EXHIBIT 10.3

EAGLE MOUNTAIN RAILROAD AGREEMENT

This EAGLE MOUNTAIN RAILROAD AGREEMENT (“Agreement”) is dated as of Closing Date
as specified below and is by and between KAISER EAGLE MOUNTAIN, LLC, a Delaware
limited liability company (“KEM”), and EAGLE MOUNTAIN MINING & RAILROAD COMPANY,
LLC, a Delaware limited liability company (“EMMR”). KEM and EMMR are sometimes
referred to individually in this Agreement as a “Party” and collectively as the
“Parties.”

RECITALS

A. The Eagle Mountain Railroad is an approximately 52-mile long private railroad
line located in Riverside County, California that links the Operations Area (as
defined below) to or near the Union Pacific Railroad’s mainline near the Salton
Sea (the “Railroad”). The Railroad traverses both the KEM Railroad Property (as
defined below) and the Railroad Properties (as defined below) and includes
Railroad Equipment and Supplies (as defined below), Railroad Facilities (as
defined below), and Railroad Properties (as defined below). EMMR currently owns
the Railroad.

B. On the Closing Date, Eagle Mountain Acquisition, LLC, (“ECLand”) purchased
KEM from CIL&D, LLC (“CIL&D”) pursuant to that certain Purchase and Sale
Agreement among ECLand, and CIL&D and certain other parties dated June 25, 2015
(the “PA”). KEM owns or controls certain real property, mining claims,
rights-of-way, easements, buildings, houses, facilities, and mining rights,
minerals, rock, rock products and other items related to the Eagle Mountain mine
located in Riverside County, California (collectively the “Eagle Mountain
Property”) as described in EXHIBIT “A” attached hereto. The Railroad traverses
through and uses a limited portion of the Eagle Mountain Property which is
defined below as the “KEM Railroad Property”.

C. Eagle Crest Energy Company (“Eagle Crest”) is the developer of hydro-electric
and water storage projects that, along with other activities related thereto,
would be developed, constructed, maintained and operated on portions of the
Eagle Mountain Property as described in EXHIBIT “B” attached hereto (the
“Project”).

D. In order to effectuate the transactions contemplated by the PA, in addition
to this Agreement, the Parties are entering into a Mining Agreement (as defined
below), Water and Utilities Joint Use Agreement and Mutual Access and Joint Use
Agreement relating to the Eagle Mountain Property (collectively with this
Agreement, the “Transaction Agreements”). EMMR will undertake mining activities
on the Eagle Mountain Property pursuant to the Mining Agreement and may utilize
the Railroad in connection with such mining activities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties agree as follows:

AGREEMENT

1. CONFIRMATION AND INCORPORATION OF RECITALS. The above Recitals and the
definitions provided therein are hereby incorporated into and made a part of
this Agreement.

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2. DEFINITIONS. In addition to the terms defined in the above Recitals and
elsewhere in this Agreement, for purposes of this Agreement the terms set forth
below shall have the following meanings:

2.1 “AFFILIATE” shall mean with respect to any person or entity, another person
or entity that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such person or
entity. With respect to KEM, on and after the Closing Date KEM’s Affiliates
shall be deemed to include, but are not limited to, EC Land, EC Land Holdco,
LLC, and Eagle Crest and their respective successors and assigns. With respect
to EMMR, EMMR’s Affiliates shall be deemed to include, but are not limited to,
CIL&D and Lake Tamarisk Development, LLC and their respective successors and
assigns.

2.2 “BLM” shall mean the United States Bureau of Land Management.

2.3 “CLOSING DATE” shall mean the date on which ECLand acquires KEM pursuant to
the PA.

2.4 “CONSTRUCTION PERIOD” shall mean the period of time during which there is
actual material construction of the Project on the Eagle Mountain Property;
provided, that the Construction Period shall not commence any earlier than the
date of the closing and funding of the construction financing for the Project
and the Construction Period shall not extend at the latest beyond the commercial
operation date of the final generating unit of the Project; provided, that if
after the commercial operation of the first generating unit of the Project
material construction work on the Project on the Eagle Mountain Property ceases
for a period of more than ninety (90) consecutive days, the Construction Period
shall be deemed to have ended.

2.5 “ENVIRONMENTAL LAWS” shall mean those Laws that relate to or regulate
Hazardous Materials or relate to or regulate any activity involving Hazardous
Materials relating to pollution, natural resources damages or the environment or
the use or release into the environment of any Hazardous Materials, including
without limitation, the Comprehensive Environmental Response Compensation and
Liability Act (42 U.S.C. Sections 9601 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. Sections 6901 et seq.), the Clean Air Act (42 U.S.C.
Sections 7401 et seq.), the Clean Water Act (33 U.S.C. Sections 1251 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. Sections 1801 et seq.),
the Toxic Substances Control Act (15 U.S.C. Sections 2601 et seq.), the Safe
Drinking Water Act (42 U.S.C. Sections § 300 et seq.), and the regulations
promulgated pursuant to any of the foregoing and similar state and local laws,
including the Safe Drinking Water and Toxic Enforcement Act of 1986 (California
Health and Safety Code Sections 25249.5 et seq.), the Porter Cologne Water
Quality Control Act (California Water Code, Sections 13000 et seq.) and the
Surface Mining and Reclamation Act (Public Resources Code, Sections 2710 et
seq.), and the Hazardous Substance Account Act (California Health and Safety
Code Sections § 25300 et seq.), and the Hazardous Waste Control Act (California
Health and Safety Code Sections § 25100 et seq.).

2.6 “HAZARDOUS MATERIALS” shall mean: (i) any substance, product, waste or other
material of any nature whatsoever which is or becomes listed or regulated as a
“hazardous waste,” “hazardous substance,” “hazardous material,” “toxic
substance,” “waste,” “pollutant,” “contaminant,” or similar characteristic
pursuant to any federal, state or local statute, law, ordinance, resolution
code, rule, regulation, order or decree as now or at any time hereafter may be
in effect

 

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during the term of this Agreement, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Section 9601, et seq., the Hazardous Materials Transportation Act of
1975, 49 U.S.C. Section 1801 et seq., the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Section 6901 et seq., the Toxic Substance Control Act of
1976, 15 U.S.C. Section 2601 et seq., the Clean Water Act of 1977, 33 U.S.C.
Section 1251 et seq., the Hazardous Substance Account Act (California Health and
Safety Code Sections § 25300 et seq.), the Hazardous Waste Control Act
(California Health and Safety Code Sections § 25100 et seq.) and Sections 25117
and 25316 of the California Health and Safety Code; and (ii) petroleum or crude
oil other than petroleum and petroleum products which are wholly contained
within equipment, regularly operated motor vehicles and approved containers or
tanks.

2.7 “KEM RAILROAD PROPERTY” shall mean that portion of the Eagle Mountain
Property occupied by or to be used by the Railroad and certain rights-of-way for
the benefit of the Railroad, all as described in EXHIBIT “D” attached hereto.

2.8 “KEM PROPERTY RIGHT-OF-WAY” shall mean that certain right-of-way granted by
KEM to EMMR over the KEM Railroad Property in that certain KEM Property
Right-of-Way Agreement attached hereto as EXHIBIT “I”.

2.9 “LAWS” shall mean any federal, state, or local, statute, constitution, rule,
regulation, ordinance, permit, license, requirement, concession, grant,
franchise, agreement, or approval or any determination, judgment, injunction,
order of any governmental authority or other governmental restriction or any
similar form of decision of, or determination by, or any interpretation or
administration of, any of the foregoing, that has jurisdiction over the Railroad
and its operation, repair, maintenance, restoration, improvement, salvage or any
other Railroad Activities or the Project (but solely with respect to KEM or its
Affiliates and not with respect to EMMR) at any level of federal, state or
county government (including agencies thereof), whether in effect as of the date
hereof or thereafter and in each case as amended (including any of the foregoing
pertaining to land use or zoning restrictions).

2.10 “MINING AGREEMENT” shall mean that certain Mining Lease and Agreement
between the Parties dated as of the Closing Date as such agreement may be
amended from time-to-time.

2.11 “OPERATIONS AREA” shall mean that area on the Eagle Mountain Property as
more specifically described in EXHIBIT “E” attached hereto and incorporated
herein by this reference.

