<PAGE>
 
                                                                    EXHIBIT 10.1

                   PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS


                                      FOR

                              KAISER VENTURES INC.
                                    (SELLER)

                                      AND

                            BUDWAY ENTERPRISES INC.
                                    (BUYER)



                             DATED:  APRIL 9, 1997
 
<PAGE>
 
                                     INDEX
<TABLE>
<CAPTION>
    ITEM                                                                                          PAGE NO.
------------                                                                                      --------
 
<S>            <C>                                                                                <C>
 ARTICLE 1     RECITALS                                                                             1
    1.1        .................................................................................    1
    1.2        .................................................................................    1
    1.3        .................................................................................    1
 
 ARTICLE 2     AGREEMENT OF PURCHASE AND SALE..................................................     1
    2.1        Purchase Price..................................................................     1
    2.2        Payment of Purchase Price.......................................................     1
 
 ARTICLE 3     ESCROW..........................................................................     2
    3.1        Opening of Escrow...............................................................     2
    3.2        Delivery of Documents to Escrow.................................................     2
    3.3        Close of Escrow.................................................................     3
 
 ARTICLE 4     REVIEW PERIOD...................................................................     3
    4.1        Review Period...................................................................     3
    4.2        Review of Condition of Title....................................................     3
    4.3        Disapproval of Contingencies....................................................     3
 
 ARTICLE 5     ADDITIONAL COVENANTS AND AGREEMENTS.............................................     4
    5.1        Cooperation.....................................................................     5
    5.2        Federal and State Withholding Requirements......................................     5
 
 ARTICLE 6     PRE CLOSING OBLIGATIONS.........................................................     5
    6.1        Seller's Obligations............................................................     5
    6.2        Buyer's Obligations.............................................................     5
 
 ARTICLE 7     POST CLOSING OBLIGATIONS........................................................     6
    7.1        Improvements....................................................................     6
    7.2        Buyer's Compliance with Environmental Laws and 
               Indemnification for Noncompliance...............................................     6
 
 ARTICLE 8     ACKNOWLEDGMENTS, REPRESENTATIONS AND WARRANTIES.................................     7
    8.1        Buyer's Acknowledgments, Representations and Warranties.........................     7
    8.2        Seller's Acknowledgments, Representations and Warranties........................     8
    8.3        Hazardous Materials.............................................................     8
 
 ARTICLE 9     THE CLOSE OF ESCROW.............................................................     9
    9.1        Conditions and Close of Escrow..................................................     9
    9.2        Termination Based on Failure to Close by Closing Date...........................     10
    9.3        Prorations......................................................................     10
    9.4        Seller's Fees and Costs.........................................................     10
    9.5        Buyer's Fees and Costs..........................................................     10
</TABLE>

                                       i
<PAGE>
 
<TABLE>
<CAPTION>
 
   ITEM                                                                                          PAGE NO.
----------                                                                                       --------
 
<S>                                                                                              <C>
ARTICLE 10   REMEDIES..........................................................................    10
      10.1   Seller's Remedies.................................................................    10
      10.2   Damages Against Seller............................................................    11
 
ARTICLE 11   GENERAL PROVISIONS................................................................    11
      11.1   Time of the Essence and Strict Construction.......................................    11
      11.2   Notice and Demands................................................................    11
      11.3   Captions for Convenience..........................................................    12
      11.4   Severability......................................................................    12
      11.5   Governing Law.....................................................................    12
      11.6   No Oral Amendment or Modifications................................................    12
      11.7   Relationship of Seller and Buyer..................................................    12
      11.8   Attorneys' Fees...................................................................    12
      11.9   Amended and Successor Statutes and Regulations....................................    12
      11.10  Entire Agreement..................................................................    13
      11.11  Exhibits and Schedules............................................................    13
      11.12  Confidentiality...................................................................    13
      11.13  Successors and Assigns............................................................    13
      11.14  Eminent Domain....................................................................    13
      11.15  Counterparts......................................................................    13
 
</TABLE>
                   

                                       ii
<PAGE>
 
                     PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS

     This PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS ("AGREEMENT") is made and
entered into this 9th day of April, 1997 ("EFFECTIVE DATE"), by and between
KAISER VENTURES INC., a Delaware corporation ("SELLER"), and BUDWAY ENTERPRISES
INC., a California Corporation ("BUYER") with reference to the facts set forth
below.


                                   ARTICLE 1
                                    RECITALS

     1.1  Seller is the owner of that certain real property, situated in the
County of San Bernardino, State of California, as more particularly described in
Exhibit "A", attached hereto and incorporated herein (the "PROPERTY").

     1.2  The Property is part of the property owned by Seller formerly used as
an integrated steel mill facility (the "PROJECT").  The Project is included in
the San Bernardino San Sevine Redevelopment District.

     1.3  Seller desires to sell the Property to Buyer upon the terms and
conditions set forth in this Agreement and Buyer desires to purchase the
Property as set forth herein.

     NOW THEREFORE, in consideration of the mutual agreements set forth herein
and for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer agrees to purchase and Seller agrees to sell the
Property on the terms and conditions set forth below.

                                   ARTICLE 2
                         AGREEMENT OF PURCHASE AND SALE

     2.1  PURCHASE PRICE.  The purchase price ("PURCHASE PRICE") for the
Property is Two Million, Eight Hundred Sixty-Nine Thousand, Five Hundred Fifteen
Dollars ($2,869,515.00) based on a purchase of approximately 15.5 acres, gross,
at a price of $4.25 a square foot.  Should the actual gross acreage of the
Property be more or less than 15.5 acres, based on the final parcel map to be
recorded prior to Close of Escrow, the Purchase Price shall be adjusted, with
the adjustment being made in the amount of the Note and Second Deed of Trust.

