shall be eliminated
or limited to the fullest extent permitted by the Act, as so amended.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Any repeal or modification of this Article shall not adversely affect any right or protection
of a director of the Corporation under this Article, as in effect immediately prior to such repeal
or modification, with respect to any liability that would have accrued, but for this Article, prior
to such repeal or modification.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE IX</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>REGISTERED OFFICE AND REGISTERED AGENT</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The street address of the initial registered office of the Corporation is 8461 Delaware
Street, Thornton, Colorado 80260. The name of the initial registered agent of the Corporation at
such address is Mark W. Harding.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE X</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>INITIAL PRINCIPAL OFFICE</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The address of the initial principal office of the Corporation is 8451 Delaware Street,
Thornton, Colorado 80260.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->B-10<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE XI</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>INCORPORATOR</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The individual named below, being over eighteen years of age, is the true Incorporator of the
Corporation, may be contacted at the address provided and is the individual who causes this
document to be filed with the Colorado Secretary of State:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Wanda J. Abel, Esq.,<BR>
1550 Seventeenth Street<BR>
Suite&nbsp;500<BR>
Denver, Colorado 80202.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The powers of the Incorporator expire immediately upon the filing of these Articles of
Incorporation with the Colorado Secretary of State.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->B-11<!-- /Folio -->
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Appendix&nbsp;C</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>BYLAWS<BR>
OF<BR>
PURE CYCLE WATER CORPORATION</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE I</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>OFFICES</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">1.1 <U>Principal Office</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The principal office of Pure Cycle (&#147;Corporation&#148;) shall be designated from time to time by
the Corporation and may be within or outside the State of Colorado. The Corporation may have
offices at such other places as the board of directors may from time to time determine.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">1.2 <U>Registered Office and Agent</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The registered office of the Corporation required by the Colorado Business Corporation Act
(the &#147;Act&#148;) to be maintained in Colorado may, but need not, be identical with the principal office.
The initial registered office and initial registered agent of the Corporation in the State of
Colorado are specified in the original Articles of Incorporation.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE II</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SHAREHOLDERS</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">2.1 <U>Annual Meetings</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The annual meeting of shareholders for the election of directors and for the transaction of
such other business as may properly come before the meeting shall be held on the date and at the
time fixed, from time to time, by a resolution of the board of directors. Each such annual meeting
shall be held at such place, within or without the State of Colorado, as shall be determined by the
board of directors. The day, time, and place of each annual meeting shall be specified in the
notice of such annual meeting. Any annual meeting of shareholders may be adjourned from day to
day, time to time, and place to place until its business is completed.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">2.2 <U>Special Meetings</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Except as otherwise required by law or by the Articles of Incorporation of the Corporation
(the &#147;Articles of Incorporation&#148;), special meetings of shareholders may be called by the chairman
of the board, the chief executive officer, the president, or the board of directors pursuant to a
resolution approved by a majority of the entire board of directors or a sole remaining director.
The Corporation shall also hold a special shareholders&#146; meeting if it receives one or more written
demands for the meeting, signed and dated by the holders of shares representing at least ten (10%)
percent of all the votes entitled to be cast on any issue proposed to be considered at the meeting.
A written request for a meeting delivered by shareholders shall state the purpose or purposes of
the meeting, shall be delivered to the secretary, and shall comply with the requirements set forth
in the third paragraph of Section&nbsp;2.10 of these bylaws. The term &#147;entire board of directors,&#148; as used in these bylaws, means the total number of directors
which the Corporation would have if there were no vacancies. Only business within the purpose or
purposes described in the notice of the meeting may be conducted at a special shareholders&#146;
meeting.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">2.3 <U>Shareholder Action</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Any action required or permitted to be taken by the shareholders of the Corporation shall be
effected at a duly called annual or special meeting of such shareholders, or without a meeting,
without prior notice and without a vote, if the requisite shareholders entitled to vote execute a
consent in writing setting forth the action so taken.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">No action taken by written consent shall be effective unless, within sixty days after the date
the Corporation first receives a writing describing and consenting to the action and signed by a
shareholder, the Corporation has received writings that describe and consent to the action, signed
by shareholders holding at least the number of shares necessary to authorize or take the action
(disregarding any consent that has been revoked as provided below). Action taken pursuant to this
Section shall be effective as of the date the last writing necessary to effect the action is
received by the Corporation, unless all of the writings necessary to effect the action specify
another date, which may be before or after the date the writings are received by the Corporation.
Such action shall have the same effect as action taken at a meeting of shareholders and may be
described as such in any document. Any shareholder who has signed a writing describing and
consenting to an action taken pursuant to this Section may revoke such consent by a writing signed
by the shareholder describing the action and stating that the shareholder&#146;s prior consent thereto
is revoked, if such writing is received by the Corporation before the effectiveness of the action.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">If written action is taken with less than unanimous consent of all shareholders entitled to
vote upon the action, the Corporation or shareholders taking the action shall, upon receipt by the
Corporation of all writings necessary to effect the action, give notice of the action to all
shareholders who were entitled to vote upon the action but who have not consented to the action as
herein provided. The notice shall contain or be accompanied by the same material, if any, that
would have been required under the Act to be given to shareholders in or with notice of the meeting
at which the action would have been submitted to the shareholders.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">2.4 <U>Notice of Meeting</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Except as otherwise required by statute or the Articles of Incorporation, written notice
stating the place, date and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given not less than ten (10)&nbsp;nor more than sixty
(60)&nbsp;days before the date of the meeting, except that if the number of authorized shares is to be
increased, at least thirty days&#146; notice shall be given, either personally or by mail, prepaid
telegram, telex, facsimile transmission, cablegram, overnight courier or radiogram, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to
be given when deposited in the United States mail, first class postage prepaid, addressed to the
shareholder at the shareholder&#146;s address as it appears on the stock records of the Corporation. If
given personally or otherwise than by mail, such notice shall be deemed to be given when either handed to the shareholder or delivered to the shareholder&#146;s address as it
appears on the stock records of the Corporation.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-2<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">2.5 <U>Waiver of Notice</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Attendance of a shareholder of the Corporation, either in person or by proxy, at any meeting,
whether annual or special, shall constitute a waiver (i)&nbsp;of lack of notice or defective notice of
such meeting, except where a shareholder at the beginning of the meeting objects to the holding of
the meeting or transacting business at the meeting because of lack of notice or defective notice
and (ii)&nbsp;of objection to consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, unless the shareholder objects to considering
the matter when it is presented. A written waiver of notice of any such meeting waiver, signed by
the shareholder or shareholders entitled to such notice, whether before, at or after the time for
notice or the time of the meeting, shall be equivalent to notice. Neither the business to be
transacted at, nor the purposes of, any meeting need be specified in any written waiver of notice.