2.12 “PROJECT INTERFERENCE” shall mean (i) at any time prior to the end of the
Construction Period, any delay, interference or conflict arising from EMMR’s
activities under this Agreement (including the Railroad Activities and EMMR’s
use of the Railroad or KEM Railroad Properties) with (A) the planning (which, in
this Agreement in all instances, refers to physical access and use of the Eagle
Mountain Property reasonably necessary or reasonably expedient to the
preparation of Project-related engineering reports, surveys (including
geotechnical surveys), plans, and specifications, as well as those site
assessment activities reasonably necessary or reasonably expedient to the
implementation of the Project and obtaining financing therefor) or (B) KEM’s
physical access to and use of the Eagle Mountain Property for the construction
of the Project, in a manner that could reasonably be expected to have an adverse
impact on the Project’s construction schedule or budget, in each case as
reasonably determined and in good faith by KEM; and (ii) after

 

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the Construction Period, any delay, interference or conflict with KEM’s physical
access to and use of the Eagle Mountain Property for the operation or
maintenance of the Project that could reasonably be expected to have a material
impact on the Project’s operation and/or operating budget or otherwise
materially adversely affect the economic returns of the Project, in each case,
after taking into account any mitigations proposed by EMMR. For purposes of this
defined term, an impact shall be presumed to be material if the reasonably
expected economic impact upon the Project equals or exceeds $100,000 or if such
impact could reasonably be expected to interrupt the operation of the Project.

2.13 “RAILROAD ACTIVITIES” shall mean any and all activities undertaken after
the date of this Agreement in connection with the repair, restoration,
maintenance, improvement, operation, use (with use including, but not limited
to, loading, unloading, staging, storage, weighing, or other similar activities)
or salvage in connection with the Railroad, whether on the KEM Railroad Property
or Railroad Properties.

2.14 “RAILROAD ELECTION DEADLINE” shall be the eleventh (11th) anniversary of
the Closing Date except that such date shall be automatically extended for such
period of time that KEM or any of KEM’s Affiliates are in default under any
agreement, document or instrument with EMMR or any of EMMR’s Affiliates. EMMR
shall provide KEM notice of any such default, including the nature of such
default as well as notice and confirmation of any cure. The Railroad Election
Deadline shall be extended for the period of time between the date of such
default and the date of any cure.

2.15 “RAILROAD EQUIPMENT AND SUPPLIES” shall mean all uninstalled rail (whole or
partial sticks of rail), fastenings, ties and ballast, and other similar items
located or stored on the Railroad Properties, KEM Railroad Property and the
Operations Area as of the Effective Date. Railroad Equipment and Supplies also
includes all tools, equipment and vehicles used for Railroad Activities,
including, but not limited to, those items described in EXHIBIT “F” attached
hereto.

2.16 “RAILROAD FACILITIES” shall mean and include (i) all facilities that
exclusively serve the Railroad on the KEM Railroad Properties, (ii) all
facilities that serve the Railroad in any way on the Railroad Properties, and
(iii) the installed components of the Railroad located on the Railroad
Properties and KEM Railroad Properties, including but not limited to the
installed railroad tracks, fastenings, ties and ballast, roadbed, embankment,
bridges, trestles, culverts, crossings, drainage facilities, flood control and
diversion facilities such as berms, rail spurs, rail yards, switching and signal
facilities, access roads, refueling stations and associated equipment an piping,
storage facilities, and other similar items as they now or hereafter exist.

2.17 “RAILROAD PROPERTIES” means and includes the site of the former rail yard
referred to as Ferrum Junction, a right-of-way from the Bureau of Land
Management (“BLM”) related to the Railroad, rights-of-way or other grants of use
from other federal and governmental entities related to the Railroad, various
properties owned in fee and private easements and rights-of-way related to the
Railroad, all as described on Exhibit “C” attached hereto. Railroad Properties
shall also include any causes of action or recoveries related to the Railroad as
may now or hereafter exist. However, for the avoidance of doubt, “Railroad
Properties” shall not include the KEM Railroad Property.

3. CURRENT AND MODIFIED LOCATION OF RAILROAD. The last surveyed location of the
Railroad is generally depicted on EXHIBIT “G” attached hereto. The Railroad
Properties that

 

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existed at the time of the last survey are described and depicted on EXHIBIT “H”
attached hereto. The only property of KEM used or occupied by the Railroad is
the KEM Railroad Property. The location of the Railroad may be changed or
modified over time but any such change or modification on the KEM Railroad
Property shall be subject to the prior written consent of KEM as provided below,
and in no event shall such change or modification result in Project
Interference. For the purpose of this Agreement, the Railroad includes all
future additions, changes and modifications that are made to the location,
physical extent, and permitting of the Railroad, and the Railroad Properties and
the Railroad Facilities. If EMMR desires to make any physical modifications or
additions to the Railroad on the KEM Railroad Property, including the repair or
salvage of the Railroad pursuant to Section 7 below, EMMR shall submit a work
plan describing in reasonable detail the modifications and any additions to be
made to the Railroad and the activities to be undertaken in connection with such
work (a “Work Plan”), and such Work Plan shall be subject to KEM’s review,
comment and approval, not to be unreasonably withheld, conditioned or delayed.
KEM shall have sixty (60) days to review and comment on any such Work Plan. In
the event of any planned material change or amendment to a previously approved
Work Plan, KEM shall have thirty (30 days) to review and comment on the proposed
modification or amendment. The Parties agree that senior officers of each of KEM
and EMMR shall meet in person with over a period of up to three (3) days within
ten (10) days of KEM’s rejection of EMMR’s proposed Work Plan in a good faith
effort to resolve any dispute over a Work Plan. Notwithstanding the forgoing, in
the event emergency repairs are required on the KEM Railroad Property no Work
Plan shall be required but EMMR shall provide to KEM as much detail concerning
the emergency repairs as can be reasonably be provided given the circumstances.
Such emergency repairs shall be conducted in a workmanlike manner and shall not
be allowed to cause any Project Interference. Once the immediate need for action
and repair has passed, EMMR shall submit a Work Plan in accordance with the
provisions of this Section 3 for any follow-up repairs or modifications.

4. TERM.

4.1 INITIAL TERM. The initial term of this Agreement shall be for a period of
forty (40) years from the Closing Date (“Initial Term”) unless sooner terminated
as provided in this Agreement.

4.2 EXTENSION OF TERM. If at the end of the Initial Term of this Agreement, the
Mining Agreement has been extended as provided pursuant to the terms of the
Mining Agreement, then this Agreement shall be automatically extended for up to
three (3) additional twenty (20) year periods, provided that EMMR is not then in
material default under this Agreement beyond any applicable notice and cure
periods, and provided further that such default is cured within such cure
period.

5. GRANT OF KEM RAILROAD PROPERTY RIGHT OF WAY. KEM shall grant EMMR a
right-of-way over that portion of the KEM Railroad Property traversed by the
Railroad for the Term of this Agreement, in the form of the KEM Property
Right-of-Way Agreement attached hereto as EXHIBIT “I” (the “KEM Property
Right-of-Way Agreement”). The Parties shall execute KEM Property Right-of-Way
Agreement concurrently with the execution of this Agreement, and promptly submit
the Property Right-of-Way Agreement for recording in the land records of the
Riverside County, California.

6. EMMR RESPONSIBLE FOR THE RAILROAD AND RAILROAD ACTIVITIES; INDEMNIFICATION BY
EMMR. Except as otherwise provided in this Agreement, EMMR

 

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acknowledges and agrees that it is responsible for all claims, liabilities,
obligations, costs and expenses arising from or directly related to the
ownership of the Railroad or from Railroad Activities.

