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                                                                    EXHIBIT 10.3
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               AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
                  AND RELATED PERSONAL PROPERTY IN REGARD TO
                      THE EAGLE MOUNTAIN LANDFILL PROJECT
                         AND JOINT ESCROW INSTRUCTIONS

ESCROW NO.:  ___________________
DATE OF OPENING ESCROW:  __________________, 2000

Chicago Title Insurance Company ("Title Company")

Commerce Escrow Company ("Escrow Agent")
1545 Wilshire Blvd., Suite 600
Los Angeles, California  90017
        Attention: Phil Graf, President

Telephone No.: (213) 484-0855
Fax No.:       (213) 484-0417

     THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND RELATED PERSONAL
PROPERTY IN REGARD TO THE EAGLE MOUNTAIN LANDFILL AND JOINT ESCROW INSTRUCTIONS
(this "Agreement") is made this 9/th/ day of August, 2000, by and between Mine
Reclamation, LLC ("Seller"), and County Sanitation District No. 2 of Los Angeles
County ("Buyer"), a special district organized and existing pursuant to the
County Sanitation District Act, Health and Safety Code (S)(S)4700, et seq.
(collectively, the "Parties").

     WHEREAS, Seller owns or controls through its Affiliates certain real
property, personal property, and intellectual property, as defined in this
paragraph ("Property") located in Riverside County that comprise the Eagle
Mountain Landfill Project (the "Project"), which includes various regulatory
permits and approvals ("Permits"). The real property is legally

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described in Exhibit "A" ("Real Property"), the personal property is scheduled
in Exhibit "B," the intellectual property is scheduled in Exhibit "C," (personal
and intellectual property to be referred to herein collectively as "Personal
Property") and the Permits are listed on Exhibit "D" to this Agreement.

     WHEREAS, the Project is permitted for the development and operation of a
sanitary landfill that is permitted to accept waste from within Riverside County
and waste delivered by rail from sites outside of Riverside County, as more
fully described in that certain Development Agreement No. 64 approved by the
County of Riverside, dated September 9, 1997, and the Specific Plan Conditions
of Approval for the Project.

     WHEREAS, Buyer operates sanitary landfills, materials recovery facilities,
and transfer stations in accordance with that certain Solid Waste Management
System Agreement, effective February 21, 1996, by and between Buyer and certain
other County Sanitation Districts of Los Angeles County ("System Agreement").
Buyer is exercising authority and acquiring the Project under the terms of the
System Agreement.

     WHEREAS, Buyer and Seller desire by this Agreement to provide for the
transfer of all of the right, title, and interest of the Seller and its
Affiliates in the Project (except where certain easements and rights are to be
non-exclusive), including all Property and Permits necessary to operate and form
an integral part of the Project, to Buyer in exchange for the payment to Seller
of the consideration provided herein, so that Buyer will be able develop and
operate the Project under the terms of the existing Permits and other project
approvals in accordance with this Agreement and the System Agreement.

     WHEREAS, this Agreement does not change the permitted operating conditions
of the Project and does not have a potential to result in a physical change in
the environment, directly

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or ultimately which is different from that which would occur if Seller were to
retain ownership of the Project and were to develop its permitted landfill
operations on the Property.

     NOW, THEREFORE, the parties agree as follows:

1.   DEFINITIONS.

     This Agreement will be construed in accordance with the following
     definitions:

          "Affiliates" means Mine Reclamation Corporation, Kaiser Eagle Mountain
     Inc., Kaiser Reclamation Corporation, and Kaiser Ventures Inc.

          "Agreement" is defined in the preamble.

          "Approved Exceptions" is defined in Section 10(a).

          "Assignment" is defined in Section 10(b)(ii).

          "Buyer" is defined in the preamble.

          "CEQA" means the California Environmental Quality Act, Public
     Resources Code (S)(S) 21000, et seq., the Guidelines for the Implementation
     of the California Environmental Quality Act, Cal. Code of Regulations,
     Title 14, Division 6, Chapter 3 (S)(S) 15000 et seq., including any laws,
     regulations, or orders of any kind pertaining to protection of the
     environment or environmental justice.