Waivers shall be delivered to the Corporation for inclusion in the minutes or filing with the
corporate records, but such delivery and filing shall not be conditions of the effectiveness of the
waiver.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">2.6 <U>Voting List</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">After fixing a record date for a shareholders&#146; meeting, the secretary shall prepare a complete
list of the shareholders entitled to be given notice of the meeting. The list shall be arranged by
voting groups, and within each voting group by class or series of shares, shall be alphabetical
within each class or series, and shall show the address of and the number of shares of each such
class and series that are registered in the name of each shareholder. Such list shall be available
for inspection by any shareholder beginning at the earlier of ten (10)&nbsp;days before the meeting for
which the list was prepared or two (2)&nbsp;business days after the notice is given and continuing
through the meeting, and any adjournment thereof, during ordinary business hours either at a place
within the city where the meeting is to be held, which place shall be specified in the notice of
the meeting or, if not so specified, at the principal office of the Corporation. The list shall be
produced and kept at the place of the meeting during the whole time of the meeting and may be
inspected by any shareholder or an agent or attorney of the shareholder at any time during the
meeting or any adjournment.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">2.7 <U>Quorum</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Except as otherwise required by law, the Articles of Incorporation or these bylaws, the
holders of not less than a majority of the shares entitled to vote at any meeting of the
shareholders, present in person or by proxy, shall constitute a quorum. If a quorum exists, action
on a matter other than the election of directors by a voting group is approved if the votes cast
within the voting group favoring the action exceed the votes cast within the voting group opposing
the action, unless a greater number of affirmative votes is required by law or by the Articles of
Incorporation. Cumulative voting shall not be permitted in the election of directors or otherwise.
At each election for directors, each shareholder entitled to vote at such election has the right to
vote all of the shareholder&#146;s votes for as many persons as there are directors to be elected and
for whose election the shareholder has a right to vote. In an election of directors, that
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-3<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">number of candidates equaling the number of directors to be elected, having the highest number
of votes cast in favor of their election, are elected to the board of directors. Once a share is
present for any purpose at a meeting, including the purpose of determining that a quorum exists, it
is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of
the meeting, unless otherwise provided in the Articles of Incorporation or unless a new record date
is or shall be set for that adjourned meeting. If a quorum shall fail to attend any meeting, the
chairman of the meeting may adjourn the meeting from time to time, without notice if the time and
place are announced at the meeting, until a quorum shall be present. At such adjourned meeting at
which a quorum is present, any business may be transacted which might have been transacted at the
original meeting. If the adjournment is for more than thirty (30)&nbsp;days or if after the adjournment
a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record entitled to vote at the meeting.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">2.8 <U>Record Date</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In order that the Corporation may determine the shareholders entitled to notice of or to vote
at any meeting or at any adjournment of a meeting of shareholders; entitled to receive payment of
any dividend or other distribution or allotment of any rights; entitled to exercise any rights in
respect of any change, conversion or exchange of stock; or for the purpose of any other lawful
action; the board of directors may fix, in advance, a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by the board of
directors. The record date shall not be fixed more than seventy (70)&nbsp;days before the date of the
proposed action. If no record date is fixed: (i)&nbsp;the record date for determining shareholders
entitled to notice of or to vote at any meeting shall be the close of business on the day
immediately preceding the day on which notice is given or, if notice is waived by all shareholders,
at the close of business on the day immediately preceding the day on which the meeting is held; and
(ii)&nbsp;the record date for determining shareholders for any other purpose shall be at the close of
business on the day on which the board of directors adopts the resolution relating to such other
purpose. A determination of shareholders of record entitled to notice of or to vote at a meeting
of shareholders shall apply to any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting, and the board of directors shall set
a new record date if the meeting is adjourned to a date more than one hundred twenty (120)&nbsp;days
after the date fixed for the original meeting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Notwithstanding the above, the record date for determining the shareholders entitled to take
action without a meeting or entitled to be given notice of action so taken shall be the date a
writing upon which the action is taken is first received by the Corporation. The record date for
determining shareholders entitled to demand a special meeting shall be the date of the earliest of
any of the demands pursuant to which the meeting is called, or the date that is sixty (60)&nbsp;days
before the date the first of such demands is received by the corporation, whichever is later.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">2.9 <U>Procedure</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The order of business and all other matters of procedure at every meeting of the shareholders
may be determined by the presiding officer.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-4<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">2.10 <U>Advance Notice of Shareholder Proposals and Director Nominations</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Shareholders may nominate one or more persons for election as directors at the annual meeting
of shareholders or propose business to be brought before the annual meeting of shareholders, or
both, only if (i)&nbsp;such business is a proper matter for shareholder action under applicable Colorado
law, (ii)&nbsp;the shareholder has given timely notice in proper written form of such shareholder&#146;s
intent to make such nomination or nominations or to propose such business, and (iii)&nbsp;the
shareholder is eligible to submit a proposal pursuant to Rule&nbsp;14a-8 under the Securities Exchange
Act of 1934, as amended (the &#147;Exchange Act&#148;), or &#167;7-107-102 of the Act.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">To be timely, a shareholder&#146;s notice relating to the annual meeting shall be delivered to the
secretary at the principal executive offices of the Corporation not less than 120 or more than 180
days prior to the first anniversary (the &#147;Anniversary&#148;) of the date on which the Corporation first
mailed its proxy materials for the preceding year&#146;s annual meeting of shareholders. However, if the
date of the annual meeting is advanced more than 30&nbsp;days prior to or delayed by more than 30&nbsp;days
after the Anniversary of the preceding year&#146;s annual meeting, then notice by the shareholder to be
timely must be delivered to the secretary at the principal executive offices of the Corporation not
later than the close of business on the later of (i)&nbsp;the 90th day prior to such annual meeting or
(ii)&nbsp;the 15th day following the day on which public announcement of the date of such meeting is
first made.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">To be in proper form a shareholder&#146;s notice to the secretary shall be in writing and shall set
forth (i)&nbsp;the name and address of the shareholder who intends to make the nomination(s) or propose
the business and, as the case may be, of the person or persons to be nominated or of the business