6.1 INDEMNIFICATION BY EMMR. EMMR shall indemnify, defend and hold KEM and its
current and future Affiliates and its and their respective current and future
employees, officers, shareholders, members, lenders, directors, managers,
agents, and representatives, and its and their respective successors and assigns
(collectively, the “KEM Indemnitees”) harmless from and against any loss,
damage, injury, death, accident, fire or other casualty, liability, claim, fine,
penalty, fee, cost or expense (including but not limited to, reasonable fees,
costs and expenses of any kind incurred by any Person indemnified under this
Agreement in investigating, preparing for, defending against, prosecuting or
providing evidence, providing testimony, producing documents, negotiating and
entering into settlements or taking other action with respect to any threatened
or asserted claim against a Person indemnified under this Agreement (“Legal
Expenses”) and the reasonable fees of other professionals) of any kind or
character to any person or property, including the property of the KEM
Indemnitees, but excluding any lost profits, consequential, special or punitive
damages (other than those required to be paid to a third party pursuant to a
third party claim) (together, the “KEM Losses”), arising from, relating to or
caused by: (a) all claims of whatever nature against KEM arising from or related
to the Railroad Assets or Railroad Activities; (b) all claims of whatever nature
against KEM arising from any act, omission or negligence of EMMR, its
contractors, licensees, agents, servants, employees, invitees or visitors on or
about the KEM Railroad Property; (c) the actual or alleged presence of Hazardous
Materials on the KEM Railroad Property to the extent related to or arising out
of any Railroad Activities; and (d) any environmental claim or claim relating to
violations of Environmental Law after the date of this Agreement relating in any
way to the Railroad Assets located on the KEM Railroad Property or Railroad
Activities on the KEM Railroad Property; provided, however, EMMR will have no
obligation to indemnify a KEM Indemnitee for any KEM Loss or group of items of
KEM Loss arising out of the same event (x) where the total KEM Loss is less than
Fifty Thousand Dollars ($50,000) (y) to the extent the KEM Losses are caused by
or attributable to the negligence or willful misconduct of the KEM Indemnitee,
or (z) to the extent the KEM Losses are caused by or attributable to any breach
of this Agreement by KEM or its Affiliates or subcontractors. Without limiting
the foregoing, until the total of KEM Losses exceed One Hundred Thousand Dollars
($100,000) no claim for indemnification may be made by KEM hereunder and if the
KEM Losses exceed the One Hundred Thousand Dollars ($100,000) basket, KEM may
only seek to recover amounts over the Fifty Thousand Dollars ($50,000) de
minimis threshold.

6.2 INDEMNIFICATION BY KEM. KEM shall indemnify, defend and hold EMMR and its
current and future Affiliates and its and their respective current and future
employees, officers, shareholders, members, directors, managers, agents, and
representatives, and its and their respective successors and assigns
(collectively, the “EMMR Indemnitees”) harmless from and against any loss,
damage, injury, death, accident, fire or other casualty, liability, claim, fine,
penalty, fee, cost or expense (including but not limited to, Legal Expenses and
the reasonable fees of other professionals) of any kind or character to any
person or property, including the property of the EMMR Indemnitees, but
excluding any lost profits, consequential, special or punitive damages (other
than those required to be paid to a third party pursuant to a third party claim)
(together, the “EMMR Losses”, and, together with the KEM Losses, “Losses”),
arising from, relating to or caused by: (a) the construction, maintenance or
operation of the Project; (b) use of the KEM Railroad Property by KEM or its
Affiliates; (c) any negligent or willful act or omission of KEM, its Affiliates,
contractors or agents; (d) any violation or alleged violation by KEM of the
applicable Laws (including any applicable Environmental Laws); and (e) any
breach by KEM of its obligations under this Agreement; provided, however, KEM
will have no obligation to indemnify an EMMR

 

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Indemnitee for any EMMR Loss or group of items of EMMR Loss arising out of the
same event (x) where the total EMMR Loss is less than Fifty Thousand Dollars
($50,000) (y) to the extent the EMMR Losses are caused by or attributable to the
negligence or willful misconduct of the EMMR Indemnitee, or (z) to the extent
the EMMR Losses are caused by or attributable to any breach of this Agreement by
EMMR or its Affiliates or subcontractors. Without limiting the forgoing, until
the total of all EMMR Losses exceed One Hundred Thousand Dollars ($100,000) no
claim for indemnification may be made by EMMR hereunder and if the EMMR Losses
exceed the One Hundred Thousand Dollars ($100,000) basket, EMMR may only seek to
recover amounts over the Fifty Thousand Dollars ($50,000) de minimis threshold.

6.3 INDEMNIFICATION PROCEDURES.

6.3.1 NOTICE OF A CLAIM. As promptly as practicable, and in any event within
thirty (30) days, after a Party shall receive any notice of, or otherwise become
aware of, the commencement of any action, suit or proceeding, the assertion of
any claim, the occurrence of any event, the existence of any fact or
circumstance, or the incurrence of any Losses, for which indemnification is
provided for, by Section 6.1 or 6.2 (an “Indemnification Event”), the Party
entitled to such indemnification (an “Indemnified Party”) shall give written
notice (an “Indemnification Claim”) to the Party from which such indemnification
is (or, under such assumption, could be) sought (an “Indemnifying Party”)
describing in reasonable detail the Indemnification Event and the basis on which
indemnification is (or, under such assumption, could be) sought. If the
Indemnifying Party is not so notified by the Indemnified Party within thirty
(30) days after the date of the receipt by the Indemnified Party or any of its
Affiliates of notice of, or of the Indemnified Party or any of its Affiliates
otherwise becoming aware of, any particular Indemnification Event, to the extent
that such Indemnifying Party is materially prejudiced as a consequence of such
failure, the Indemnifying Party shall be relieved of all liability hereunder in
respect of such Indemnification Event, and in the event that such Indemnifying
Party is materially prejudiced or harmed as a consequence of such failure the
Indemnifying Party shall not be liable for any expenses directly related to the
Losses from such Indemnification Event incurred during the period in which the
Indemnified Party was overdue in giving, and had not given, such notice.

6.3.2 DEFENSE OF A CLAIM. If any Indemnification Event involves the claim of any
third party (a “Third-Party Claim”), the Indemnifying Party (the “Controlling
Person”) shall (whether or not the Indemnified Party is entitled to claim
indemnification under Section 6.1 or 6.2, as the case may be) be entitled to,
and the Indemnified Party shall provide the Controlling Person with the right
to, participate in, and assume sole control over, the defense and settlement of
such Third-Party Claim (with counsel reasonably satisfactory to the Indemnified
Party); provided, however, that (i) the Indemnified Party shall be entitled to
participate in the defense of such Third-Party Claim and to employ counsel at
its own expense to assist in the handling of such Third-Party Claim, and
(ii) the Controlling Person shall obtain the prior written approval of the
Indemnified Party before entering into any settlement of such Third-Party Claim
or ceasing to defend against such Third-Party Claim if (x) as a result of such
settlement, consenting to the entry of any judgment or ceasing to defend,
injunctive relief or other equitable relief would be imposed against the
Indemnified Party, (y) in the case of a settlement or consenting to the entry of
any judgment, the Indemnified Party would not thereby receive from the claimant
an unconditional release from all further liability and obligations in respect
of such Third-Party Claim or (z) as a result of such settlement, consenting to
the entry of any judgment or ceasing to defend, may reasonably be expected to
have an adverse effect on the affected business of the Indemnified Party. After
written notice by the Controlling Person to the Indemnified Party of its
election to assume control of the defense of any such Third-Party Claim, the
Indemnifying Party shall not be liable hereunder to

 

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indemnify any Person for any Legal Expenses subsequently incurred in connection
therewith. If the Controlling Person does not assume sole control over the
defense or settlement of such Third-Party Claim as provided in this
Section 6.3.2 within a reasonable period of time, or, after assuming such
control, fails to defend against such Third-Party Claim (it being agreed that
settlement of such Third-Party Claim does not constitute such a failure to
defend), the Indemnified Party shall have the right (as to itself) to defend
and, upon obtaining the written consent of the Controlling Person, settle the
claim in such manner as it may deem appropriate, and the Indemnifying Party
shall promptly reimburse the Indemnified Party therefor in accordance with (and
to the extent provided for in) Section 6.1 or 6.2, as appropriate.
Notwithstanding the foregoing provisions of this Section 6.3.2, the Indemnified
Party shall have the right at all times to take over and assume the control (as
to itself) of the defense or settlement of any Third-Party Claim; provided,
however, that in such event the Indemnifying Party shall cease to have any
obligation under Section 6.1 or 6.2, as the case may be, in respect of such
Third-Party Claim. The Indemnifying Party shall not be liable under this
Section 6 for any settlement or compromise effected without its consent.

6.3.3 COOPERATION; MITIGATION. The Indemnified Party and the Indemnifying Party
shall each cooperate fully (and shall each cause its Affiliates to cooperate
fully) with the other in the defense or prosecution of any Third-Party Claim
pursuant to Section 6.3.2. Without limiting the generality of the foregoing,
each such Person shall furnish the other such Person (at the expense of the
Indemnifying Party) with such documentary or other evidence as is then in its or
any of its Affiliates’ possession and such other information and testimony, and
attend such conferences, discovery proceedings, hearings, trials or appeals, as
may be reasonably requested in connection therewith as may reasonably be
requested by the other Person for the purpose of defending against any such
Third-Party Claim. The Parties hereby agree to use commercially reasonable
efforts to mitigate any Loss that may be incurred in accordance with applicable
Laws.