     2.2  PAYMENT OF PURCHASE PRICE.  The Purchase Price shall be paid in good
funds in accordance with the provisions set forth below.

     2.2.1  DEPOSIT.  Concurrently with the execution of this Agreement, Buyer
            -------
shall deposit into escrow the amount of Thirty Thousand Dollars ($ 30,000.00).
Unless this agreement is terminated by Buyer, on or before the end of the Review
Period, the Deposit shall be immediately released from Escrow to Seller and
shall be non refundable to Buyer.  The Deposit shall be credited and applied to
the Purchase Price at the Close of Escrow, but shall be retained by Seller as
its liquidated damages as provided in Paragraph 10.1 if Escrow fails to close as
a result of Buyer's default.

                                       1
<PAGE>
 
     2.2.2  BALANCE OF CASH PAYMENT.  On or before one business day prior to the
            -----------------------
Closing Date, Buyer shall deposit the balance of the cash portion of the
Purchase Price in the amount of Nine Hundred Seventy Thousand Dollars
($970,000.00) into escrow, which shall be released to Seller on the Close of
Escrow.

     2.2.3  SELLER CARRY-BACK FINANCING.  On or before one business day prior to
            ---------------------------
the Closing Date, Buyer shall deposit a Note and Second Deed of Trust, in the
forms as shown on Exhibits "B" and "C", attached hereto and made a part hereof.
The Note shall be released to Seller and the Second Deed of Trust shall be
recorded on the Close of Escrow.

     2.2.4  DECLARATION OF CONSTRUCTION COVENANTS.  As additional consideration
            -------------------------------------
for the sale of the Property, on or before one business day prior to the Closing
Date, Buyer agrees to execute and deposit into Escrow a Declaration of
Construction Covenants, Use Restrictions, Lien rights and Repurchase Option in
the form attached hereto as Exhibit "E" (the "DECLARATION"), which shall be
recorded immediately on the Close of Escrow.

     2.2.5  GUARANTY OF V.M. MCLEOD.  As additional consideration for the sale
            -----------------------
of the Property, on or before one business day prior to the Closing Date, Buyer
agrees to cause to have executed and deposited into Escrow a Guaranty  in the
form attached hereto as Exhibit "F" (the "DECLARATION"), which shall be
delivered to Seller  immediately on the Close of Escrow.


                                   ARTICLE  3
                                     ESCROW

     3.1  OPENING OF ESCROW.  Within two business days of the Effective Date of
this Agreement, Buyer and Seller shall open escrow by depositing with Chicago
Title Insurance Company, San Bernardino office ("ESCROW AGENT") a fully executed
original of this Agreement for use as escrow instructions and Escrow Agent shall
execute the consent of Escrow Agent and deliver a fully executed consent to
Buyer and Seller.  If Escrow Agent requires additional instructions, the parties
agree to make any such deletions, substitutions and additions which do not
materially alter the terms of this Agreement.

     3.2  DELIVERY OF DOCUMENTS TO ESCROW.

     3.2.1  SELLER'S DOCUMENTS.  On or before the Close of Escrow, Seller shall
            ------------------
sign, acknowledge and deposit into Escrow a grant deed in the form attached
hereto as Exhibit "D" and incorporated herein (the "GRANT DEED") conveying the
property to Buyer.  Provided that all terms and conditions of this Agreement
have been satisfied, Escrow agent shall record the Grant Deed at the Close of
Escrow.  Seller shall deliver on or before the Close of Escrow any other
documents required by the Escrow Agent in order to convey title to Buyer as
contemplated herein.

     3.2.2  BUYER'S DOCUMENTS.  On or before the Close of Escrow, Buyer shall
            -----------------
deposit into Escrow the executed Note and Second Deed of Trust, the Guaranty,
appropriate UCC Financing documents, and any other document required by the
Escrow Agent in order secures Seller's interest as contemplated herein. Provided
that all terms and conditions of this 

                                       2
<PAGE>
 
Agreement have been satisfied, Escrow Agent shall record the Second Deed of 
Trust at the Close of Escrow.

     3.3  CLOSE OF ESCROW.

     3.3.3  CLOSING DATE.  Unless the parties mutually agree upon an earlier
            ------------
Closing Date, Escrow shall close ninety (90) days following the Effective Date.

     3.3.4  EXTENSION OF CLOSING DATE.  At Buyer's option, Buyer may extend the
            -------------------------
Close of Escrow for one  additional period of thirty (30) days.  Should Buyer
wish to extend the Close of Escrow, Buyer shall notify Seller and Escrow no
later than five days prior to the scheduled Closing Date, and shall deposit
Thirty Thousand Dollars ($30,000.00) (the "Extension Payment") in immediately
available funds into Escrow. The Extension Payment shall be credited and applied
to the Purchase Price at the Close of Escrow, but shall be released immediately
to Seller and retained by Seller as additional liquidated damages as provided in
Paragraph 10.1 if Escrow fails to close as a result of Buyer's default.

                                   ARTICLE 4
                                 REVIEW PERIOD

     4.1  REVIEW PERIOD.  Buyer shall have eighty-five (85) days following the
Effective Date to determine the feasibility of its purchase of the Property (the
"REVIEW PERIOD").  Said feasibility shall include Buyer's ability to finance the
construction of its planned improvements, the condition of title, and the
physical condition of the Property.  Seller shall no later than ten days after
the Effective Date make available to Buyer at Seller's notice address
documentation in its possession dealing with the Property, including the
proposed parcel map and conditions of approval, any soils, environmental or
engineering reports, the grading and utility plans and a copy of a Preliminary
Title Report ("PRELIMINARY REPORT"), prepared by Chicago Title Insurance Company
(the "TITLE COMPANY") with respect to the Property containing such exceptions as
the Title Company would specify in the title policy, along with copies of all
recorded documents referenced in the Preliminary Report and platted easements
("PERMITTED EXCEPTIONS").