          "Chief Engineer" means Buyer's Chief Engineer and General Manager or
     his designee duly authorized to act on behalf of Buyer.

          "Close of Escrow" is defined in Section 10(d).

          "Closing Certificate" is defined in Section 13(h).

          "Closing Date" is defined in Section 10(d).

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          "Closing Documents" is defined in Section 5, and shall include the
     documents described on Exhibit E.

          "Closure Operations" shall mean those operations of Buyer that are
     undertaken in regard to the closure of the Property as a sanitary landfill
     as required by law, including without limitation, the California Integrated
     Waste Management Act (Public Resources Code (S)(S)40000 et seq.) and as may
     be deemed appropriate by Buyer.

          "CLTA" is defined in Section 9 (a).

          "CUP" is defined in Section 3(c).

          "Deed" is defined in Section 10(b)(i).

          "Deposit" is defined in Section 5.

          "Disapproved Exception" is defined in Section 9(d).

          "Due Diligence Period" means the period defined in Section 6.

          "EPA" is defined in Section 13(a)(iv).

          "Environmental Laws" means any federal, state or local statute,
     ordinance, rule, regulation, order, consent decree, judgment or common-law
     doctrine, and provisions and conditions of permits, licenses and other
     operating authorizations relating to (i) pollution or protection of the
     environment, including natural resources, (ii) exposure of persons,
     including employees, to Hazardous Materials or other products, bio-hazards,
     chemicals or other substances, (iii) protection of the public health or
     welfare from the effects of by-products, wastes, emissions, discharges or
     releases of chemical or biological substances from industrial or commercial
     activities, or (iv) regulation of the manufacture, use or introduction into
     commerce of chemical substances, including,

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     without limitation, their manufacture, formulation, labeling, distribution,
     transportation, handling, storage and disposal.

          "Escrow" is defined in Section 5.

          "Escrow Agent" is designated on the first page of this Agreement.

          "Exception" is defined in Section 9(c).

          "Final Payment" is defined in Section 3(b).

          "Hazardous Substances" and "Hazardous Materials" as used in this
          Agreement shall mean the same as those terms are defined within:

          (a)  The Comprehensive Environmental Response, Compensation and
               Liability Act of 1980 ("CERCLA") [42 USCS (S)(S) 9601 et seq.];
               the Resource Conservation and Recovery Act of 1976 ("RCRA") [42
               USCS (S)(S) 6901 et seq.]; the Clean Water Act, also known as the
               Federal Water Pollution Control Act ("FWPCA") [33 USCS (S)(S)
               1251 et seq.]; the Toxic Substances Control Act ("TSCA") [15 USCS
               (S)(S) 2601 et seq.]; the Hazardous Materials Transportation Act
               ("HMTA") [49 USCS (S)(S) 1801 et seq.]; the Insecticide,
               Fungicide, Rodenticide Act (7 USCS (S)(S) 136 et seq.]; the
               Superfund Amendments and Re-authorization Act [42 USCS (S)(S)
               6901 et seq.]; the Clean Air Act [42 USCS (S)(S) 7401 et seq.];
               the Safe Drinking Water Act [42 USCS (S)(S) 3001 et seq.]; the
               Solid Waste Disposal Act [42 USCS (S)(S) 6901 et seq.]; the
               Surface Mining Control and Reclamation Act [30 USCS (S)(S) 1201
               et seq.]; the Emergency Planning and Community Right to Know Act
               [42 USCS (S)(S) 11001 et seq.]; the Occupational Safety and
               Health Act [29 USCS (S)(S) 655 and

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               657]; the California Underground Storage of Hazardous Substances
               Act [Health and Safety Code (S)(S) 25280 et seq.]; the California
               Hazardous Substances Account Act [Health and Safety Code (S)(S)
               25300 et seq.]; the California Hazardous Waste Control Act
               [Health and Safety Code (S)(S)25100 et seq.]; the California Safe
               Drinking Water and Toxic Enforcement Act [Health and Safety Code
               (S)(S) 24249.5 et seq.]; the Porter-Cologne Water Quality Act
               [Water Code (S)(S) 13000 et seq.] together with any amendments of
               or regulations promulgated under the statutes cited above and any
               other federal, state, or local law, statute, ordinance, or
               regulation now in effect that pertains to occupational health or
               industrial hygiene, and only to the extent that the occupational
               health or industrial hygiene laws, ordinances, or regulations
               relate to Hazardous Substances and/or Hazardous Materials on,
               under or about the Real Property, or the regulation or protection
               of the environment, including ambient air, soil, soil vapor,
               groundwater, surface water, or land use;