6.3.4 SUBROGATION. Upon payment of any amount pursuant to any Indemnification
Claim, the Indemnifying Party shall be subrogated, to the extent of such
payment, to all of the Indemnified Party’s rights of recovery against any third
party with respect to the matters to which such Indemnification Claim relates.

6.3.5 RECOVERY. If at any time subsequent to the receipt by an Indemnified Party
of an indemnity payment hereunder, such Indemnified Party (or any Affiliate
thereof) receives any recovery, settlement or other similar payment with respect
to the Losses for which it received such indemnity payment (including, without
limitation, under any insurance policy for which a claim is made under
Section 6.3.6) (a “Recovery”), such Indemnified Party shall promptly pay to the
Indemnifying Party an amount equal to the amount of such Recovery, less any
expense incurred by such Indemnified Party (or its Affiliates) in connection
with such Recovery, but in no event shall any such payment exceed the amount of
such indemnity payment.

6.3.6 NO LIMITATION. Nothing in this Section 6 shall be deemed to prevent a
Party from making a claim under any available insurance policy, in addition to
pursuing indemnification under this Agreement.

6.3.7 NO RIGHT OF OFFSET. Neither KEM nor any other KEM Indemnitee shall have
any right-of-off set, including, but not limited to, under this Section 6,
against any amounts that may now or hereafter be owed to CIL&D (or its
successors and assigns) by Buyer, KEM, KEM’s Affiliates and any other party
guarantying of securing any such amounts including, but not limited to, the
$4.25 million note and the $19 million Note, as defined in the PA.

 

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7. RESTORATION OR SALVAGE OF THE RAILROAD. EMMR may in its sole and absolute
discretion and at its sole cost and expense elect to restore the Railroad to be
operational in that the rail line can be traversed its full length from the
Operations Parcel to near the Salton Sea in compliance with all applicable Laws.
Alternatively, EMMR may, in its sole and absolute discretion and at its sole
cost and expense, salvage the Railroad in compliance with all applicable Laws.
KEM acknowledges that it has no right or interest in the proceeds generated from
the salvage of the Railroad or any portion thereof. If the restoration or
salvage of the Railroad has not been completed by the Railroad Election
Deadline, EMMR shall give written notice to KEM on or before the Railroad
Elections Deadline of its election to restore or salvage the Railroad. EMMR
shall thereafter, at its sole cost and expense, promptly commence (or continue)
and proceed with diligence with the Railroad Activities necessary or appropriate
to restore the Railroad or to salvage the Railroad in accordance with the
election made by EMMR and in compliance with all applicable Laws. Any repair or
salvage of the Railroad on the KEM Railroad Property shall be conducted pursuant
to an approved Work Plan, as provided in Section 3 above.

8. USE OF RAILROAD FACILITIES AND ASSUMPTION OF RISK. EMMR shall have the right
to use the Railroad Facilities on the KEM Railroad Property free of charge
except that EMMR shall pay the actual cost of all new or additional expenses and
costs that may be incurred by KEM as a result of its Railroad Activities. EMMR
shall promptly reimburse KEM upon demand for any expenses and costs incurred by
KEM as a result of the Railroad Activities or the maintenance, removal, disposal
or alteration of the Railroad as required by applicable Laws. In addition, EMMR
shall have the right to store any Railroad Equipment and Supplies currently
located on the KEM Railroad Property in such location free of charge; provided,
however, (i) such storage does not result in Project Interference (ii) EMMR
shall pay the actual cost of all new or additional expenses and costs related to
the storage of the Railroad Equipment and Supplies that may be incurred by KEM,
and (iii) the storage of any Railroad Equipment and Supplies in the “Warehouse”
or “Maintenance Building” identified in that certain Warehouse & Maintenance
Lease dated as of the Closing Date by and between KEM and EMMR shall be subject
to the terms of such Warehouse & Maintenance Lease. EMMR shall assume all risks
of harm and loss of storing Railroad Equipment and Supplies on the KEM Railroad
Property and EMMR shall be responsible for undertaking any actions its deems
appropriate to safeguard the Railroad Equipment and Supplies. KEM shall have the
right to relocate any Railroad Equipment and Supplies located on the KEM
Railroad Property (other than in the Storage Building and/or Maintenance
Building) that may reasonably be expected to result in Project Interference, and
shall provide advance notice of such relocation to EMMR whenever possible, and
prompt notice thereafter if advance notice is impractical due to timing
constraints. The relocation of the Railroad Equipment and Supplies shall be to
an area mutually agreed upon by KEM and EMMR but in the event the Parties are
unable to agree on an appropriate location or as timing does not allow, KEM
shall in good faith reasonably select the location.

9. NO OPPOSITION TO RAILROAD ACTIVITIES AND OWNERSHIP OF RAILROAD. Subject to
the terms of this Agreement, neither KEM nor its Affiliates shall take any
action that would oppose, prevent, hinder, limit or terminate Railroad
Activities or EMMR’s ownership of the Railroad or take any actions to amend,
modify, or terminate any easement, right-of-way, permit, license, consent or
agreement for or pertaining to the Railroad or Railroad Activities so long as
the EMMR’s ownership of the Railroad or such Railroad Activities are conducted
in compliance with the terms of this Agreement, applicable Laws and Work Plans
and do not cause or could not reasonably be expected to cause Project
Interference.

10. COOPERATION. KEM and EMMR agree to work in good faith and to make
commercially reasonable efforts to minimize Project Interference and in their
joint use and

 

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simultaneous use of and access to and through the KEM Railroad Property.
However, if Project Interference cannot be commercially reasonably avoided or
resolved, then the Project shall have priority of use and access and EMMR shall
cease or modify any activity that is causing any Project Interference. EMMR
acknowledges that the Operations Area will also be utilized from time to time by
KEM or its Affiliates in connection with the Project. Certain portions of the
Operations Area will be used jointly by KEM and EMMR and other areas shall be
for the exclusive use of both KEM and EMMR, all as depicted and described in
Exhibit “E” attached hereto and incorporated herein by this reference. The
Parties shall reasonably cooperate with each other for the use of other areas to
the extent not already agreed upon, which use shall be subject to the final
approval of KEM, which approval shall not be unreasonably withheld or delayed.
In addition, during the term of this Agreement, KEM agrees to reasonable
cooperate in shipping mined materials via the Railroad and undertaking other
actions as reasonably requested by EMMR to preserve and maintain any and all
rights in the Railroad. EMMR shall pay all actual, out of pocket costs incurred
by KEM in providing the cooperation reasonably requested by EMMR.

11. CONDUCT OF RAILROAD OPERATIONS IN COMPLIANCE WITH LAWS. EMMR shall conduct
or cause to be conducted all Railroad Activities on the KEM Railroad Property,
as applicable, consistent with all applicable Laws and accepted railroad
standards and practices for a private railroad. EMMR, shall at its sole cost and
expense, comply with the Laws applicable to its ownership of the Railroad and
the conduct of Railroad Activities on the KEM Railroad Property. To the extent
new or modified permits, consents, licenses and approvals (collectively
“Railroad Licenses”) are necessary to conduct Railroad Activities on the KEM
Railroad Property, EMMR shall at its sole cost and expense obtain and maintain
such Railroad Licenses. KEM shall cooperate in EMMR’s application, acquisition,
and defense of such Railroad Licenses, pursuant to Section 9.

12. ENVIRONMENTAL MATTERS

12.1 RAILROAD ACTIVITIES TO BE CONDUCTED IN COMPLIANCE WITH ENVIRONMENTAL LAWS.
EMMR shall conduct its Railroad Activities on the KEM Railroad Property in
compliance with the Environmental Laws applicable to the Railroad such Railroad
Activities. EMMR shall limit to any use, generation, storage, treatment,
transportation and handling in connection with Railroad Activities on the KEM
Railroad Property to those Hazardous Materials, and to quantities thereof that
are reasonably necessary to perform Railroad Activities. EMMR shall not cause or
permit any Hazardous Materials to be disposed or abandoned on the KEM Railroad
Property. EMMR shall promptly inform KEM and any applicable regulatory body of
any actual or claimed violation of applicable Environmental Laws in connection
with its Railroad Activities on the KEM Railroad Property and EMMR shall
promptly undertake the actions necessary to cure any violation of the
Environmental Laws arising or resulting from its Railroad Activities on the KEM
Railroad Property.