     4.2  REVIEW OF CONDITION OF TITLE.  Buyer shall deliver notice of
disapproval of any exception or other title matter to Seller in writing on or
before thirty (30) days from the Effective Date (the "TITLE REVIEW PERIOD").
Buyer shall deliver notice of such disapproval to seller in writing on or before
the end of the Title Review Period or all Permitted Exceptions shall be deemed
approved.  If Buyer disapproves any Permitted Exceptions, Seller may elect to
remove such Permitted Exceptions by the Close of Escrow or shall notify the
Buyer in writing that such Permitted Exceptions shall not be removed.  Seller
shall give Buyer Notice of its election to not remove the disapproved exceptions
with ten (10) days of Seller's receipt of Buyer's notice of disapproval.

     4.3  DISAPPROVAL OF CONTINGENCIES.  Should Buyer, in its sole discretion,
determine that its plans for the Property are not feasible, Buyer shall deliver
a notice of cancellation to Seller in writing on or before the end of the Review
Period ("NOTICE OF CANCELLATION").  Should Buyer deliver a Notice of
Cancellation on or before the end of the Review Period, then, except 

                                       3
<PAGE>
 
for Buyer's obligations to indemnify Seller, the respective rights, duties and 
obligations of Buyer and Seller under this Agreement shall forthwith terminate 
without further liability.  The Parties shall immediately thereafter sign such
instructions and other instruments as may be necessary to effect the
cancellation of this Escrow, and each party shall pay its respective share (if
any) of escrow cancellation charges.  Upon cancellation, Escrow Agent shall
immediately return the funds, less applicable escrow cancellation charges, and
documents to the parties that furnished them.  Should Buyer not deliver a Notice
of Cancellation to Seller on or before the end of the Review Period, Buyer shall
be deemed to have approved the feasibility of its purchase of the Property.


                                   ARTICLE 5
                      ADDITIONAL COVENANTS AND AGREEMENTS

     5.1  COOPERATION.  Buyer and Seller acknowledge that it may be necessary to
execute documents other than those specifically referred to herein in order to
complete the acquisition of the Property.  Both Buyer and Seller hereby agree to
cooperate with each other by executing such other documents or taking such other
action as may be reasonably necessary to complete this transaction in accordance
with the intent of the parties as evidenced in this Agreement.

     5.2  FEDERAL AND STATE WITHHOLDING REQUIREMENTS.  The parties agree to
comply with the requirements of Section 1445 of the Internal Revenue Code,
California withholding requirements, and any regulations promulgated thereunder.


                                   ARTICLE 6
                            PRE-CLOSING OBLIGATIONS

     6.1  SELLER'S OBLIGATIONS.

          6.1.1      PHASE 1 REPORT.  Seller shall cooperate with Buyer to
                     --------------
obtain a Phase 1 environmental report covering the Property.  Should the Buyer
purchase the Property, the Seller shall reimburse the Buyer for one-half the
cost of the Phase 1 Report at Close of Escrow.  If the Phase 1 requires a Phase
2 Report, Seller shall obtain a Phase 2 Report from a company of its choosing,
and shall pay for the cost of the Phase 2 Report.

          Should the Phase 1 report show evidence of Hazardous Materials that
require either remediation or a Phase 2 report and the Phase 2 report requires
remediation in excess of $250,000, Seller may cancel the within escrow.

          6.1.2  LEGAL PARCEL.  Prior to the Close of Escrow, Seller shall
                 ------------
record a parcel map, making the Property a separate legal parcel.  Seller shall
deliver a parcel map showing the final configuration of the Property to Buyer
for Buyer's approval prior to the end of the Review Period.

          6.1.3  SELLER'S DOCUMENTS.  Seller shall provide all documents
                 ------------------
required by Article 4.1 within the time stated in said article.

                                       4
<PAGE>
 
     6.2  BUYER'S OBLIGATIONS.
        
          6.2.1  CONDITIONAL USE PERMIT.  Prior to the end of the Review
                 ----------------------
Period, Buyer shall obtain a conditional use permit from the County of San
Bernardino for its intended use of the Property.  Seller agrees to cooperate and
assist Buyer in obtaining the Conditional Use Permit.

          6.2.2      FINANCING.  Prior to the end of the Review Period, Buyer
                     ---------
shall obtain financing in an amount sufficient to fund the construction of the
Planned Improvements.  Seller shall agree to allow the deed of trust securing
such financing to record as a first deed of trust with priority over  the deed
of trust to record at the Close of Escrow in favor of Seller, Seller shall in
good faith consider amending  this Agreement and/or its exhibits to comply with
the reasonable requirements of the Lender, so long as said amendment(s) shall
not impair Seller's security for its loan or increase seller's costs of sale or
otherwise materially alter Seller's obligations, and Seller shall execute any
necessary loan documents, provided that:
 
          (a) such financing is reasonably adequate to fully implement the
purpose of the financing, and such financing does not exceed Five Million
Dollars ($5,000,000);

          (b) Buyer shall provide to Seller a copy of all financing documents
for review and approval which approval shall not be unreasonably withheld.  All
financing documents shall be submitted for Seller's approval at least ten (10)
days prior to the scheduled closing.  Seller shall review and provide any
comments it may have no later than seven (7) days after the receipt of all the
loan documents.  Should Seller use an outside law firm for said review, upon
submittal of an invoice by Seller, Buyer shall reimburse to Seller Seller's
actual cost of the law firm's review of the loan documents, in an amount not to
exceed seven thousand five hundred dollars ($7,500);