          (b)  Those substances listed in the United States Department of
               Transportation Table [49 CFR 172.101], or by the EPA, or any
               successor agency, as hazardous substances [40 CFR Part 302];

          (c)  Other substances, materials, and wastes that are regulated or
               classified as hazardous or toxic under federal, state, or local
               laws or regulations; and

          (d)  Any material, waste, or substance that is

               (i)   a petroleum or refined petroleum product,

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               (ii)  asbestos,

               (iii) polychlorinated biphenyl,

               (iv)  designated as a hazardous substance pursuant to 33 USCS (S)
                     1321 or listed pursuant to 33 USCS (S) 1317,

               (v)   a flammable explosive, or

               (vi)  a radioactive material.

          "Initial Payment" is defined in Section 3(a).

          "Permits" are defined in the recitals, and are listed on Exhibit "D."

          "Personal Property" is defined in the recitals. In addition to the
     items set forth in Exhibit "B," Personal Property shall be deemed to
     include all licenses, entitlements, specifications, maps, drawings and
     other renderings related to the Property as well as all warranty claims
     which relate to the Personal Property, all contracts and other rights
     (except financial assurances of or on behalf of Seller) relating to or
     benefitting the Property, including intangible rights, goodwill, claims, or
     awards. Personal Property also shall include all appurtenances presently
     existing as a part of the Project and required for the operation and
     maintenance of the sanitary landfill and other operations conducted at the
     Project site, including, but not limited to, stationary equipment,
     computers, tools, fences and trailers, and shall also include all files and
     plans related to all Permits that have been issued in respect to the
     Project or the Property and to the operation, maintenance, design,
     monitoring, history, geotechnical and geological studies related to the
     Real Property.

          "Preliminary Report" is defined in Section 9(a).

          "Prevailing Party" is defined in Section 21.

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          "Project" means the Eagle Mountain Landfill Project as contemplated
     and described in Development Agreement No. 64 approved by the County of
     Riverside, dated September 9, 1997, and the Specific Plan Conditions of
     Approval for the Project. The Project does not include the existing Eagle
     Mountain town site.

          "Property" is defined in the recitals. In addition to the Real
     Property legally described in Exhibit "A," Property shall include, but not
     be limited to, all buildings and, to the extent of the interests therein of
     Seller or its Affiliates, rail facilities, irrigation systems, water,
     electrical, and drainage systems and structures, roads and other utilities
     located on or serving the Real Property or developed, constructed, or
     acquired for the operation of the Project, subject to and except for such
     rights, reservations, easements, exclusions, property and other items as
     may be mutually agreed upon by the Parties prior to Close of Escrow.

          "Purchase Price" is defined in Section 3.

          "Real Property" is defined in the recitals, and legally described in
Exhibit A.

          "Section" means sections of this Agreement.

          "Seller" is defined in the preamble.

          "Seller's Parties" is defined in Section 8.

          "Specified Operations" is defined in Section 3(c).

          "Survey" is defined in Section 9(b).

          "System Agreement" is defined in the recitals.

          "Title Company" is defined in the preamble.

          "Title Policy" is defined in Section 10(a).

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1.   PURCHASE AND SALE.

     Upon the terms provided herein, Seller agrees to sell, assign, and transfer
to Buyer all of Seller's right, title, and interest in the Project, including
the rights of Affiliates that will be acquired by Seller and transferred to
Buyer pursuant to this Agreement, including all of the Property and Permits that
comprise the Project, and Buyer agrees to purchase the Project and assume all of
the duties and obligations of Seller and its Affiliates in and to the Project.