12.2 SPILLS OF HAZARDOUS MATERIALS. EMMR shall promptly notify KEM and each
governmental entity with jurisdiction of any spills, releases or leaks of
Hazardous Materials that occur on the KEM Railroad Property arising or resulting
from its Railroad Activities (whether such spill, release or leak impacts the
KEM Railroad Property or Railroad Property) as required by Environmental Laws.
EMMR shall, at its expense, undertake or cause to be diligently undertaken the
activities reasonably necessary to report, investigate, monitor, and remediate
the consequences of the spill, release or leak that occurred on the KEM Railroad
Property arising or resulting from its Railroad Activities (whether such spill,
release or leak impacts the KEM Railroad Property or Railroad Property). EMMR
shall keep KEM timely and reasonably informed regarding its activities pursuant
to this Section 12.2.

12.3 REMOVAL OF STORED HAZARDOUS MATERIALS. Before the expiration or termination
of this Agreement, and in conformance with the applicable Environmental Laws,
EMMR shall, at its expense cause to be properly removed from the KEM Railroad
Property all Hazardous Materials stored on the KEM Railroad Property and used in
connection with Railroad Activities, and any storage containers associated with
such Hazardous Materials shall be removed and/or properly closed.

 

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13. SCHEDULING OF RAILROAD ACTIVITIES AND USE OF OTHERS. Subject to the
provisions of Sections 3, 7 and 10, EMMR shall have sole and exclusive right to
schedule Railroad Activities including use of the Railroad and to dispatch
trains and equipment. EMMR shall have the right to retain one or more third
party subcontractors to operate the Railroad and to conduct other Railroad
Activities; provided however EMMR may not subcontract any portion of the
Railroad Activities to be conducted on the KEM Railroad Property without first
obtaining written consent from KEM for each subcontractor so involved, which
approval shall not be unreasonably withheld, conditioned or delayed. EMMR shall
only subcontract the Railroad Activities conducted on the KEM Railroad Property
to subcontractors with proper licensing, certification and bonding under all
applicable Laws, including, without limitation, the California Business and
Professions Code. Further, any subcontractor engaged by EMMR for any portion of
the Railroad Activities conducted on the KEM Railroad Property shall be required
by EMMR to comply with this Agreement to the extent applicable, including but
not limited to, Section 11 (Conduct of Railroad Operations In Compliance with
Laws), Section 12 (Environmental Matters) and Section 19 (Insurance).

14. IMPROVEMENTS. Subject to the provisions of Sections 3 and 10, EMMR shall
have the right, from time to time, to construct, improve, replace, re-route,
upgrade, or expand the Railroad Facilities on KEM Railroad Property.

15. LIENS

15.1 EMMR’S OBLIGATIONS WITH RESPECT TO LIENS. EMMR shall not suffer or permit
to be enforced against the Eagle Mountain Property, or any part thereof, or any
or any other land owned by KEM including the KEM Railroad Properties, any
mechanics’, materialmen’s, contractors’ or subcontractors’ lien arising from its
Railroad Activities or any other work performed on behalf of or for the benefit
of EMMR (other than inchoate liens that arise by operation of law but which are
not presently exercisable). EMMR shall pay or cause to be paid all of said
liens, claims or demands before any action is brought to enforce the same
against the Eagle Mountain Property. Notwithstanding anything to the contrary
set forth above, if EMMR shall in good faith contest the validity of any such
lien, claim or demand, then EMMR shall, at its expense, defend itself and KEM
against the same and shall pay and satisfy any adverse judgment that may be
rendered thereon before any enforcement thereof against KEM or the Eagle
Mountain Property, but only upon the condition that if KEM shall so require,
EMMR shall procure and record or furnish to KEM a surety bond or other
acceptable security satisfactory to KEM in an amount at least equal to such
contested lien, claim or demand indemnifying KEM against liability for the same,
and holding the Eagle Mountain Property free from the effect of any such lien or
claim. KEM reserves the right at any time and from time to time to post and
maintain on said Eagle Mountain Property, KEM Railroad Property, Operations Area
or any portion thereof or improvement thereon, such notices of
non-responsibility or otherwise as may be necessary to protect KEM against
liability for all such liens and claims.

 

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15.2 KEM’S OBLIGATIONS WITH RESPECT TO LIENS. KEM shall not suffer or permit to
be enforced against the KEM Railroad Property or the Railroad, or that would
interfere with Railroad Activities or any part thereof, any mechanics’,
materialmen’s, contractors’ or subcontractors’ lien arising from the activities
of KEM after the date hereof or any other work performed on behalf of or for the
benefit of the Project (other than inchoate liens that arise by operation of law
but which are not presently exercisable). KEM shall pay or cause to be paid all
of said liens, claims or demands before any action is brought to enforce the
same against the KEM Railroad Property or the Railroad. Notwithstanding anything
to the contrary set forth above, if KEM shall in good faith contest the validity
of any such lien, claim or demand, then KEM shall, at its expense, defend itself
and EMMR against the same and shall pay and satisfy any adverse judgment that
may be rendered thereon before any enforcement thereof against KEM or the KEM
Property or Railroad but only upon the condition that if EMMR shall so require,
KEM shall procure and record or furnish to EMMR a surety bond or other
acceptable security satisfactory to EMMR in an amount at least equal to such
contested lien, claim or demand indemnifying EMMR against liability for the
same, and holding the KEM Railroad Property free from the effect of any such
lien or claim. EMMR reserves the right at any time and from time to time to post
and maintain on the KEM Railroad Property or any portion thereof or improvement
thereon, such notices of non-responsibility or otherwise as may be necessary to
protect EMMR against liability for all such liens and claims. Notwithstanding
anything to the contrary herein and for the avoidance of doubt, nothing in this
Section 15.2 shall preclude in any way KEM’s rights to grant a lien to its
Financing Parties in connection with the financing or refinancing of the
Project. For the purposes of this Agreement, “Financing Parties” means, with
respect to KEM, the agent or lead bank and any other financial institutions
party to a loan agreement, indenture, credit agreement, hedge agreement, tax
equity financing documents or other debt, equity or other type of financing
instrument with KEM, which may be secured in part by KEM’s share of, or interest
in, the Project or all or a portion of KEM’s interest in the Eagle Mountain
Property. Financing Parties shall not include any Affiliate of KEM.

16. DEFAULT. The occurrence of any of the following events shall constitute an
“Event of Default”:

16.1 NON-PAYMENT OF MONETARY OBLIGATION. Either Party’s failure to pay any
monetary amount payable under this Agreement when due, where such delinquency
continues for more than ten (10) days after receipt of written notice that such
payment is delinquent.

16.2 BREACH OF OBLIGATIONS UNDER THIS AGREEMENT OR OTHER TRANSACTION AGREEMENTS.
Failure (i) to perform by a Party any of its obligations hereunder (other than
monetary payment obligations as set forth in Section 16.1) or under any of the
Transaction Agreements, and (ii) to remedy such failure within thirty (30) days
after written demand is made therefore by the non-breaching Party; provided,
however, that if the failure to remedy such default is not curable within such
thirty (30) day period by the defaulting Party by using commercially reasonable
efforts, such thirty (30) day period shall be extended for the period reasonably
required to cure the failure so long as (a) the breaching Party is exercising
diligence to effectuate a cure as soon as is reasonable practicable; and
(b) such extended cure period could not reasonably be expected to have a
material and adverse impact on the non-breaching Party (including Project
Interference).

 

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16.3 ASSIGNMENTS. The making of a general assignment by a Party for the benefit
of its creditors (other than in the case of KEM to its Financing Parties as
permitted in accordance with this Agreement).

16.4 BANKRUPTCY. The filing of any form of voluntary petition in bankruptcy by a
Party or the filing of any involuntary petition by a Party’s creditors, if such
petition remains not discharged within a period of sixty (60) days.

16.5 RECEIVERSHIP. The appointment of a receiver to take possession of all or
substantially all of a Party’s assets if such receivership is not dissolved
within a period of sixty (60) days.

16.6 ATTACHMENT. The attachment or other judicial seizure of substantially all
of a Party’s assets, if such attachment or other seizure remains is not
dismissed or not discharged for a period of sixty (60) days after the levy
thereof.