          (c) Any permitted Mortgage shall not be construed as in any way
releasing Buyer from its obligations pursuant to this Agreement or the
Declaration;

          (d) Buyer may not subject the Property to any further or additional
encumbrance or lien other than the initial construction and permanent financing
for the Building and related improvements without Seller's express written
consent, which consent may be granted or withheld in its sole and absolute
discretion;

          (e) Buyer shall include a provision in any financing documents
requiring the Lender to give written notice to Seller of any default, or alleged
default, by Buyer.  In addition, the Seller shall have the right, but not the
obligation, to cure any such default and, if it does so, the Buyer shall be
obligated, on the demand of the Seller, to reimburse any such payments, plus
interest at the Default Rate;

          (f) Buyer shall include a provision in any financing document allowing
Seller to acquire the note given by Buyer to the Lender and/or Lender's security
interest in the collateral pledged to secure the Lender upon such terms and
conditions as Lender and Seller may reasonably negotiate and in such instance
Lender shall not be required to institute or comply with the foreclosure
provisions of any financing documents and applicable law.

                                       5
<PAGE>
 
                                   ARTICLE 7
                            POST CLOSING OBLIGATIONS


     7.1  IMPROVEMENTS.  Seller shall have no liability or responsibility for
improvements on-site or off-site for the benefit of  the Property.

          7.1.1   FEES.  Buyer shall be responsible for and obligated to pay
                  ----
all fees, assessments, special taxes or in-lieu fees encumbering the Property or
required by any governmental agency, assessment district, fee district or any
other similar governmental charges for or in connection with Buyer's purchase or
improvement of the Property, other than the fees and costs in connection with
the approval and recording of Parcel Map 14757, provided, however, Buyer shall
be responsible for its prorata share of any prepaid expenses such as property
taxes.

          7.1.2   NO OBLIGATION FOR OTHER IMPROVEMENTS.   Seller is not
                  ------------------------------------
obligated in any way to construct any improvements on the Property.  Buyer shall
have the sole responsibility for processing approvals and construction all other
improvements on the Property.  Unless expressly provided in this Agreement, all
expenses and responsibility associated with governmental approvals for the
development of the Property shall be the sole responsibility of Buyer.

     7.2  COMPLIANCE WITH ENVIRONMENTAL LAWS AND INDEMNIFICATION FOR
NONCOMPLIANCE.  Buyer specifically covenants and agrees to timely and fully
comply with Environmental Laws, and shall not allow the release of Hazardous
Materials on the Property (including, but not limited to, the Building,
surrounding property, the surface, subsurface, water and air) with Hazardous
Materials.  Furthermore, Buyer shall not use, store, handle or treat Hazardous
Materials on the Subject Property except in full compliance with Environmental
Laws and only as necessary in furtherance of the Project and its operation.
Buyer shall indemnify, defend, and hold Seller and its officers, directors,
shareholders, partners, employees, Affiliates, and assigns (collectively the
"INDEMNIFIED PARTIES") harmless from and against all liability, obligations,
claims, damages, penalties, losses, causes of action, costs, and expenses
(including attorneys' fees, expert witness fees, consulting and other
professional fees) imposed upon incurred by or asserted against the Indemnified
Parties as a result of any violation or asserted violation of or failure to
timely or fully comply with Environmental Laws or as a result of any release of
Hazardous Materials on the Property, adjacent property owned by Seller or its
Affiliates, or other property (including, but not limited to, improvements,
surface, subsurface water and air) or any allegations related thereto.

     This indemnification shall exclude Hazardous Materials that exist on the
Property prior to the Close of Escrow, or those Hazardous Materials which are
found within the first seven years after the Close of Escrow and that are shown
by clear and convincing evidence to have existed on the Property prior to the
Close of Escrow.

     For the purposes of this Agreement, "Environmental Laws" shall mean and
refer to all federal, state and local laws, rules, regulations, ordinances,
guidelines, permit conditions, orders, consent decrees and other requirements
relating to health, safety, hazardous substances, industrial hygiene and
environmental conditions or protections applicable to the Property and 

                                       6
<PAGE>
 
the Project's wild life and fish, if any, and their habitats. Such laws and
regulations include, but are not limited to, the Resource Conservation and
Recovery Act, 42 U.S.C. (S)6901 et seq., as amended from time to time; the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
(S)9601 et seq., as amended from time to time; the Toxic Substances Control Act,
15 U.S.C. (S)2601 et seq., as amended from time to time; the Clean Water Act, 33
U.S.C. (S)466 et seq., as amended from time to time; the Clean Air Act, 42
U.S.C. (S)7401 et seq., as amended from time to time; the Emergency Planning and
Community Right-to-Know act, 42 U.S.C. (S)1101 et seq., as amended from time to
time; the Hazardous Materials Transportation act, 49 U.S.C. (S)1801 et seq., as
amended from time to time; the Federal Water Pollution Control Act, 33 U.S.C.
(S)1251 et seq., as amended from time to time; the Federal Insecticide,
Fungicide and Rodenticide Act, & U.S.C. (S)136 et seq., as amended from time to
time; the Oil Pollution Act of 1990, 33 U.S.C. (S)2701 et seq., as amended from
time to time; the Safe Drinking Water Act, 42 U.S.C. (S)300 et seq., et seq., as
amended from time to time; the Pollution Prevention Act 29 U.S.C. (S)651 et
seq., as amended from time to time; state and federal super lien and
environmental clean-up programs; U.S. Department of Transportation regulations;
Endangered Species Act, 16 U.S.C. (S)1531 et seq., as amended from time to time;
all applicable state and local statutes and ordinances with a scope or purpose
similar to the foregoing; and all regulations promulgated pursuant to said laws.