2.   PURCHASE PRICE.

     Buyer and Seller agree that the Purchase Price shall be $41 million
("Purchase Price"), and shall be payable to Seller in two payments as described
below:

     (a)  Prior to Close of Escrow, Buyer shall deposit the Purchase Price (less
          the Deposit) in Escrow. Upon Close of Escrow, Escrow Agent shall place
          the sum of $39 million (the "Initial Payment") into an interest-
          earning escrow account to be selected by the Parties, which sum shall
          be held and disbursed as provided in Section 13 (d). If Close of
          Escrow fails to occur on or before January 1, 2001, and Seller has
          satisfied all conditions of closing as set forth in Section 7 of this
          Agreement, the Initial Payment shall be increased by the amount of
          interest earned on such sum by Buyer in the Pooled Surplus Investment
          Fund of the County of Los Angeles from January 1, 2001, until Close of
          Escrow.

     (b)  Upon Close of Escrow, the Escrow Agent shall place the sum of $2
          million into a separate escrow account to be selected by the Parties
          and to be invested at the direction of Seller from a list of approved
          investments supplied by Buyer, and held and disbursed in accordance
          with Section 3(c) (the "Final Payment").

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     (c)  The Final Payment shall be held in the escrow account and paid to
          Seller only in the event that the County of Los Angeles issues to
          Buyer a Conditional Use Permit for the Puente Hills Landfill ("CUP")
          that authorizes continued landfill operations after November 3, 2003,
          until the remaining capacity of the Puente Hills Landfill has been
          fully utilized at a permitted weekly waste acceptance rate of at least
          72,000 tons representing an operating life of approximately ten years,
          or such lesser amount as otherwise approved by Buyer's Board of
          Directors at the time that a final environmental impact report for the
          continued operation of the Puente Hills Landfill is approved and
          certified ("the Specified Operations"). Buyer, at its expense, shall
          undertake all reasonable efforts to promptly and diligently pursue
          obtaining a CUP providing for the Specified Operations and all
          reasonable efforts to defend against legal or administrative challenge
          to the CUP and related environmental and use approvals. In the event
          the County of Los Angeles issues a CUP that provides for the Specified
          Operations, the Final Payment plus accrued interest shall be paid to
          Seller at the time the CUP becomes final. For the purposes of this
          section, the CUP shall become final upon the expiration of any appeal
          periods without the filing of an appeal or the conclusion, by final
          judgment, dismissal, settlement, or otherwise, of any and all legal
          proceedings, including any appeals, by writ or otherwise, involving
          the CUP or compliance with CEQA, so that the CUP for the Puente Hills
          Landfill is no longer subject to legal challenge. In the event that
          the County issues two conditional use permits with terms that
          cumulatively and continuously provide

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          for the Specified Operations, the Final Payment plus accrued interest
          shall be paid to Seller at the time the later permit that provides for
          such operations becomes final. In the event that the County of Los
          Angeles does not issue a CUP for the continued operation of the Puente
          Hills Landfill, or issues a CUP that does not provide for the
          Specified Operations, then the Final Payment plus accrued interest
          shall not be part of the Purchase Price and such amount will be
          released from the escrow account to Buyer. In the event that a CUP is
          issued with waste acceptance rates that have been reduced for the
          primary purpose of causing Seller not to receive the Final Payment,
          Seller shall nonetheless be entitled to receive the Final Payment.

3.   TRANSFER OF PERSONAL PROPERTY.

     As a part of the Purchase Price, Seller agrees to sell to Buyer and Buyer
agrees to purchase from Seller those items of tangible personal property,
including mobile equipment, detailed in Exhibit "B." Prior to the Close of
Escrow, Seller shall deposit in Escrow bills of sale and endorsed certificates
of title in favor of Buyer with respect to all items of Personal Property,
including all items of equipment and vehicles, listed on Exhibit B, together
with appropriate instruments of transfer. Any sales tax incurred by reason of
this transaction shall be paid by Seller outside Escrow.

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4   ESCROW.

