Re: Jelinek - Minor Water Issues

<DKIESQ@aol.com>

tommy will be very upset about the easement issues,,
and we will tell jelnik after closing that he flipped
the contract to someone else, can we close earlier
than the 7th

--- DKIESQ@aol.com wrote:

Gideon has advised me of the following issues which
he says are not major
issues regarding Jelinek's water rights.

Jelinek has pending 2 water matters/cases

which we will have to see
through. Approximate cost to do so for each case is
upwards of $12k per water
matter/case. One matter involves complying with
periodic requirements to
demonstrate diligence in exploiting water rights in
order to keep thorse rights.
Another case involves an application to correct
certain improper
descriptions with respect to grants of certain
water rights (Gideon will get me the
details -- but the Water attorney assures me that
the need to correct the
descriptions does not pose a major water issue).

Jelinek has several ponds on various areas of

the property as well as
the very large lake. The rights with respect to the
ponds are junior rights,
so that during the July and August peak of dry
season when the water levels
in those ponds drop, we do not have rights to refill
them because the senior
right holders basically hold superior rights to use
the limited amount of the
water available at the time

We need to get a new purchase price allocation

and once obtained need
to agree on it with Jelinek. I have asked Bart to
get a new allocation to us
which I will forward to you and George for comment.

As of 4:50 pm today, they still do not have

the property disclosure
statement from the Sellers. I told Bart and Glen
to call Josh, David Kelly and
Jelinek until they get it.

Inconsistent legal descriptions have not been

resolved and will not
likely get resolved until early next week.

Title insurer has not yet agreed to insure

the two easements providing
access to each of the 1200 acres and 400 acres from
the highways. The
easement from the highway to the 1200 acre parcel
is particularly problematic
because it passes over the properties of multiple
owners and lacks a metes and
bounds description (so far -- Gideon, Bart and Glen
are still working on this).
The easement to the 400 acres is over a very small
part of property owned
by one owner, so it may not be that big an issue,
but still they do not have a
metes and bounds description yet.

As of 4:50 PM today, our team has still not

received a copy of the BLM
Lease, though they have asked David Kelly for it
and David Kelly claims not
to have it. I told Bart and Glen to call Jelinek
again.

One other issue that occurred to me when Gideon told
me that they are still
trying to find out whether or not they will be able
to get the current ranch
manager to stay on either permanently or at least
for a short period while
our people learn about the ranch.

Problem is Ranch manager is probably close to
Jelinek who will remain in the
area anyway. Ranch manager likely to find out who
real owners are and
likely to tell Jelinek. Even if we do not retain
ranch manager, ranch hands will
likely talk and he will find out who the owners are
and tell Jelinek.

How do you think we should deal with that issue.

I'll keep you updated as I learn more.

Darren

Darren K. Indyke
Attorney-At-Law
457 Madison Avenue
4th Floor
New York, New York 10022
Tel: 212-750-1176
Fax: 212-750-0381
e-mail: dkiesq@aol.com (mailto:dkiesq@aol.com)

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