to be proposed, (ii)&nbsp;a representation as to the number of shares held of record by such
shareholder, that the shareholder intends to vote such stock at such meeting and, in the case of
nomination of a director or directors, intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, (iii)&nbsp;in the case of nomination of a
director or directors, a description of all arrangements or understandings between the shareholder
and each nominee or any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the shareholder, (iv)&nbsp;such other information
regarding each nominee or each matter of business to be proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to Regulation&nbsp;14A promulgated by the
Securities and Exchange Commission pursuant to the Exchange Act, had the nominee been nominated, or
intended to be nominated, or the matter been proposed, or intended to be proposed, by the board of
directors of the Corporation and (v)&nbsp;in the case of nomination of a director or directors, the
consent of each nominee to serve as a director of the Corporation if so elected.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Chairman of a meeting of shareholders may refuse to acknowledge the nomination of any
person or the proposal of any business not made in compliance with the foregoing procedures.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Notwithstanding the foregoing provisions of this section, a shareholder shall also comply with
all applicable requirements of the Exchange Act and the rules and regulations thereunder with
respect to matters set forth in this section. Nothing in this section shall affect any rights of
shareholders to request inclusion of proposals in the Corporation&#146;s proxy statement pursuant to Rule&nbsp;14a-8 under the Exchange Act. Nothing in this section shall affect any
rights of shareholders, if any, to have any nominee included in the Corporation&#146;s proxy statement
pursuant to Rule&nbsp;14a-8 under the Exchange Act.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-5<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE III</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DIRECTORS</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.1 <U>Number</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Except as otherwise fixed pursuant to the provisions of the Articles of Incorporation, the
number of directors shall be fixed from time to time exclusively by resolutions adopted by the
board of directors; provided, however, that the number of directors shall at no time be less than
three (3)&nbsp;nor more than fifteen (15); provided, however, that no decrease in the number of
directors constituting the board of directors shall shorten the term of any incumbent director; and
provided, further, that a newly created directorship established by the election of an additional
member of the board by the board of directors shall be deemed to automatically increase the size of
the board by one (1).
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.2 <U>Chairman of the Board</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The chairman, if present, shall preside at all meetings of shareholders and of the board and
shall perform all duties incident to the office of chairman of the board and all such other duties
as may from time to time be assigned to the chairman by the board or by these bylaws.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.3 <U>Election and Terms</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">A director shall hold office until the annual shareholders&#146; meeting for the year in which the
director&#146;s term expires and thereafter until a successor shall be elected and qualified, subject,
however, to such director&#146;s prior death, resignation, retirement, disqualification or removal from
office.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.4 <U>Newly Created Directorships and Vacancies</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Except as otherwise fixed pursuant to the provisions of the Articles of Incorporation, newly
created directorships resulting from any increase in the number of directors and any vacancies on
the board of directors resulting from death, resignation, disqualification, removal or other cause
shall be filled by (i)&nbsp;the board of directors, (ii)&nbsp;the affirmative vote of a majority of the
remaining directors then in office or a sole remaining director, even though less than a quorum of
the board of directors, or (iii)&nbsp;by the shareholders at the next annual meeting or at a special
meeting called for that purpose. Any director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term of the new directorship which was created or
the unexpired term of the director&#146;s predecessor in office in which the vacancy occurred and until
such director&#146;s successor shall have been elected and qualified.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-6<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.5 <U>Regular Meetings</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The first meeting of each newly elected board of directors elected at the annual meeting of
shareholders shall be held immediately after and at the same place as, the annual meeting of the
shareholders, provided a quorum is present, and no notice of such meeting shall be necessary in
order to legally constitute the meeting. Regular meetings of the board of directors shall be held
at such times and places as the board of directors may from time to time determine.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.6 <U>Special Meetings</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Special meetings of the board of directors may be called at any time, at any place and for any
purpose by the chairman of the board, the chief executive officer, the president or by a majority
of the entire board of directors.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.7 <U>Notice of Meetings</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Notice of regular meetings of the board of directors need not be given. Notice of every
special meeting of the board of directors shall be given to each director at his usual place of
business or at such other address as shall have been furnished by him for such purpose. Such
notice shall be properly and timely given if it is: (i)&nbsp;deposited in the United States mail not
later than the third calendar day preceding the date of the meeting or (ii)&nbsp;personally delivered,
telegraphed, sent by facsimile transmission or communicated by telephone at least twenty-four hours
before the time of the meeting. Such notice need not include a statement of the business to be
transacted at, or the purpose of, any such meeting.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.8 <U>Waiver</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Attendance of a director at a regular or special meeting of the board of directors shall
constitute a waiver of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened, and does not thereafter vote for or assent
to action taken at the meeting. A written waiver of notice signed by a director or directors
entitled to such notice, whether before, at, or after the time for notice or the time of the
meeting, shall be equivalent to the giving of such notice. Such waiver shall be delivered to the
secretary for filing with the corporate records, but such delivery and filing shall not be
conditions of the effectiveness of the waiver.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.9 <U>Quorum and Voting</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Except as may be otherwise provided by law, the Articles of Incorporation or in these bylaws,
the presence of a majority of the total number of directors then in office immediately before the
meeting begins shall be necessary and sufficient to constitute a quorum for the transaction of
business at any meeting of the board of directors, and the affirmative act of a majority of the
directors present at a meeting at which a quorum is present shall be deemed the act of the board of
directors. Less than a quorum may adjourn any meeting of the board of directors from time to time
without notice. A director who is present at the meeting of the board of directors when corporate
action is taken is deemed to have assented to all action taken at the
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-7<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">meeting unless: (i)&nbsp;the director objects at the beginning of the meeting, or promptly upon