                                   ARTICLE 8
                ACKNOWLEDGMENTS, REPRESENTATIONS AND WARRANTIES

  8.1       BUYER'S ACKNOWLEDGMENTS, REPRESENTATIONS AND WARRANTIES

            8.1.1   Purchase "As Is".  Buyer is relying solely upon its own
                    ---------------
inspections, investigations and analyses of the Property, including but not
limited to the Phase 1 study done under Article 6.1.1, in entering into this
Agreement and is not relying in any way upon any representations, statements,
agreements, warranties, studies, reports, descriptions, guidelines or other
information or material furnished by Seller or its representatives, whether oral
or written, express or implied, of any nature whatsoever regarding any such
matters. Buyer has made such independent investigations and analyses as Buyer
deems necessary or appropriate concerning Buyer's proposed use, development and
sale of the Property.  Buyer is buying the property on an "as is-all faults"
basis.  No patent or latent condition affecting the Property in any way
(including without limitation, the effects of Hazardous Materials, unless the
hazardous materials are reported in the Phase 1 study done under Article 6.1.1
or otherwise shown within seven years of the Close of Escrow by clear and
convincing evidence to have been present on the property before the Close of
Escrow) (collectively, the "PROPERTY CONDITIONS"), shall give rise to any right
of damages, specific performance rescission or other claims by Buyer against
Seller.  Buyer hereby assumes the risk of any and all liabilities, claims,
demands, suits, judgments, losses, damages, expenses (including, without
limitation, attorney's fees) and other obligations arising out of or incurred in
connection with the effect of the Property Conditions (collectively, the
"ASSUMED RISKS") and hereby releases, waives, discharges, covenants not to sue,
indemnifies and agrees to hold harmless Seller, and all officers, directors,
shareholders, employees, agents, affiliates, partners, insurers, successors and
assigns of Seller, and each of them, from any and all liabilities or obligations
concerning the assumed Risks.  Seller shall have no obligation to correct any
conditions or alleged defects discovered by Buyer in the course of its
investigations or inspections or thereafter with respect 

                                       7
<PAGE>
 
to the Property except for Hazardous Materials are reported in the Phase 1 study
done under article 6.1.1 or otherwise shown within seven years of the Close of
Escrow by clear and convincing evidence to have been present on the Property
before the Close of Escrow. Notwithstanding the above, Seller shall only be
obligated to remediate any Hazardous Materials on the Property pre-existing the
Closing Date, except those attributable to Buyer, its agents, and their
activities, to industrial standards and not residential standards. In connection
therewith, upon Seller's request at any time, buyer agrees that it will execute,
acknowledge and deliver to the DTSC a "Covenant to Restrict Use of Property"
which is a deed restriction which provides generally that the Property could not
be used for the following purposes: (i) a residence, including any mobile home
or factory-built housing, constructed or installed for use as permanently
occupied residential human habitation, (ii) a long-term care hospital for
humans, provided that nothing therein shall restrict use of the property for any
infirmary, medical aid station or emergency medical care facility where there is
no intent for any patient to remain in such facility for more than 24 hours,
(iii) a traditional public or private school for persons under 21 years of age,
provided that nothing therein shall restrict the use of the property for any
specialized training programs related to then-existing facilities on the
Property, or (iv) a day-care center for children and containing such other terms
and conditions typically required by the DTSC provided such terms and conditions
do not materially adversely interfere with the final development of the
Property.


        8.1.2   BUYER'S AUTHORITY.   Buyer and the individuals executing this
                -----------------
agreement for Buyer have the legal power, right and authority to enter into this
Agreement and to consummate the transaction contemplated hereby.


    8.2    SELLER'S ACKNOWLEDGMENTS, REPRESENTATIONS AND WARRANTIES.  Seller 
and the individuals executing this Agreement for Seller have the legal
right and authority to enter into this Agreement and  to consummate the
transaction contemplated hereby.  Seller makes no other representations or
warranties either express or implied.

    8.3    HAZARDOUS MATERIALS

        8.3.1  HAZARDOUS MATERIALS DEFINED.  For the purposes of this
               ---------------------------
agreement, "Hazardous Materials" shall mean and refer to any material or
substance which is (i) defined or listed as a "hazardous waste", "extremely
hazardous waste", "restrictive hazardous waste", "hazardous substance",
"hazardous material", "hazardous chemical", "extremely hazardous substance",
"toxic substance", "toxic pollutant", "pollutant", "pollution", "regulated
substance", "pesticide", "contaminant", "hazardous air pollutant", or words of
similar import, or considered a waste, condition of pollution, or nuisance,
pursuant to the laws of California and/or the United States, (ii) gasoline,
diesel fuel, oil, used oil, petroleum, or a petroleum product or fraction
thereof, (iii) asbestos and asbestos-containing construction materials as
defined by federal or state law, by weight, of asbestos, (iv) substances known
by the State of California or the United States to cause cancer and/or
reproductive toxicity, (v) toxic, corrosive, flammable, infectious, radioactive,
mutagenic, explosive or otherwise hazardous substances which are or become
regulated by any governmental agency or instrumentality of the United States, or
any state or any political subdivision thereof, (vi) polychlorinated biphenyls
(PCBs), (vii) urea formaldehyde foam insulation, (viii) all hazardous air
pollutants or materials known to cause serious health effects (including,
without limitation, volatile hydrocarbons, pesticides, herbicides and industrial
solvents) and/or (ix) substances which constitute a material health, 

                                       8
<PAGE>
 
safety or environmental risk to any Person or property. It is the intent of the
parties hereto to construe the term "Hazardous Materials" in its broadest sense.