16.7 INSURANCE. The failure of either Party to maintain the minimum insurance
required by Section 19 hereof at all times and such failure is not cured within
thirty (30) days of receipt of notice.

17. REMEDIES. Upon the occurrence of an Event of Default and the expiration of
any applicable cure periods, the non-defaulting Party shall have all remedies
provided by law or equity and as provided in this Agreement. Subsequent to the
payment in full of all amounts owed to CIL&D (or its successor and assigns) by
KEM’s Affiliates under the $4.25 Million Note and $19 Million Note (as those
terms are defined in the PA) (the “CIL&D Payment Date”) the Parties agree that
irreparable damage would occur in the event that the obligations under Sections
3, 8, 9, 10, 12, 13, 15, 18.4 and 20.14 of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Accordingly,
after the CIL&D Payment Date each of the Parties shall be entitled to seek
specific performance of the terms of this Agreement, including an injunction or
injunctions to prevent breaches of this Agreement and to enforce the terms and
provisions of this Agreement. Subsequent to the CIL&D Payment Date, each of the
Parties hereby further waives (a) any defense in any action for specific
performance that a remedy at law would be adequate and (b) any requirement under
any law to post security as a prerequisite to obtaining equitable relief.

18. TERMINATION. This Agreement shall terminate as expressly provided herein,
unless earlier terminated by mutual written consent.

18.1 TERMINATION BY KEM. Upon the occurrence of an uncured Event of Default, KEM
may terminate this Agreement, provided, that KEM or its Affiliates are not in
default under the PA or the Transaction Documents. On termination of this
Agreement based upon an uncured Event of Default by EMMR, EMMR within thirty
(30) days after termination of this Agreement, shall execute and deliver to KEM
a release and termination of this Agreement in a form acceptable for recording.

18.2 TERMINATION BY EMMR. EMMR may at any time terminate this Agreement by
giving sixty (60) days advance notice to KEM. If EMMR terminates this Agreement,
EMMR shall perform all obligations which accrue or become due before the
termination date. On EMMR’s termination of this Agreement, within thirty
(30) days after termination, EMMR shall execute and deliver to KEM a release and
termination of this Agreement in a form acceptable for recording.

 

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18.3 CONTINUING OBLIGATIONS AND ENVIRONMENTAL LIABILITIES. During the term of
this Agreement and after termination or expiration under this Section 18, EMMR
shall remain liable for obligations to KEM and/or third parties arising out of
or related to the Railroad and Railroad Activities, including the violation of
any Laws and Environmental Laws and as provided under Section 6 hereof.
Similarly, KEM shall remain liable for its obligations to EMMR and/or third
parties as provided in this Agreement with respect to any obligations incurred
prior to the termination of this Agreement.

18.4 SURRENDER OF THE PROPERTY AND DISPOSITION OF ASSETS ON TERMINATION. On
expiration or termination of this Agreement, EMMR shall surrender its interest
in the KEM Railroad Property for the purposes of the Railroad and Railroad
Activities. Unless the Parties otherwise agree in writing, EMMR at its sole cost
and expense shall remove from the KEM Railroad Property all of the Railroad
Facilities and Railroad Equipment and Supplies in accordance with an approved
Work Plan within one hundred eighty (180) days following the date of the
expiration or termination of this Agreement. This provision shall survive
expiration or termination of this Agreement.

19. INSURANCE.

19.1 EMMR INSURANCE OBLIGATIONS. EMMR shall, at its sole expense, obtain and
maintain (and cause any subcontractors acting on EMMR’s behalf in connection
with any activities contemplated by this Agreement to obtain and maintain)
throughout the term of this Agreement the following insurance coverage:

a. Workers’ Compensation Insurance in full compliance with Law, covering all
persons employed by EMMR in the conduct of its operations on the Eagle Mountain
Property, and Employer’s Liability Insurance in the amount of not less than one
million dollars ($1,000,000);

b. Commercial Automobile Liability Insurance on an occurrence basis including
all non-owned, hired, rented or owned motor vehicles with a combined single
limit for bodily injury and property damage of not less than one million dollars
($1,000,000) per occurrence; and

c. Commercial General Liability Insurance on an occurrence basis with a combined
single limit for bodily injury and property damage of not less than one million
dollars ($1,000,000) per occurrence and an annual aggregate of not less than two
million dollars ($2,000,000) per location, including Premises-Operations,
Independent Contractors, Broad Form Property Damage.

19.2 KEM INSURANCE. KEM shall, at its sole cost and expense, provide and
maintain throughout the term of this Agreement the following insurance coverage:

a. Workers’ Compensation Insurance in full compliance with Law, covering all
persons employed by KEM or its Affiliates in the conduct of its operations on
the Eagle Mountain Property, and Employer’s Liability Insurance in the amount of
not less than one million dollars ($1,000,000);

 

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b. Commercial Automobile Liability Insurance on an occurrence basis including
all non-owned, hired, rented or owned motor vehicles with a combined single
limit for bodily injury and property damage of not less than one million dollars
($1,000,000) per occurrence; and

c. Commercial General Liability Insurance on an occurrence basis with a combined
single limit for bodily injury and property damage of not less than one million
dollars ($1,000,000) per occurrence and an annual aggregate of not less than two
million dollars ($2,000,000) per location, including Premises-Operations,
Independent Contractors, Broad Form Property Damage.

19.3 GENERAL INSURANCE REQUIREMENTS. Each insurance policy required by EMMR or
its subcontractors or by KEM or its Affiliates under this Agreement shall (i) be
underwritten by an insurance company licensed to do business in the State of
California and having a “General Policyholder’s Rating” of at least A as set
forth in the most current issue of “Best’s Insurance Guide”; (ii) if the
insurance is to be provided by EMMR or its subcontractors, such insurance shall
name KEM as an additional insured on all policies except Workers’ Compensation;
(iii) if the insurance is to be provided by KEM or its Affiliates, such
insurance shall name EMMR as additional insured on all such polices except
Worker’s Compensation and (iv) provide that it may not be materially changed,
amended, canceled or allowed to lapse unless thirty (30) days prior written
notice is mailed to KEM or to EMMR, as applicable, at the address for notice in
this Agreement. Each insurance policy required by this Agreement shall provide
that it is primary insurance and not excess over, nor contributory with, any
other insurance in force for, or on behalf of, KEM or EMMR, as applicable. Upon
request, each Party shall promptly deliver to the other Party a copy of each
policy of insurance required by this Agreement within thirty (30) days of the
date requested and, if requested, copies of all renewal or replacement policies
will be delivered to KEM or EMMR, as applicable not less than the later of
(x) fifteen (15) days before the expiration date of each expiring policy (y) ten
(10) days after the date of such request. Should EMMR or its subcontractors or
KEM or its Affiliates fail to procure or maintain any insurance required by this
Agreement, or to deliver such copies of such policies as provided in this
Agreement, KEM or EMMR, as applicable, may, at their option, procure the same
for the account of the non-performing Party or its applicable subcontractor(s),
in the case of EMMR, or, in the case of KEM, its Affiliates, and the cost
thereof shall be paid by the applicable Party upon demand.

20. MISCELLANEOUS PROVISIONS.

20.1 ATTORNEYS’ AND OTHER FEES. Should any Party institute any action or
proceeding to enforce or interpret this Agreement or any provision hereof, for a
declaration of rights hereunder, the prevailing Party in any such action or
proceeding shall be entitled to receive from the other Party all costs and
expenses, including reasonable attorneys’ and other fees, incurred by the
prevailing Party in connection with such action or proceeding. The term
“attorneys’ and other fees” shall mean and include reasonable attorneys’ fees,
accountants’ fees, and any and all other similar reasonable fees incurred in
connection with the action or proceeding and preparation therefor. The term
“action or proceeding” shall mean and include actions, proceedings, suits,
arbitrations, appeals and other similar proceedings.

 

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20.2 COMPUTATION OF TIME. All references to “days” shall mean calendar days
unless otherwise specifically set forth herein. If the last day for any period
or any date pursuant to this Agreement is a weekend or a holiday recognized in
California, such last day or date shall automatically be deemed to be the next
succeeding business day. A day shall be construed as a business day if banks are
open for business on that day in Riverside County, California, but a business
day shall not include a Sunday or Saturday.

20.3 BENEFICIARIES. Eagle Crest and CIL&D shall, respectively, be deemed third
party beneficiaries of this Agreement, and all of KEM’s rights shall inure to
the benefit of, and may be exercised by, Eagle Crest. Except as provided in the
foregoing sentence or as may be separately agreed by the Parties in writing,
including pursuant to a consent agreement entered into with the Financing
Parties pursuant to Section 20.6 below, no party shall be deemed a third party
beneficiary of this Agreement.