his/her arrival, to holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to any action taken at the meeting; (ii)&nbsp;the director
contemporaneously requests that the director&#146;s dissent or abstention as to any specific action
taken be entered in the minutes of the meeting; or (iii)&nbsp;the director causes written notice of the
his/her dissent or abstention as to any specific action to be received by the presiding officer of
the meeting before the adjournment of the meeting or by the secretary (or, if the director is the
secretary, by another director) promptly after adjournment of the meeting. The right of dissent or
abstention as to a specific action in not available to a director who votes in favor or the action
taken.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.10 <U>Participation in Meetings by Telephone</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Members of the board of directors, or of any committee thereof, may participate in any meeting
of such board or committee by means of conference telephone or other means of communication by
which all persons participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.11 <U>Powers</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The business, property and affairs of the Corporation shall be managed by or under the
direction of its board of directors, which shall have and may exercise all the powers of the
Corporation to do all such lawful acts and things as are not by law, by the Articles of
Incorporation or by these bylaws, directed or required to be exercised or done by the shareholders.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.12 <U>Compensation of Directors</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Directors shall receive such compensation for their services as shall be determined by a
majority of the entire board of directors, provided that directors who are serving the Corporation
as officers or employees and who receive compensation for their services as such officers or
employees shall not receive any salary or other compensation for their services as directors.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3.13 <U>Action Without a Meeting</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Unless otherwise restricted by the Articles of Incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the board of directors or any committee thereof
may be taken without a meeting if written consent thereto is signed by all members of the board of
directors or such committee, as the case may be, and such written consent is filed with the minutes
of proceedings of the board or committee. Any such consent may be signed in counterparts and shall
be effective on the date of the last signature thereon unless otherwise provided therein or unless,
before such time as the last director signs, any director has revoked his/her consent by a writing
received by the secretary of the corporation. Action taken pursuant to written consent has the
same effect as action taken at a meeting of directors and may be described as such in any document.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE IV</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>COMMITTEES</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">4.1 <U>Designation of Committees</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The board of directors may establish committees for the performance of delegated or designated
functions to the extent permitted by law, each committee to consist of one or more members of the
board of directors. The creation of a committee and appointment of members to it shall require
approval by a majority of all the directors in office when the action is taken.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">4.2 <U>Committee Powers and Authority</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The board of directors may provide, by resolution or by amendment to these bylaws, that a
committee may exercise all the power and authority of the board of directors in the management of
the business and affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; <U>provided</U>, <U>however</U>, that a committee may
not exercise the power or authority of the board of directors in reference to authorizing
distributions; approving or proposing to shareholders action that the Act require to be approved by
shareholders; amending the Articles of Incorporation; filling vacancies on the board of directors
or on any of its committees; approving a plan of merger or conversion not requiring shareholder
approval; authorizing or approving reacquisition of shares except according to a formula or method
prescribed by the board of directors; authorizing or approving the issuance or sale of shares, or a
contract for the sale of shares, or determination of the designation and relative rights,
preferences, and limitations of a class or series of shares, except that the board of directors may
authorize a committee or an officer to do so within limits specifically prescribed by the board of
directors; or adopting, amending or repealing these bylaws.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">4.3 <U>Committee Procedures</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">To the extent the board of directors or the committee does not establish other procedures for
the committee, each committee shall be governed by the procedures established in Section&nbsp;3.3
(except as they relate to an annual meeting of the board of directors) and Sections&nbsp;3.4, 3.5, 3.6,
3.7, 3.9, 3.10, 3.12, and 3.13 of these bylaws, as if the committee were the board of directors.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">4.4 <U>Director Responsibility</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The creation of, delegation of authority to, or action by committee does not alone constitute
compliance by a director with the standards of conduct described in section 7-108-401 of the Act.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-9<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE V</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>OFFICERS</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.1 <U>Number</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The officers of the Corporation shall be appointed or elected by the board of directors. The
officers shall be a chief executive officer, a president, such number, if any, of executive vice
presidents as the board of directors may from time to time determine, such number, if any, of vice
presidents as the board of directors may from time to time determine, a secretary, such number, if
any, of assistant secretaries as the board of directors may from time to time determine, and a
chief financial officer. Any person may hold two (2)&nbsp;or more offices at the same time except the
offices of chief executive officer and secretary and the offices of president and secretary.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.2 <U>Additional Officers</U>.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">The board of directors may appoint such other officers as it shall deem appropriate.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.3 <U>Term of Office, Resignation</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">All officers, agents and employees of the Corporation shall hold their respective offices or
positions at the pleasure of the board of directors and may be removed at any time by the board of
directors with or without cause. Any officer may resign at any time by giving written notice of
his resignation to the chief executive officer, the president, or to the secretary, and acceptance
of such resignation shall not be necessary to make it effective unless the notice so provides. Any
vacancy occurring in any office shall be filled by the board of directors.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.4 <U>Chief Executive Officer</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The chief executive officer shall be chief executive officer of the Corporation and, subject
to the direction and control of the board of directors, shall manage the business of the
Corporation. The chief executive officer shall preside at all meetings of the shareholders and
directors at which such officer may be present unless the board of directors has appointed a
chairman, vice chairman, or other officer of the board to preside at such meetings. The chief
executive officer may execute contracts, deeds and other instruments on behalf of the Corporation.