        8.3.2    ASSUMPTION OF RISKS, RELEASE AND INDEMNITY.  Buyer for
                 ------------------------------------------
itself and its successors and assigns (the "BUYER'S RELATED PARTIES") hereby (i)
agrees that Buyer is relying solely on its investigation, including but not
limited to the Phase 1 study done under Article 6.1.1, of the Property covering
the effect of any Hazardous Materials that may be on or beneath the Property or
threaten now or in the future to subject the Buyer or others to liability,
whether disclosed by such investigations or not (collectively, the "HAZARDOUS
MATERIALS EFFECTS"), (ii) assumes the risk of any and all liabilities, claims,
demands, suits, injunctive proceedings, administrative actions, judgments,
losses, damages, expenses (including, without limitation, attorneys' fees) and
other obligations arising out of or incurred in connection with the Hazardous
Materials effects, if any, (including without limitation, the effects of
Hazardous Materials, unless the Hazardous Materials are reported in the Phase 1
study done under Article 6.1.1 or otherwise shown within seven years of the
Close of Escrow by clear and convincing evidence to have been present on the
property before the close of escrow) (collectively, the "Assumed Risks") (iii)
releases, waives, discharges, covenants not to sue seller and all officers,
directors, shareholders, employees, agents, affiliates, partners, insurers,
successors and assigns of seller (collectively the "RELEASED PARTIES"), and each
of them for any and all liabilities or obligations concerning the Assumed Risks
except for any acts of Seller in placing Hazardous Materials on the Property,
(iv) agrees to defend, indemnify and hold harmless Seller and the other Released
Parties, and each of them, from any and all liabilities, obligations or costs
(including attorneys' fees) concerning the Assumed Risks and (v) waives the
benefits of California civil Code Section 1542 which provides as follows:

     "A general release does not extend to claims which the creditor does not
     know or suspect to exist in his favor at the time of executing the release,
     which if known by him must have materially affected his settlement with the
     debtor."


                                   ARTICLE 9
                              THE CLOSE OF ESCROW

     9.1     CLOSE OF ESCROW.  Escrow Agent shall close the Escrow (the
"CLOSE OF ESCROW") on or before the closing date WHEN AND ONLY WHEN each of the
following conditions has been, or upon such closing shall be, satisfied or
waived.

          9.1.1   SUPPLEMENTS TO PRELIMINARY REPORT.  If any title exceptions
                  ---------------------------------
are recorded against the Property before the Close of Escrow in addition to the
Permitted Exceptions or instruments disclosed in this Agreement, Buyer shall
have approved such exceptions within fifteen (15) days after receipt of a
supplemental report showing such exceptions or this Agreement shall terminate.

          9.1.2  TITLE POLICY.  Escrow Agent shall be unconditionally
                 ------------
committed to procure from the Title Company, at Seller's expense, a CLTA joint
protection policy of title insurance (the "TITLE POLICY") with a liability limit
in the amount of the purchase price and insuring fee title vested in Buyer free
and clear of any liens, encumbrances and interests except: (i) general, special
and supplemental taxes, bonds and assessments (including without 

                                       9
<PAGE>
 
limitation any Special taxes); (ii) the permitted exceptions; (iii) those
rights, interests and easements reserved by Seller in Seller's Grant Deed; (iv)
the matters described in the printed form portion of the Title Policy; and (v)
any items caused by the acts or omissions of Buyer or permitted to be placed of
record by Buyer as of the close of escrow.


          9.1.3   BUYER'S PERFORMANCE, REPRESENTATIONS AND WARRANTIES.
                  ---------------------------------------------------
Buyer shall have duly performed each and every undertaking and agreement to be
performed by it hereunder and under the terms and conditions of the Agreement,
and Buyer's representations and warranties shall be true and correct in all
material respects at and as of the Close of Escrow.  Buyer shall provide Seller
an Officer's certificate, certifying the above.

    9.2    TERMINATION BASED ON FAILURE TO CLOSE BY CLOSING DATE.  If Escrow 
fails to close by the Closing Date for any reason other than Buyer's or
Seller's default, then, except for Buyer's obligations to indemnify Seller, the
respective rights, duties and obligations of Buyer and Seller under this
Agreement shall forthwith terminate without further liability.  The Parties
shall immediately thereafter sign such instructions and other instruments as may
be necessary to effect the cancellation of this Escrow, and each party shall pay
its respective share (if any) of escrow cancellation charges.  Upon
cancellation, Escrow Agent shall immediately return the funds, less applicable
escrow cancellation charges, and documents to the parties that furnished them
and Seller shall return the Deposit to Buyer less any cancellation fees.
Notwithstanding the provisions of this Paragraph, the Parties may extend the
Closing Date by their mutual written agreement in which event the provisions of
this Paragraph shall apply to the extended closing date with the same force and
effect as the Closing Date.

    9.3    PRORATIONS.  Property taxes, special assessments, utility
charges and other similar amounts with respect to the Property shall be prorated
as of the Closing Date by the Escrow Agent, in accordance with the Escrow
Agent's standard practices and as shall be mutually agreed upon by Buyer and
Seller prior to the Close of Escrow.  All such adjustments shall be against the
cash portion of the Purchase Price.

    9.4    SELLER'S FEES AND COSTS. Seller will pay (i) the fee for the Title
Policy, (ii) one-half of Escrow Agent's escrow fee and (iii) usual Seller's
document-drafting and recording charges.