20.4 WAIVER. No Party shall be deemed to have waived any right which such Party
has under this Agreement, unless this Agreement expressly provides a period of
time within which such right may be exercised and such time period has expired,
or unless such Party has expressly waived the same in writing or unless this
Agreement specifies that a waiver shall be deemed to have occurred. Any failure
on the part of any Party hereto to comply with any of its obligations,
agreements or conditions hereunder may be waived in writing by the Party to whom
such compliance is owed. The waiver by either Party of a right, claim, default,
by the other Party shall not be deemed a waiver of any other right, claim or
default or any subsequent default of the same kind.

20.5 GOVERNING LAW. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of California, without regard to the
conflict of law principles thereof.

20.6 TRANSFER. The rights and interests of EMMR under this Agreement may only be
conveyed, assigned or otherwise transferred in whole or in part (i) to any
Affiliate of EMMR which expressly assumes the obligations of EMMR hereunder with
reasonable prior, written notice to KEM, and (ii) to any other person subject to
the prior written consent of KEM, which consent shall not be unreasonably
delayed, conditioned or withheld, and the rights and obligations shall extend to
its successors and assigns; provided, however, any transfer under clause
(i) above may be conditioned upon such transferee delivering to KEM
documentation reasonably satisfactory to KEM whereby such transferee expressly
assumes the obligations of EMMR hereunder; provided, further, in connection with
the transfer by KEM of its interest in the Eagle Mountain Property, the rights
of KEM under this Agreement shall automatically be transferred without the
consent of EMMR to the transferee of KEM’s interest in the Eagle Mountain
Property and, subject to Section 20.15 below, KEM may not transfer its rights
under this Agreement separate and apart from its interest in the Eagle Mountain
Property. Notwithstanding anything to the contrary contained herein, a
transferee of EMMR permitted under the Mining Lease shall be deemed a permitted
transferee hereunder. Any transfer made in violation of this Section 20.6 shall
be null and void and of no force and effect.

20.7 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto and the
Transaction Agreements constitute the entire agreement of the Parties covering
everything agreed upon or understood with respect to this Agreement. This
Agreement may not be amended or modified except by a written document executed
by the Parties to this Agreement.

 

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20.8 HEADINGS. The headings in this Agreement are inserted only as a matter of
convenience, and in no way define, limit, extend or interpret the scope of this
Agreement or of any particular Section.

20.9 NOTICES. Any notices, demands or other communications required or permitted
to be given by any provision of this Agreement or which any Party may desire to
give the other shall be given in writing, delivered personally or sent by
certified mail, postage pre-paid, facsimile, or by Federal Express or similar
generally recognized delivery service regularly providing proof of delivery,
addressed to a Party, at the addresses set forth below, or to such other address
as said Party may hereafter or from time to time designate by written notice to
the other Party. Notice by United States Postal Service or delivery service as
provided herein shall be considered given on the earlier of the date on which
said notice is actually received by the Party to whom such notice is addressed,
or as of the date of delivery, whether accepted or refused, established by the
United States Postal service return receipt or such overnight carrier’s proof of
delivery, as the case may be. Any such notice given by facsimile shall be deemed
given upon receipt of the same by the Party to which it is addressed; provided,
however, any facsimile sent after 4:00 p.m. (California time) shall be deemed
received on the next succeeding business day.

 

To EMMR: WITH A COPY TO: EAGLE MOUNTAIN MINING & RAILROAD COMPANY, LLC EAGLE
MOUNTAIN MINING & RAILROAD COMPANY, LLC 337 N. Vineyard Ave., 4th Floor 337 N.
Vineyard, 4th Floor Ontario, CA 91764 Ontario, CA 91764 Attn.: Richard E.
Stoddard Attn.: Terry Cook Telephone:  909.483.8501 Telephone:  909.483.8511

Facsimile:  909.944.6605

Email:                     

Facsimile:  909.944.6605

Email: terry@cild.co

To KEM: WITH A COPY TO (which shall not constitute notice): KAISER EAGLE
MOUNTAIN, LLC LATHAM & WATKINS LLP c/o Eagle Crest Energy Company 355 S. Grand
Ave 3000 Ocean Park Blvd, Suite 1020 Los Angeles, CA 90071-1560 Santa Monica, CA
90405 Attn: Kevin Ehrhart Attn.: J. Douglas Divine Telephone:  213.485.1234
Telephone:  310.450.9090 Facsimile:  213.891.8763

Facsimile:  310.450.9494

Email: ddivine@eaglecrestenergy.com

Email: Kevin.Ehrhart@lw.com

20.10 COUNTERPARTS. This Agreement may be executed in two counterparts, each of
which when executed shall be deemed an original, but both of which when taken
together shall constitute one and the same instrument. Facsimile or scanned
signatures on this Agreement are acceptable, provided that original signatures
are presented to the Parties promptly thereafter.

20.11 SEVERABILITY. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the

 

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economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the Parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that the transactions completed hereby are
fulfilled to the extent possible.

20.12 AUTHORITY. The undersigned are authorized to execute and enter into this
Agreement for and on behalf of their respective Party.

20.13 FURTHER ASSURANCES AND CONSENTS. Each Party hereto shall from and after
the date hereof execute and acknowledge such further instruments and documents
and perform such additional acts as any other Party may reasonably request to
effectuate the intent of this Agreement; provided, however, that no such
requests may require any Party to make any material expenditure. In addition,
this Agreement is deemed by KEM and EMMR to provide each Party with all consents
that such Party may need to carry out its respective activities at the Eagle
Mountain Property, including all consents that may be required or requested by
governmental or quasi-governmental authorities in approving the Project or
Railroad Activities. However, should EMMR or KEM be required by any governmental
or quasi-governmental authorities to provide additional or further property
owner consents, KEM shall promptly and freely provide such consents as necessary
with respect to any activities undertaken in compliance with this Agreement. KEM
and EMMR shall not protest or negatively comment on any application by the other
Party for any permit or approval necessary for that Party to conduct its
activities at the Eagle Mountain Property as contemplated by this Agreement,
whether now pending or later filed, or revisions, amendments or additions
thereto so long as such permit, revisions, amendments, or additions do not have
a material adverse effect on the rights of KEM or EMMR, as the case may be,
under this Agreement or result in any Project Interference.

20.14 RESOLUTION OF DISPUTES. Prior to the CIL&D Payment Date any and all
claims, grievances, demands, controversies, causes of action or disputes of any
nature whatsoever (including tort and contract claims, and claims under any
applicable Law) arising out of, in connection with, or in relation to (i) this
Agreement, or (ii) questions of arbitrability under this Agreement (hereinafter,
a “Dispute”), may be resolved by the Parties through litigation in the
California Superior Courts located in Los Angeles County, California, including,
where appropriate, by seeking equitable relief under Section 17 of this
Agreement. After the CIL&D Payment Date, all disputes shall be resolved by final
and binding, arbitration in accordance with the Federal Arbitration Act,
9 U.S.C. Section 1, et seq. pursuant to the following procedures:

(a) AFTER THE CIL&D PAYMENT DATE ANY PARTY MAY SEND ANOTHER PARTY OR PARTIES
WRITTEN NOTICE IDENTIFYING THE MATTER IN DISPUTE AND INVOKING THE PROCEDURES OF
THIS SECTION 24.12 (THE “DISPUTE NOTICE”). WITHIN FOURTEEN (14) DAYS FROM
DELIVERY OF THE DISPUTE NOTICE, EACH PARTY INVOLVED IN THE DISPUTE SHALL MEET AT
A MUTUALLY AGREED LOCATION IN LOS ANGELES, CALIFORNIA, FOR THE PURPOSE OF
DETERMINING WHETHER THEY CAN RESOLVE THE DISPUTE THEMSELVES BY WRITTEN
AGREEMENT, AND, IF NOT, WHETHER THEY CAN AGREE UPON AN IMPARTIAL THIRD-PARTY
ARBITRATOR (THE “ARBITRATOR”) TO WHOM TO SUBMIT THE MATTER IN DISPUTE FOR FINAL
AND BINDING ARBITRATION. IN THE EVENT THE MATTER IN DISPUTE INVOLVES MORE THAN
FIVE MILLION DOLLARS IN CLAIMED DAMAGES, THEN ANY PARTY TO THE DISPUTE MAY UPON
WRITTEN DEMAND MADE ON OR BEFORE THREE (3) DAYS

 

18

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FOLLOWING THE MEETING OF THE PARTIES AS PROVIDED IN THIS SECTION 20.14(A)
REQUIRE THAT THE ARBITRATION BE CONDUCTED BY A PANEL OF THREE (3) ARBITRATORS.