The chief executive officer shall have full authority on behalf of the Corporation to attend any
meeting, give any waiver, cast any vote, grant any discretionary or directed proxy to any person,
and exercise any other rights of ownership with respect to any shares of capital stock or other
securities held by the Corporation and issued by any other corporation or with respect to any
partnership, trust or similar interest held by the Corporation.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-10<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.5 <U>President</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The president, if any, shall be the officer next in rank after the chief executive officer.
The president may execute contracts, deeds and other instruments on behalf of the Corporation. In
the absence of the chief executive officer or in the event of his disability, inability or refusal to act, the president shall perform the duties and exercise the power of
the chief executive officer. The president shall have full authority on behalf of the Corporation
to attend any meeting, give any waiver, cast any vote, grant any discretionary or directed proxy to
any person, and exercise any other rights of ownership with respect to any shares of capital stock
or other securities held by the Corporation and issued by any other corporation or with respect to
any partnership, trust or similar interest held by the Corporation.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.6 <U>Executive Vice President</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Each executive vice president, if any, shall perform such functions as may be prescribed by
the board of directors, the chairman of the board, the chief executive officer or the president.
Each executive vice president may execute contracts, deeds and other instruments on behalf of the
Corporation. Each executive vice president shall have full authority on behalf of the Corporation
to attend any meeting, give any waiver, cast any vote, grant any discretionary or directed proxy to
any person, and exercise any other rights of ownership with respect to any shares of capital stock
or other securities held by the Corporation and issued by any other corporation or with respect to
any partnership, trust or similar interest held by the Corporation. Each executive vice president
shall perform such other duties as the board, the chief executive officer or the president may from
time to time prescribe or delegate to him.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.7 <U>Vice President</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Each vice president, if any, shall perform such functions as may be prescribed by the board of
directors, the chief executive officer, the president, or any executive vice president. Each vice
president may execute contracts, deeds and other instruments on behalf of the Corporation. The
vice president shall have full authority on behalf of the Corporation to attend any meeting, give
any waiver, cast any vote, grant any discretionary or directed proxy to any person, and exercise
any other rights of ownership with respect to any shares of capital stock or other securities held
by the Corporation and issued by any other corporation or with respect to any partnership, trust or
similar interest held by the Corporation. Each vice president shall perform such other duties as
the board, the chief executive officer, the president or any executive vice president may from time
to time prescribe or delegate to him.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.8 <U>Secretary</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The secretary shall give, or cause to be given, notice of all meetings of the shareholders
and, upon the request of a person entitled to call a special meeting of the board of directors, he
shall give notice of any such special meeting. The secretary shall keep the minutes of all
meetings of the shareholders, the board of directors or any committee established by the board of
directors. The secretary shall be responsible for the maintenance of all records of the
Corporation and may attest documents on behalf of the Corporation. The secretary shall perform
such other duties as the board, the chief executive officer, the president or any vice president
may from time to time prescribe or delegate to him.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-11<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.9 <U>Assistant Secretary</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Each assistant secretary, if any, shall, in general, perform the duties as may be prescribed
by the secretary or by the chief executive officer, president, or by the board of directors from time to time. Any assistant secretary or secretaries, when authorized by the
board of directors, may sign with the president or a vice president certificates for the
Corporation&#146;s shares, the issuance of which have been authorized by a resolution of the board of
directors.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.10 <U>Chief Financial Officer</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The chief financial officer shall also be the treasurer of the Corporation and shall be
responsible for the control of the funds of the Corporation and the custody of all securities owned
by the Corporation. The chief financial officer shall perform such other duties as the board, the
chief executive officer or the president may from time to time prescribe or delegate to him.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">5.11 <U>Compensation</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Officers shall receive such compensation, if any, for their services as may be authorized or
ratified by the board of directors. Election or appointment as an officer shall not of itself
create a right to compensation for services performed as such officer.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE VI</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.1 <U>Definitions</U>. As used in this Article&nbsp;VI:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;&#147;Corporation&#148; includes any domestic or foreign entity that is a predecessor of the
Corporation by reason of a merger or other transaction in which the predecessor&#146;s existence ceased
upon consummation of the transaction.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;&#147;Director&#148; means an individual who is or was a director of the Corporation or an
individual who, while a director of the Corporation, is or was serving at the Corporation&#146;s request
as a director, officer, partner, manager, member, trustee, employee, fiduciary or agent of, or in
any similar managerial or fiduciary position of, another domestic or foreign entity or of an
employee benefit plan. A director is considered to be serving an employee benefit plan at the
Corporation&#146;s request if his or her duties to the Corporation also impose duties on, or otherwise
involve services by, the director to the plan or to participants in or beneficiaries of the plan.