     Within three (3) business days following approval of this Agreement by the
Seller's and Buyer's respective boards of directors, the Parties shall establish
escrow ("Escrow") with Escrow Agent, subject to the provisions of the standard
conditions for acceptance of escrow as may be reasonably approved by Buyer and
Seller, but only to the extent that the standard conditions are consistent with
this Agreement, impose no additional liabilities or obligations between the
Parties, and are specifically subject to the terms and conditions of this
Agreement, the latter to control in the case of conflict. A signed counterpart
of this Agreement is to be delivered as joint escrow instructions to Escrow
Agent. Prior to the Closing Date, all other documents required to complete the
closing (collectively, the "Closing Documents") shall be deposited into Escrow.
The Closing Documents shall contain closing conditions provided herein, and
include the documents listed on Exhibit E of this Agreement. Within five (5)
business days following the opening of Escrow, Buyer shall deposit with Escrow
Agent the sum of fifty thousand dollars ($50,000.00) to be applied to the
initial payment of the Purchase Price at the Close of Escrow ("Deposit"). The
Escrow Agent shall place the Deposit in a state or federally chartered bank in
an interest bearing account as selected by the Parties whose term is appropriate
and consistent with the timing requirements of this transaction. The interest
therefrom shall accrue to the benefit of Buyer, whose Federal Tax Identification
Number is 95-3755190. Escrow Agent is hereby authorized and instructed to
conduct the Escrow in accordance with this Agreement.

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5.   DUE DILIGENCE.

     (1)  Within ninety (90) days following the opening of Escrow (the "Due
          Diligence Period"), Buyer will, at its sole cost and expense, complete
          its due diligence examination of the Project, during which, among
          other things, Buyer will, with Seller's cooperation and assistance at
          Seller's sole cost and expense:

          (1)  investigate the validity and sufficiency of the Permits,
               consents, and approvals for the Project, and arrange for the
               transfer or assignment of such Permits at Close of Escrow, or,
               with the written consent of the Chief Engineer, after Close of
               Escrow, and obtain any required consents and approvals for
               Buyer's ownership and operation of the Project upon Close of
               Escrow;

          (2)  conduct any environmental audits, geological investigations, and
               operational assessments of the site and private rail line and
               review title to the Real Property, including an ALTA survey at
               Buyer's election and expense;

          (3)  make such inquiries as Buyer deems reasonably appropriate of
               Seller's contractors, consultants, and/or regulators in regard to
               the Project and Buyer shall keep Seller reasonably informed of
               all such inquiries during the Due Diligence Period;

          (4)  examine all books, records and files relating to the Project,
               except for those books, records, and files that are privileged,
               or are privileged from disclosure under the attorney work product
               doctrine.

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          (2)  During the Due Diligence Period, Seller shall provide Buyer with
               full and complete access to the Real and Personal Property, and
               all documents and records requested by Buyer to complete its due
               diligence, except for those books, records and files that are
               privileged or privileged from disclosure under the attorney work
               product doctrine. It is not intended that an assertion of
               privilege will prevent the Buyer from obtaining any factual,
               scientific, or technical information of importance to the
               acquisition, permitting and/or operation of the Project.

          (c)  Upon completion of its due diligence and its acceptance of the
               Project, Buyer will provide a Certificate of Acceptance of the
               Project to Seller and Escrow Agent. At the Close of Escrow, the
               Escrow Agent will deliver the initial payment, less any
               prorations, to Seller under Section 3 (a), and record, as
               necessary, and deliver the Closing Documents to Buyer.

          (d)  Seller grants to Buyer, its agents and employees, a license to
               enter upon any portion of the Real Property and rights of access
               to all Personal Property for purposes of conducting engineering
               tests, investigations, or other studies reasonably necessary to
               evaluate the condition of the Property in accordance with Section
               8 hereunder. Seller shall provide Buyer, its agents and
               employees, with reasonable access to water and utilities in
               connection with any such tests, investigations, or studies,
               provided that Buyer shall restore the Property to its pre-
               existing condition upon completion of any tests or investigation.

          (e)  Within thirty (30) days following the opening of Escrow under
               this Agreement by the Parties, Seller shall make available to
               Buyer for inspection all

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               architectural, engineering, and technical plans, surveys,
               specifications and other documents pertaining to the physical,
               geological or environmental condition of the Real Property, or
               which pertain to the zoning of and/or entitlements to the Real
               Property, or otherwise relate to the feasibility of conducting a
               Class III sanitary landfill operation on the Real Property, that
               are owned by or in the possession of Seller or its attorneys or
               consultants (which can be copied at Seller's expense), except
               communications that are subject to the attorney-client privilege
               or are privileged from disclosure under the attorney-work product
               doctrine. In the event that Escrow fails to close, Buyer shall
               deliver to Seller copies of all of Buyer's tests, studies or
               reports developed during the Due Diligence Period.