(b) IF SUCH PARTIES FAIL TO RESOLVE THE DISPUTE BY WRITTEN AGREEMENT OR AGREE ON
THE ARBITRATOR(S) WITHIN THE LATER OF FOURTEEN (14) DAYS FROM ANY SUCH INITIAL
MEETING OR WITHIN THIRTY (30) DAYS FROM THE DELIVERY OF THE DISPUTE NOTICE, ANY
SUCH PARTY MAY MAKE WRITTEN APPLICATION TO JAMS, INC. (OR ITS SUCCESSOR,
“JAMS”), IN LOS ANGELES, CALIFORNIA FOR THE APPOINTMENT OF A SINGLE ARBITRATOR
OR PANEL OF ARBITRATORS AS PROVIDED ABOVE TO RESOLVE THE DISPUTE BY ARBITRATION.
THE ARBITRATION WILL BE ADMINISTERED BY JAMS PURSUANT TO ITS COMPREHENSIVE
ARBITRATION RULES AND PROCEDURES AND ITS RECOMMENDED ARBITRATION DISCOVERY
PROTOCOLS. AT THE REQUEST OF JAMS THE PARTIES INVOLVED IN THE DISPUTE SHALL MEET
WITH JAMS AT ITS OFFICES WITHIN FOURTEEN (14) DAYS OF SUCH REQUEST TO DISCUSS
THE DISPUTE AND THE QUALIFICATIONS AND EXPERIENCE WHICH EACH PARTY RESPECTIVELY
BELIEVES THE ARBITRATOR(S) SHOULD HAVE; PROVIDED, HOWEVER, THAT THE SELECTION OF
THE ARBITRATOR(S) SHALL BE THE EXCLUSIVE DECISION OF JAMS AND SHALL BE MADE
WITHIN THIRTY (30) DAYS OF THE WRITTEN APPLICATION TO JAMS.

(c) WITHIN SIXTY (60) DAYS OF THE SELECTION OF THE ARBITRATOR(S), OR SUCH OTHER
LONGER TIME AS THE PARTIES MAY MUTUALLY AGREE UPON, THE PARTIES INVOLVED IN THE
DISPUTE SHALL MEET IN LOS ANGELES, CALIFORNIA WITH SUCH ARBITRATOR(S) AT A PLACE
AND TIME DESIGNATED BY SUCH ARBITRATOR(S) AFTER CONSULTATION WITH SUCH PARTIES
AND PRESENT THEIR RESPECTIVE POSITIONS ON THE DISPUTE. THE PERIOD OF DISCOVERY
SHALL BE AT LEAST FORTY (40) DAYS UNLESS OTHERWISE AGREED BY THE PARTIES. UNLESS
OTHERWISE SPECIFIED BY THE ARBITRATOR(S), EACH PARTY SHALL HAVE NO LONGER THAN
TWO (2) DAYS TO PRESENT ITS POSITION, THE ENTIRE PROCEEDINGS BEFORE THE
ARBITRATOR(S) SHALL BE NO MORE THAN FIVE (5) CONSECUTIVE DAYS, AND THE DECISION
OF THE ARBITRATOR(S) SHALL BE MADE IN WRITING NO MORE THAN THIRTY (30) DAYS
FOLLOWING THE END OF THE PROCEEDING. SUCH AN AWARD SHALL BE A FINAL AND BINDING
DETERMINATION OF THE DISPUTE AND SHALL BE FULLY ENFORCEABLE AS AN ARBITRATION
DECISION IN ANY COURT HAVING JURISDICTION AND VENUE OVER SUCH PARTIES. THE
DECISION SHALL BE MADE IN ACCORDANCE WITH THIS AGREEMENT AND APPLICABLE LAW. THE
PREVAILING PARTY OR PARTIES (AS DETERMINED BY THE ARBITRATOR(S)) SHALL IN
ADDITION BE AWARDED BY THE ARBITRATOR(S) SUCH PARTY’S OR PARTIES’ OWN REASONABLE
LEGAL FEES AND EXPENSES IN CONNECTION WITH SUCH PROCEEDING. THE PARTIES SHALL
SHARE EQUALLY IN THE PAYMENT OF THE ARBITRATOR(S)’ FEES AND EXPENSES REGARDLESS
OF WHO IS THE PREVAILING PARTY OR PARTIES. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS AGREEMENT, THIS SECTION 20.14 SHALL NOT APPLY TO ANY REQUEST BY
ANY PARTY TO THIS AGREEMENT FOR TEMPORARY, PRELIMINARY OR PERMANENT INJUNCTIVE
RELIEF OR OTHER FORMS OF EQUITABLE RELIEF PERMITTED UNDER SECTION 17; PROVIDED,
THAT ANY CONTROVERSY ARISING OUT OF SUCH REQUEST FOR RELIEF (OTHER THAN ON THE
QUESTION OF THE INJUNCTIVE OR OTHER EQUITABLE RELIEF BEING SOUGHT) SHALL BE
SETTLED PURSUANT TO BINDING ARBITRATION PURSUANT TO THIS SECTION 20.14.

 

19

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(d) ALL OFFERS, PROMISES, CONDUCT AND STATEMENTS, WHETHER ORAL OR WRITTEN, MADE
IN THE COURSE OF THE INFORMAL DISCUSSIONS BY ANY OF THE PARTIES IN CONNECTION
WITH THE SETTLEMENT OR ATTEMPTED SETTLEMENT OF ANY DISPUTES ARISING HEREUNDER,
THEIR AGENTS, EMPLOYEES, EXPERTS, AND ATTORNEYS ARE CONFIDENTIAL, PRIVILEGED AND
INADMISSIBLE FOR ANY PURPOSE, INCLUDING IMPEACHMENT, IN ANY ARBITRATION OR OTHER
PROCEEDING INVOLVING THE PARTIES, PROVIDED THAT EVIDENCE THAT IS OTHERWISE
ADMISSIBLE OR DISCOVERABLE SHALL NOT BE RENDERED INADMISSIBLE OR
NON-DISCOVERABLE AS A RESULT OF ITS USE IN THE INFORMAL DISCUSSIONS.

20.15. ASSIGNMENT BY KEM TO FINANCING PARTIES. Notwithstanding anything to the
contrary herein (including Section 20.6), EMMR agrees that KEM may at any time
pledge, collaterally assign, encumber, or grant a security interest in its
rights under this Agreement to any of the Financing Parties without the need for
any consent from EMMR. EMMR agrees that it shall, at any time and from time to
time during the term of this Agreement, after receipt of a written request by
KEM, execute and deliver to KEM and KEM’s Financing Parties, as designated in
such request, such commercially reasonable estoppel certificates and consent and
collateral assignment agreements in connection with any such assignment,
providing for terms and conditions customary to similar project finance
transactions in California and otherwise reasonably acceptable to EMMR and such
Financing Parties. Upon the request of KEM, EMMR will reasonably cooperate at
KEM’s expense in the financing or refinancing of the Project, including in the
making of any filings required by KEM for regulatory compliance or obtaining
governmental approvals.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as
of the Closing Date.

 

“EMMR”

EAGLE MOUNTAIN MINING & RAILROAD COMPANY, LLC,

a Delaware limited liability company

By:

/s/ Richard E. Stoddard

Name:

Richard E. Stoddard

Title: President

[Signatures continue on the following page]

 

(Signature page to Railroad Operations Agreement – Eagle Mountain)

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“KEM”

KAISER EAGLE MOUNTAIN, LLC,

a Delaware limited liability company

By:

/s/ Doug Divine

Name:

Doug Divine

Title: Authorized Person

 

(Signature page to Railroad Operations Agreement – Eagle Mountain)

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THE EXHIBITS AND/OR SCHEDULES TO THIS AGREEMENT

OR INSTRUMENT ARE NOT BEING FILED BUT WILL BE

FURNISHED TO THE SECURITIES AND EXCHANGE

COMMISSION UPON THE REQUEST OF THE SECURITIES AND

EXCHANGE COMMISSION.