&#147;Director&#148; includes, unless the context requires otherwise, the estate or personal representative
of a director.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">(c) &#147;Expenses&#148; includes counsel fees.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(d)&nbsp;&#147;Liability&#148; means the obligation incurred with respect to a proceeding to pay a judgment,
settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit
plan, or reasonable expenses.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(e)&nbsp;&#147;Official capacity&#148; means, when used with respect to a director, the office of director in
the Corporation and, when used with respect to a person other than a director as contemplated in
Section&nbsp;6.7, the office in the Corporation held by the officer or the employment, fiduciary or
agency relationship undertaken by the employee, fiduciary or agent on behalf of the
Corporation. &#147;Official capacity&#148; does not include service for any other domestic or foreign
entity or employee benefit plan.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(f)&nbsp;&#147;Party&#148; includes a person who was, is or is threatened to be made, a named defendant or
respondent in a proceeding.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(g)&nbsp;&#147;Proceeding&#148; means any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative and whether formal or informal.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.2 <U>Authority to Indemnify Directors</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;Except as provided in Section&nbsp;6.2(d), the Corporation shall indemnify a person made a
party to a proceeding because the person is or was a director against liability incurred in the
proceeding if:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%">(i)&nbsp;The person conducted himself or herself in good faith; and
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%">(ii)&nbsp;The person reasonably believed:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 11%">(A)&nbsp;In the case of conduct in an official capacity with the Corporation, that his or
her conduct was in the Corporation&#146;s best interests; and
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 11%">(B)&nbsp;In all other cases, that such conduct was at least not opposed to the Corporation&#146;s
best interests; and
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(iii)&nbsp;In the case of any criminal proceeding, the person had no reasonable cause to
believe his or her conduct was unlawful.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;A director&#146;s conduct with respect to an employee benefit plan for a purpose the director
reasonably believed to be in the interests of the participants in or beneficiaries of the plan is
conduct that satisfies the requirement of Section&nbsp;6.2(a)(ii)(B). A director&#146;s conduct with respect
to an employee benefit plan for a purpose that the director did not reasonably believe to be in the
interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the
requirements of Section&nbsp;6.2(a)(i).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;The termination of a proceeding by judgment, order, settlement, conviction or upon a plea
of nolo contendere or its equivalent is not, of itself, determinative that the director did not
meet the standard of conduct described in this Section&nbsp;6.2.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(d)&nbsp;Except to the extent authorized by a court as provided in the Act, the Corporation may not
indemnify a director under this Section&nbsp;6.2:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(i)&nbsp;In connection with a proceeding by or in the right of the Corporation in which the
director was adjudged liable to the Corporation; or
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(ii)&nbsp;In connection with any other proceeding charging that the director derived an
improper personal benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that he or
she derived an improper personal benefit.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(e)&nbsp;Indemnification permitted under this Section&nbsp;6.2 in connection with a proceeding by or in
the right of the Corporation is limited to reasonable expenses incurred in connection with the
proceeding.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.3 <U>Mandatory Indemnification of Directors</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Corporation shall indemnify a person who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which the person was a party because the person is
or was a director, against reasonable expenses incurred by the person in connection with the
proceeding.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.4 <U>Advance of Expenses to Directors</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;The Corporation shall pay for or reimburse the reasonable expenses incurred by a director
who is a party to a proceeding in advance of final disposition of the proceeding, within ten (10)
days after receipt by the Corporation of a statement or statements reasonably evidencing the
expenses incurred, if:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(i)&nbsp;The director furnishes to the Corporation a written affirmation of the director&#146;s
good faith belief that the director has met the standard of conduct described in Section
6.2.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(ii)&nbsp;The director furnishes to the Corporation a written undertaking, executed
personally or on the director&#146;s behalf, to repay the advance if it is ultimately determined
that the director did not meet the standard of conduct; and
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(iii)&nbsp;A determination is made that the facts then known to those making the
determination would not preclude indemnification under this Article&nbsp;VI.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;The undertaking required by Section&nbsp;6.4(a)(ii) shall be an unlimited general obligation of
the director but need not be secured and may be accepted without reference to financial ability to
make repayment.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;Determinations and authorizations of payments under this Section&nbsp;6.4 shall be made in the
manner specified in Section&nbsp;6.6.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">6.5 <U>Court-Ordered Indemnification of Directors</U>. Notwithstanding a determination that
the director did not meet the standard of conduct set forth in Section&nbsp;6.2(a) or the fact that the
director was adjudged liable in the circumstances described in Section&nbsp;6.2(d), a director who is or
was a party to a proceeding may apply for indemnification to the court conducting the proceeding or
to another court of competent jurisdiction. Neither the failure of the Corporation to have made a
determination prior to the commencement of such action that the director is entitled to
indemnification hereunder, nor an actual determination by the Corporation that the director is not
entitled to indemnification hereunder, shall be a defense to the action or create any presumption
that such person is not entitled to indemnification hereunder.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.6 <U>Determination and Authorization of Indemnification of Directors</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;Except to the extent authorized by a court as provided in the Act, the Corporation shall
not indemnify a director under Section&nbsp;6.2 unless authorized in the specific case after a
determination has been made that indemnification of the director is permissible in the
circumstances because the director has met the standard of conduct set forth in Section&nbsp;6.2. The
Corporation shall not advance expenses to a director under Section&nbsp;6.4 unless authorized in the
specific case after the written affirmation and undertaking required by Section&nbsp;6.4(a)(i) and
6.4(a)(ii) are received and the determination required by Section&nbsp;6.4(a)(iii) has been made.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">(b)&nbsp;The determinations required by Section&nbsp;6.6(a) shall be made:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(i)&nbsp;By the board of directors by a majority vote of those present at a meeting at which
a quorum is present, and only those directors not parties to the proceeding shall be counted
in satisfying the quorum; or
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(ii)&nbsp;If a quorum cannot be obtained, by a majority vote of a committee of the board of
directors designated by the board of directors, which committee shall consist of two or more
directors not parties to the proceeding; except that directors who are parties to the
proceeding may participate in the designation of directors for the committee.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;If a quorum cannot be obtained as contemplated in Section&nbsp;6.6(b)(i), and a committee
cannot be established under Section&nbsp;6.6(b)(ii), or even if a quorum is obtained or a committee is
designated, if a majority of the directors constituting such quorum or such committee so directs,
the determination required to be made by Section&nbsp;6.6(a) shall be made:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 8%">(i)&nbsp;By independent legal counsel selected by a vote of the board of directors or the
committee in the manner specified in Section&nbsp;6.6(b)(i) or 6.6(b)(ii), or, if a quorum of the
full board cannot be obtained and a committee cannot be established, by independent legal
counsel selected by a majority vote of the full board of directors; or
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%">(ii)&nbsp;By the shareholders.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(d)&nbsp;Authorization of indemnification and advance of expenses shall be made in the same manner
as the determination that indemnification or advance of expenses is permissible; except that, if
the determination that indemnification or advance of expenses is required or permissible is made by
independent legal counsel, authorization of indemnification and advance of expenses shall be made
by the body that selected such counsel.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(e)&nbsp;Any indemnification requested by a director under Section&nbsp;6.2 shall be made no later than
forty-five (45)&nbsp;days after receipt of the written request of such person unless a determination is
made within said forty-five (45)&nbsp;day period by the persons authorized pursuant to Section&nbsp;6.6 that
such director is not entitled to indemnification hereunder.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.7 <U>Indemnification of Officers, Employees, Fiduciaries, and Agents</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;The Corporation shall indemnify and advance expenses to an officer to the same extent as a