    9.5    BUYER'S FEES AND COSTS.  Buyer will pay  (i) County Documentary
transfer tax in the amount Escrow Agent determines to be required by law and
(ii) one-half of Escrow Agent's escrow fee, and (ii) usual Buyer's document-
drafting and recording charges.


                                   ARTICLE 10
                                   
                                    REMEDIES

    10.1   SELLER'S LIQUIDATED DAMAGES. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S
DEFAULT UNDER THIS AGREEMENT, SELLER WILL BE DAMAGED AND WILL BE ENTITLED TO
COMPENSATION FOR THOSE DAMAGES. SUCH DAMAGES WILL, HOWEVER, BE EXTREMELY
DIFFICULT AND IMPRACTICAL TO ASCERTAIN. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S
DEFAULT UNDER THIS AGREEMENT, THE SUM REPRESENTED BY THE DEPOSIT MADE UNDER
PARAGRAPH 2.2 AND THE

                                       10
<PAGE>
 
EXTENSION PAYMENT MADE UNDER PARAGRAPH 3.3.2, IF ANY, SHALL BE DEEMED TO 
CONSTITUTE A REASONABLE ESTIMATE OF SELLER'S DAMAGES UNDER THE PROVISIONS OF 
SECTION 1671 OF THE CALIFORNIA CIVIL CODE AND SELLER'S SOLE AND EXCLUSIVE 
REMEDY IN THE EVENT OF THE FAILURE TO CLOSE ESCROW RESULTING FROM BUYER'S 
DEFAULT SHALL BE LIMITED TO SUCH AMOUNT PROVIDED, HOWEVER, THAT THE PARTIES 
AGREE THAT, IN NO EVENT, SHALL THIS LIQUIDATED DAMAGES PROVISION APPLY TO ANY 
BREACH OF BUYER'S OBLIGATIONS UNDER ANY OTHER INDEMNITY PROVISIONS OF
THIS AGREEMENT.  BY INITIALING THIS PROVISION IN THE SPACES BELOW, SELLER AND
BUYER EACH SPECIFICALLY AFFIRM THEIR RESPECTIVE AGREEMENTS CONTAINED IN THIS
ARTICLE 9.

     BUYER'S INITIALS  ___________      SELLER'S INITIALS __________________

     10.2   DAMAGES AGAINST SELLER.  Buyer, by its execution of this
Agreement, acknowledges and agrees that if Seller defaults under any provisions
of this Agreement, including the provisions of article 6.1, Seller shall return
the Deposit to Buyer, less any escrow cancellation fees.  In addition, Seller
will extend the lease for Buyer's temporary facilities for six months from the
date of the cancellation of escrow.  Other than the return of the Deposit and
the extension of the lease, Buyer's sole and exclusive remedy is the payment of
actual damages, in an amount not to exceed One Hundred Thousand Dollars
($100,000.00) and hereby waives any actions against Seller or the Property for
specific performance and consequential damages.  Buyer covenants and agrees
that, under no circumstances, will it file or record a lis pendens against the
Property.


                                   ARTICLE 11

                               GENERAL PROVISIONS

     11.1   TIME OF THE ESSENCE AND STRICT CONSTRUCTION.  Time is of the
essence pursuant to this Agreement  for the performance and observance of all
obligations of Seller and Buyer hereunder and all provisions of this Agreement
shall be strictly construed.

     11.2   NOTICE AND DEMANDS.  All notices or demands required or
permitted pursuant to this Agreement shall be in writing, signed by the party
giving the same, and shall be deemed properly given and received when personally
served or upon the earlier of (i) receipt or (ii) rejection, if sent by
registered or certified mail, postage prepaid or by nationally recognized
overnight courier service, such as Federal Express, and addressed to the
intended recipient at its address as set forth below or at any other address of
which such party gives the other party notice in accordance with the provisions
of this Section 11.1.

    If to Buyer:  Budway Enterprises Inc.
                  4700 Gregg Road
                  Pico Rivera, CA  90660
    Attention:    Rick McLeod

                                       11
<PAGE>
 
    If to Seller:       Kaiser Ventures  Inc.
                        3633 E. Inland Empire Blvd., Suite 850
                        Ontario, CA  91764
                        Attention: Lee R. Redmond, III, 
                                   Sr. Vice President - Real Estate

    With a copy to:        Kaiser Ventures Inc.
                           3633 E. Inland Empire Blvd., Suite 850
                           Ontario, CA  91764
                           Attention: Terry L. Cook, 
                                      Sr. Vice President and General Counsel

     11.3    CAPTIONS FOR CONVENIENCE.  The headings and captions of this
Agreement are for convenience and reference only and shall not be considered in
interpreting the provisions hereof.

     11.4    SEVERABILITY.  Any provision in this Agreement which is
illegal, invalid or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such illegality, invalidity or
unenforceability without invalidating the remaining provisions hereof or
affecting the legality, validity or enforceability of such provision in any
other jurisdiction.  Seller and Buyer shall negotiate in good faith to replace
any illegal, invalid or unenforceable provision of this Agreement with a legal,
valid and enforceable provision that, to the extent possible, will preserve the
economic bargain of this agreement, or shall otherwise amend this Agreement,
including the provision relating to choice of law, to achieve such result.

     11.5    GOVERNING LAW.  This Agreement shall be interpreted and
enforced according to the laws of the State of California.

     11.6    NO ORAL AMENDMENT OR MODIFICATION.  No provision of this
Agreement may be amended or modified except to the extent any such amendment or
modification is expressly set forth in a written instrument executed by the
party against whom the amendment or modification is sought.