          (f)  If Buyer requires additional time to determine the existence and
               extent of any Hazardous Substance on the Property or other
               matters subject to Buyer's due diligence, except the presently-
               pending federal litigation, Buyer shall have the right,
               exercisable by delivering a written notice executed by the Chief
               Engineer to Seller prior to the expiration of the Due Diligence
               Period, to extend the Due Diligence Period for an additional
               period of up to forty-five (45) days to complete its examination
               of the Project.

          (g)  If the Chief Engineer disapproves the results of Buyer's
               examination of the Project, or in his sole and absolute
               discretion, determines that, because of environmental or economic
               factors or because of zoning matters, it is infeasible in his
               judgment for Buyer to conduct a Class III sanitary landfill
               operation on the Real Property or import solid waste from Los
               Angeles County in

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          economically viable quantities, the Chief Engineer may elect, prior to
          the last day of the Due Diligence Period, to terminate this Agreement
          on behalf of Buyer, giving to Seller written notification of his
          decision prior to the last day of the Due Diligence Period, in which
          event the Deposit together with all interest shall be returned to
          Buyer and the rights and duties of the Parties shall be as set forth
          in Section 9(d)(ii) and all plans, documents and information
          previously furnished shall be promptly returned to Seller together
          with all Buyer's investigatory studies and reports. If Buyer fails to
          notify Seller of its intent to terminate this Agreement within the Due
          Diligence Period, Buyer shall be deemed to be satisfied with the
          results of the inspection and review and shall be deemed to have
          waived its right to terminate this Agreement pursuant to this
          provision.

6.   CONDITIONS TO BUYER'S PERFORMANCE.

     Buyer's obligation to perform under this Agreement is subject to the
satisfaction or written waiver in whole or in part by the Chief Engineer of the
following conditions within the Due Diligence Period:

     (a)  The Chief Engineer's approval of the conditions of the Permits and
          governmental approvals for the Project and the Real Property and
          Personal Property as provided in Section 6.

     (b)  Buyer's obtaining by the Close of Escrow all necessary approvals and
          consents including such approvals and consents as may be necessary to
          have all of the Permits assigned to Buyer.  With regard to existing
          Permits held by Seller that

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          may legally be transferred to Buyer, such Permits will be deemed to
          have been obtained upon securing the consent to the transfer of the
          permitting authority.

     (c)  Pursuant to Health and Safety Code (S)4741 and Public Resources Code
          (S)49400, any required consent of the Board of Supervisors of the
          County of Riverside by resolution or otherwise to the acquisition of
          the Property by Buyer for a refuse disposal facility, and to the
          operation of said facility by Buyer.

     (d)  Seller's representations and warranties in this Agreement being
          correct as of the date of this Agreement and as of the Close of Escrow
          in all material respects.

     (e)  Seller's performance of all obligations under this Agreement.

     (f)  Title Company is prepared to issue, as stated in writing in an updated
          preliminary report, the Title Policy on the Close of Escrow, subject
          only to the Approved Exceptions.

     (g)  Escrow Agent is prepared to deliver to Buyer the instruments in favor
          of or accruing to Buyer pursuant to this Agreement.

7.   ACCESS.

     (3)  Access to Seller's documents, records and other information during the
          Due Diligence Period shall be given to Buyer during normal business
          hours upon at least one (1) business day's notice to Seller.  Access
          to the Property during the Due Diligence Period shall be given to
          Buyer  upon at least one (1) business day's notice to Seller.  Buyer
          agrees to indemnify, defend and hold harmless Seller and its
          Affiliates, and their past, current, and future respective officers,
          directors, employees, and agents (collectively "the Seller's Parties")
          from all

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          claims, losses, costs, liabilities, expenses, damages, or other
          injuries, including, without limitation, attorneys' fees and expenses,
          to the fullest extent not prohibited by applicable law, and all other
          costs and expenses incurred by reason of or in any manner resulting
          from Buyer's inspection and investigation of the Property; provided,
          however, that Buyer's obligation to indemnify, defend, and hold
          harmless the Seller's Parties shall not apply to claims, demands,
          causes of action, expenses, fees, costs or damages to the extent
          caused by the negligence or willful misconduct of the Seller's
          Parties. The provisions of this Section shall survive the Close of
          Escrow.