director.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;The Corporation may indemnify and advance expenses to an employee, fiduciary or agent of
the Corporation to the same extent as to a director.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;The Corporation may also indemnify and advance expenses to an officer, employee, fiduciary
or agent who is not a director to a greater extent than is provided in these bylaws, if not
inconsistent with public policy, and if provided for by general or specific action of its board of
directors or shareholders or by contract.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">6.8 <U>Insurance</U>. The Corporation may purchase and maintain insurance on behalf of a
person who is or was a director, officer, employee, fiduciary or agent of the Corporation, or who,
while a director, officer, employee, fiduciary or agent of the Corporation, is or was serving at
the request of the Corporation as a director, officer, partner, manager, member, trustee, employee,
fiduciary or agent of another domestic or foreign entity or of an employee benefit plan, against
liability asserted against or incurred by the person in that capacity or arising from his or her
status as a director, officer, employee, fiduciary or agent, whether or not the Corporation would
have power to indemnify the person against the same liability under Section&nbsp;6.2, 6.3, or 6.7. Any
such insurance may be procured from any insurance company designated by the board of directors,
whether such insurance company is formed under the laws of the State of Colorado or any other
jurisdiction of the United States or elsewhere, including any insurance company in which the
Corporation has an equity or any other interest through stock ownership or otherwise.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">6.9 <U>Notice to Shareholders of Indemnification of Director</U>. If the Corporation
indemnifies or advances expenses to a director under this Article&nbsp;VI in connection with a
proceeding by or in the right of the Corporation, the Corporation shall give written notice of the
indemnification or advance to the shareholders with or before the notice of the next shareholders
meeting. If the next shareholder action is taken without a meeting at the instigation of the board
of directors, such notice shall be given to the shareholders at or before the time the first
shareholder signs a writing consenting to such action.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">6.10 <U>Settlements</U>. Costs, charges or expenses of investigating or defending a
proceeding for which indemnity will be sought hereunder may be incurred without the Corporation&#146;s
consent, provided that no settlement of any such proceeding may be made without the Corporation&#146;s
consent, which consent shall not be unreasonably withheld.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.11 <U>Subrogation</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In the event of payment under these bylaws, the indemnifying party or parties shall be
subrogated to the extent of such payment to all of the rights of recovery of the indemnified person
therefor and such indemnified person shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such documents necessary to
enable the indemnifying party or parties to effectively bring suit to enforce such rights.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.12 <U>Presumptions</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In making a determination with respect to entitlement to indemnification hereunder, the person
or persons or entity making such determination shall presume that such person is entitled to
indemnification under this Article&nbsp;VI, and the Corporation shall have the burden of proof to
overcome that presumption in connection with the making by any person, persons or entity of any
determination contrary to that presumption.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.13 <U>Exception to Right of Indemnification or Advancement of Expenses</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Notwithstanding any other provision of these bylaws, no person shall be entitled to
indemnification or advancement of expenses under these bylaws with respect to any proceeding
brought by such person, unless the bringing of such proceeding or making of such claim shall have
been approved by the board of directors.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.14 <U>Contract</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The foregoing provisions of this Article&nbsp;VI shall be deemed to be a contract between the
Corporation and each director and officer who serves in such capacity at any time while this bylaw
is in effect, and any repeal or modification thereof shall not affect any rights or obligations
then existing with respect to any state of facts then or theretofore existing or any proceeding
theretofore or thereafter brought based in whole or in part upon any such state of facts.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The foregoing rights of indemnification shall not be deemed exclusive of any other rights to
which any director or officer may be entitled apart from the provisions of this <U>Article&nbsp;VI</U>.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6.15 <U>Surviving Corporation</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The board of directors may provide by resolution that references to &#147;the Corporation&#148; in this
Article shall include, in addition to this Corporation, all constituent corporations absorbed in a
merger with this Corporation so that any person who was a director or officer of such a constituent
corporation or is or was serving at the request of such constituent corporation as a director,
officer, partner, manager, member, trustee, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust or other entity shall stand in the same position under the
provisions of this Article with respect to this Corporation as such person would if such person had
served this Corporation in the same capacity or is or was so serving such other entity at the
request of this Corporation, as the case may be.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE VII</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CAPITAL STOCK</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">7.1 <U>Certificates</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Shares of stock of the Corporation shall be represented by certificates, or shall be
uncertificated shares that may be evidenced by a book-entry system, or a combination of both.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Each certificate shall be signed by or in the name of the Corporation by (i)&nbsp;the chief
executive officer, the president, or any executive vice president or vice president and (ii)&nbsp;the
secretary or an assistant secretary. Any or all the signatures on the certificate may be a
facsimile. The rights and obligations of shareholders are not affected by the fact that their
shares are not represented by certificates. Within a reasonable time after the issuance or
transfer of shares without certificates, the Corporation shall send to the shareholder a written
statement of the information required on certificates by the Act.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">7.2 <U>Facsimile Signatures</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In case any officer, transfer agent, or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued by the Corporation with the same
effect as if he, she or it was such officer, transfer agent, or registrar at the date of issue.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">7.3 <U>Registered Shareholders</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Corporation shall be entitled to treat the holder of record of any share or shares of
stock of the Corporation as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on the part of any
other person, whether or not it has actual or other notice thereof, except as provided by law.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">7.4 <U>Cancellation of Certificates</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">All certificates surrendered to the Corporation shall be canceled and, except in the case of
lost, stolen or destroyed certificates, no new certificates shall be issued until the former
certificate or certificates for the same number of shares of the same class of stock have been
surrendered and canceled.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">7.5 <U>Lost, Stolen, or Destroyed Certificates</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The board of directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Corporation alleged to have been lost,
stolen, or destroyed upon the making of an affidavit of that fact by the person claiming the
certificate or certificates to be lost, stolen, or destroyed. In its discretion, and as a
condition precedent to the issuance of any such new certificate or certificates, the board of
directors may require that the owner of such lost, stolen or destroyed certificate or certificates,
or such person&#146;s legal representative, give the Corporation and its transfer agent or agents,
registrar or registrars a bond in such form and amount as the board of directors may direct as
indemnity against any claim that may be made against the Corporation and its transfer agent or
agents, registrar or registrars on account of the alleged loss, theft, or destruction of any such
certificate or the issuance of such new certificate.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-18<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">7.6 <U>Transfer of Shares</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Certificated shares of stock shall be transferable on the books of the Corporation by the
holder thereof, in person or by duly authorized attorney, upon the surrender of the certificate or certificates representing the shares to be transferred, properly endorsed, with
such proof or guarantee of the authenticity of the signature as the Corporation or its agents may
reasonably require. Uncertificated shares shall be transferable on the books of the Corporation
upon the written instruction from the registered owner of such uncertificated shares or from a duly
authorized attorney with such proof or guarantee of the authenticity of such instructions as the
Corporation or its agents may reasonably require.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">7.7 <U>Transfer Agents and Registrars</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Corporation may have one or more transfer agents and one or more registrars of its stock,
whose respective duties the board of directors may, from time to time, define. No certificate of
stock shall be valid until countersigned by a transfer agent, if the Corporation shall have a
transfer agent, or until registered by the registrar, if the Corporation shall have a registrar.