     11.7    RELATIONSHIP OF SELLER AND BUYER.  Nothing contained in this
Agreement shall be deemed or construed as creating the relationship of principal
and agent, partnership, or joint venture and no provision in this Agreement and
no act of Seller or Buyer shall be deemed to create any relationship other than
that of Seller and Buyer.  Without limiting the generality of the foregoing, all
obligations of Seller and Buyer with respect to third parties shall be
independent.

     11.8    ATTORNEYS' FEES.  If it becomes necessary for Seller or Buyer
to bring an action (including any form of dispute resolution), either at law or
in equity, to enforce or interpret the provisions of this Agreement, the
prevailing party in such action shall be entitled to recover its reasonable
attorneys' fees and other professional fees and costs of all types, as a part of
any judgment therein, in addition to any other award which may be granted.

     11.9    AMENDED AND SUCCESSOR STATUTES AND REGULATIONS.  All references
in this Agreement to a statute or regulation or section of same, shall include
future amendments and successor statutes, regulations, or sections thereof, as
applicable, and all references in this 

                                       12
<PAGE>
 
Agreement to any local, state or federal government commission, department or 
agency or instrumentality or court shall include their successors.

     11.10    ENTIRE AGREEMENT.  This agreement and the exhibits and
schedules, if any, attached hereto contains all of the agreements and
understanding with respect to the matters covered hereby, and no prior
agreements, oral or written, or understandings, representations, or warranties
of any nature or kind what so ever pertaining to such matters shall be effective
for any purpose unless expressly incorporated into the provisions of this
Agreement or the exhibits attached hereto.

     11.11    EXHIBITS AND SCHEDULES.  All exhibits and schedules which are
referred to in this Agreement are incorporated into this Agreement as though
fully set forth herein.

     11.12    CONFIDENTIALITY.  If either Party gives notice to the other
Party that certain of its information is being furnished or for which access is
being given to the other Party on a confidential basis, then, to the extent that
such information is disclosed or made available to it, the other Party shall
thereafter treat and maintain the same as confidential information and shall not
use it or disclose it to others without the prior consent of the party giving
notice; provided, however, that this provision shall not apply to (a) disclosure
or use as is necessary to perform the provisions of this agreement (but only on
a confidential basis which is satisfactory to the party giving notice) and (b)
disclosure or use which is required or compelled by law.  Notwithstanding the
foregoing, this section 10.12 shall not apply to any information which the Party
to which the information has been furnished can show (i) has been published or
become part of the public domain other than by the conduct of such Party, its
officers, employees or agents; (ii) has been furnished or made known to such
Party by third parties (other than those acting directly or indirectly on behalf
of such Party) as a matter of legal right and without restriction on disclosure
or (iii) was lawfully in such Party's possession before the disclosure by the
disclosing Party.

     11.13    SUCCESSORS AND ASSIGNS.  Buyer may not, voluntarily or by
operation of law, assign or otherwise transfer any of its rights or obligations
under this Agreement without obtaining the prior written consent of Seller,
which consent shall not be withheld unreasonably. Seller will allow an
assignment to a McLeod family trust, family partnership or limited liability
company, so long as the Buyer shall remain obligated hereunder, either as a
direct signatory or as a guarantor Seller may, at any time, assign or otherwise
transfer its rights and obligations under this Agreement without the consent of
Buyer. Such assignment shall not release Seller from its obligations hereunder.
subject to the restrictions and prohibitions on assignment each and all of the
covenants and conditions of this agreement shall inure to the benefit of and
shall be binding upon the successors in interest of seller, and, subject to the
restrictions on transfers herein provided, the successors, heirs,
representatives and assigns of Buyer.

     11.14    EMINENT DOMAIN.  If, prior to the Close of Escrow, all or any
portion of the Property is taken or appropriated by any public or quasi-public
authority under the power of eminent domain or such an eminent domain action is
threatened pursuant to a resolution of intention to condemn filed by any public
entity, and if such taking will materially and adversely affect the Property,
then Buyer may terminate this agreement without further liability hereunder and
receive a refund of its Deposit and documents deposited herein. If Buyer does
not timely terminate this Agreement or if a partial taking of the Property which

                                       13
<PAGE>
 
does not materially and adversely affect the Property occurs, then this
Agreement shall remain in full force and effect and upon the Closing Date Buyer
shall receive from Seller any award paid for that portion of the Property taken
or the right to an award if not paid as of the Closing Date.  Buyer must elect
to terminate or maintain the Agreement by notice in writing to Seller with
twenty (20) days after written notice by Seller of a threatened taking or it
shall be deemed that Buyer has elected not to terminate this Agreement.  Buyer
may also have the right to seek an award of condemnation for any future loss of
revenue Budway may have.

     11.15    COUNTERPARTS.  This agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which 
shall constitute one and the same instrument.

      IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be 
executed by their respective duly authorized representative as of the day and 
year first above written.

SELLER:                                          BUYER:
Kaiser Ventures Inc.                             Budway Enterprises Inc.
a Delaware corporation                           a California corporation



By:/s/ Lee R. Redmond III                        By: /s/ Rick McCloud
   ____________________________                     ---------------------------
   Lee R. Redmond III                            its   Vice President
   Senior Vice President -                          ---------------------------
   Real Estate
                                       14
<PAGE>
 
                                   EXHIBITS

Exhibit "A"    Propoerty Description (Article 1.1)

Exhibit "B"    Note (Article 2.2.3)

Exhibit "C"    Deed of Trust (Article 2.2.3)

Exhibit "D"    Grant Deed (Article 3.2.1)

Exhibit "E"    Declaration of Construction Covenants, Use Restrictions, Lien
               Rights and Repurchase Option (Article 2.2.4)

Exhibit "F"    Form of Guaranty, Guarantee of V.M. McLeod (Article 2.2.5)

                                       15