     (4)  Buyer and its contractors and consultants shall have the right, upon
          one day's prior notice, from the date of this Agreement until the
          Closing Date, to enter onto the Real Property, at their own cost and
          risk, for any purposes, including, but not limited to, inspecting the
          Property, taking samples of the soil, and conducting an environmental
          audit (including an investigation of past and current uses of the
          Property). Seller shall have the right to accompany Buyer or any of
          Buyer's employees, contractors, or consultants on any inspection of
          the Real Property. In the event Buyer or any party on behalf of Buyer
          takes samples, such sampling and testing shall be in accordance with
          agreed upon protocols between Seller and Buyer's Chief Engineer, which
          shall include the right to split samples. Buyer shall provide Seller
          with the results of any sampling it undertakes, including any draft
          and final reports. In addition, Buyer shall have the right to contact
          any federal, state, or local governmental authority or agency to
          investigate any matters relating to the Property, and shall kept

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          Seller reasonably informed of all such contacts during the Due
          Diligence Period. Seller agrees to cooperate reasonably with Buyer in
          the inspection of the Property and agrees to deliver to Buyer all non-
          privileged information in Seller's possession or control pertaining to
          the condition of the Property, including engineering and environmental
          reports, studies, tests, monitoring results, and related
          documentation.

8.   TITLE.

     (a)  Within fifteen (15) days of the date of execution of this Agreement by
          the Parties, Seller shall cause Title Company to issue to Buyer (with
          a copy to Seller) a preliminary report for a California Land Title
          Association ("CLTA") Standard Owner's Policy of Title Insurance, or at
          Buyer's option and additional prorated expense, a 1970 ALTA Form
          Owner's Policy for the Real Property, setting forth all record liens,
          encumbrances, easements, restrictions, conditions, pending litigation,
          judgments, administrative proceedings, and other matters affecting
          Seller's title to the Property ("Preliminary Report"), together with
          copies of all documents relating to title exceptions referred to in
          the Preliminary Report.

     (b)  Promptly following the full execution of this Agreement by the
          Parties, Buyer may cause, at its sole cost and expense, an ALTA survey
          of the Real Property to be prepared by a registered surveyor or
          professional engineer ("Survey"). If the Buyer conducts the Survey,
          Seller shall be provided at Seller's expense for the copying costs
          with two complete copies of the Survey. Seller agrees to

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          deliver to Buyer, promptly following the full execution and delivery
          of this Agreement, copies of any survey or survey information
          pertaining to the Real Property in the possession of Seller, its
          Affiliates, or its consultants.

     (c)  The Chief Engineer shall reasonably approve or disapprove each
          exception shown on the Preliminary Report and each encroachment,
          overlap, or boundary line dispute, or any other matter that materially
          and adversely affects title to the Real Property or that violates any
          law, rule, or regulation reflected on the Survey (each an "Exception")
          within fourteen (14) days following the receipt of the Preliminary
          Report or Survey, if Survey is made, whichever is later. The Chief
          Engineer's failure to approve within the fourteen (14) day period
          shall be deemed to be a disapproval of the Exceptions.

     (d)  If any Exception is disapproved or deemed disapproved (each a
          "Disapproved Exception"), Seller shall within thirty (30) days
          following expiration of the fourteen (14) day period provided under
          Section 9 (c) above, use all reasonable efforts to cause each
          Disapproved Exception (except money claims that can be paid through
          Escrow upon Close of Escrow, as provided below) to be discharged,
          satisfied, released, or terminated, as the case may be, of record, or
          arrange for Title Company to insure against any loss due to such
          exception, and in a form that is reasonably satisfactory to the Chief
          Engineer, all at Seller's sole cost and expense. Seller shall not be
          obligated to expend an amount estimated to exceed $250,000 on a
          cumulative basis to remove Disapproved Exceptions. Seller authorizes
          Escrow Agent to disburse from proceeds otherwise distributable to
          Seller upon Close of Escrow the sum sufficient to