The duties of transfer agent and registrar may be combined.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE VIII</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SEAL</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">8.1 <U>Seal</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The board of directors may adopt and provide a seal which shall be circular in form and shall
bear the name of the Corporation and the words &#147;Seal&#148; and &#147;Colorado,&#148; and which, if adopted, shall
constitute the corporate seal of the Corporation.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE IX</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>FISCAL YEAR</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">9.1 <U>Fiscal Year</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The fiscal year for the Corporation shall be determined from time to time by the board of
directors.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE X</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>AMENDMENTS</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">10.1 <U>Amendments</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Subject to the provisions of the Articles of Incorporation, these bylaws may be altered,
amended, or repealed at any regular meeting of the shareholders (or at any special meeting thereof
duly called for that purpose) by a majority vote of the shares represented and entitled to vote at
such meeting, provided that in the notice of such special meeting, notice of such purpose shall be
given. Subject to the laws of the State of Colorado, the Articles of Incorporation and these
bylaws, the board of directors may, by majority vote of those present at any meeting at which a
quorum is present, amend these bylaws or enact such other bylaws as in their judgment may be
advisable for the regulation of the conduct of the affairs of the Corporation. The board of directors shall have the power to amend or repeal any bylaw adopted
by the shareholders unless such power is prohibited by the laws of the State of Colorado, the
Articles of Incorporation or by a provision in these Bylaws adopted by shareholders specifying
particular provisions of the Bylaws which may not be amended by the board of directors.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-19<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The undersigned secretary of the Corporation hereby certifies that the foregoing bylaws are
the bylaws of the Corporation in effect as of November&nbsp;30, 2007.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">                                              /s/ Scott Lehman
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Scott Lehman, Secretary&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->C-20<!-- /Folio -->
</DIV>




<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.5in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(PURE CYCLE CORPORATION LOGO)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">MR A SAMPLE<BR>
DESIGNATION (IF ANY)<BR>
ADD 1<BR>
ADD 2<BR>
ADD 3<BR>
ADD 4

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Least Address Line</B><BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mark this box with an X if you have made<br>
changes to your name or address details above.</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Annual Meeting Proxy Card</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">1 <B>Election of Directors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">1.&nbsp;The Board of Directors recommends a vote FOR the listed nominees.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>For</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Withhold</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>For</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Withhold</B></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">01 &#151; Mark W. Harding
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">04 &#151; Arthur G. Epker, III
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">02 &#151; Harrison H. Augur
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">05 &#151; Richard L. Guido
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">03 &#151; Mark D. Campbell
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">06 &#151; Peter C. Howell
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">07 &#151; George M. Middlemas
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>2 Change of the Company&#146;s State of Incorporation from Delaware to Colorado</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>For</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Against</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Abstain</B></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Board of Directors recommends that the
stockholders vote FOR the reincorporation of
the Company in Colorado
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Ratification of Appointment of Independent Auditors</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>For</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Against</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Abstain</B></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Board of
Directors
recommends a vote
FOR the
ratification of
appointment of the
independent
auditors named in
the proxy statement
for the fiscal year
ending August&nbsp;31,
2008.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>This proxy, when properly executed, will be voted in the manner directed herein by the
stockholder. If no instructions are specified, this proxy will be voted FOR the election of
directors and proposals 2 and 3.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Authorized Signatures &#151; Sign Here &#151; This section must be completed for your instructions to
be executed.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy. All joint
holders must sign. When signing as attorney, trustee, executor, administrator, guardian or
corporate officer, please provide your FULL title.<br>
Date (mm/dd/yyyy)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><FONT face="Wingdings">&#111;</FONT>&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; / <FONT face="Wingdings">&#111;</FONT>&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; / <FONT face="Wingdings">&#111;</FONT>&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Signature 2 &#151; Please keep signature within the box<BR>
Signature 1 &#151; Please keep signature within the box
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.5in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Proxy &#151; Pure Cycle Corporation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Proxy Solicited by Board of Directors for Annual Meeting &#151; January&nbsp;15, 2008</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Harrison H. Augur and Mark W. Harding, or either of them, each with the power of substitution,
are hereby authorized to represent and vote the shares of the undersigned, with all the powers
which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of
Pure Cycle Corporation to be held on January&nbsp;15, 2008 at 2PM Mountain time at the offices of Davis,
Graham &#038; Stubbs LLP, 1550 17th Street, Suite&nbsp;500, Denver, CO 80202, or at any postponement or
adjournment thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>In their discretion, the Proxies are authorized to vote upon such other business as may properly
come before the meeting.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(Continued and to be voted on reverse side.)
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>




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