                                       20
<PAGE>

          discharge any Disapproved Exception that may be discharged only by the
          payment of money, not to exceed $250,000. If Seller is unable to
          obtain a discharge, satisfaction, release, or termination within the
          period or monetary limits specified above, the Chief Engineer shall
          have the right to:

          (i)   waive any Disapproved Exceptions and proceed with Closing,
                accepting title to the Real Property subject to the Disapproved
                Exceptions;

          (ii)  terminate this Agreement, in which event Seller shall pay all
                charges of Escrow Agent in connection with this transaction;
                both Buyer and Seller shall be relieved of all further
                obligation and liability to each other under this Agreement,
                except Buyer's duty to restore the Real Property under Section 6
                (d), and all the funds and documents deposited with Escrow Agent
                shall be promptly refunded or returned, as the case may be, by
                Escrow Agent to the depositing party; or

          (iii) Upon agreement of the Chief Engineer and the President of
                Seller, the Close of Escrow may be deferred until any
                Disapproved Exceptions are removed.

9.   CLOSE OF ESCROW.

     (a)  Title. Simultaneously with the Close of Escrow, at Seller's expense,
          -----
          Title Company shall issue a CLTA Standard Owner's Policy of Title
          Insurance, or at Buyer's option and its additional prorated expense, a
          1970 ALTA Owner's Policy of Title Insurance ("Title Policy") to Buyer
          in the amount of the Purchase Price subject only to the following
          matters ("Approved Exceptions"):

                                       21
<PAGE>

          (i)  exceptions approved by the Chief Engineer in accordance with
          Section 9 (c), or (ii) waived under Section 9 (d) (i), or exceptions
          for matters that may be mutually agreed upon by Seller and Buyer's
          Chief Engineer, such as easements, reservations, and licenses for such
          things as access and utilities for properties retained by Seller's
          Affiliates.

     (b)  Seller's Deposits In Escrow. Seller shall deposit with Escrow Agent
          ---------------------------
          on or prior to Close of Escrow, the following documents in a form
          reasonably acceptable to Seller and Buyer's Chief Engineer:

          (i)   A grant deed executed and acknowledged in recordable form by
                Seller conveying to Buyer fee title to the Real Property,
                subject only to the Approved Exceptions ("Deed");

          (ii)  An assignment executed by Seller assigning to Buyer all of
                Seller's right, title and interest in all personal, tangible and
                intangible property comprising the Property ("Assignment").

          (iii) Certified copies of any and all resolutions as may be required
                by Buyer to confirm Seller's authority to enter into or carry
                out this Agreement.

          (iv)  The various Bills of Sale and other instruments of transfer
                referred to in Section 4.

          (v)   Such additional documents as the Chief Engineer may reasonably
                require in order to assure Seller's compliance with the
                conditions specified in  Section 7.

                                       22
<PAGE>

          (c)  Buyer's Deposits into Escrow. Buyer shall deposit with Escrow
               ----------------------------
               Agent, on or prior to the Close of Escrow, the balance of the
               Initial Payment of the Purchase Price in accordance with Section
               3(a), together with its share of the closing costs and a
               Certificate of Acceptance. Buyer shall deposit into an Escrow
               Account, the Final Payment of the Purchase Price to be held in
               accordance with Section 3 (c) on or prior to the Close of Escrow.

          (d)  Closing Date. The conveyance of the Property and transfer of
               ------------
               Permits to Buyer and the closing of this transaction ("Close of
               Escrow" or "Closing") shall take place within ninety (90) days
               following the full execution and delivery of this Agreement by
               the Parties, or December 31, 2000, whichever is earlier ("Closing
               Date"), unless the Closing Date is extended by written agreement
               of the Chief Engineer and the President of Seller; provided
               however, the Chief Engineer may extend the Closing Date up to
               forty-five (45) days in order to obtain satisfaction of any of
               the conditions to Buyer's performance as set forth in Section 7
               or to reflect any extensions of the Due Diligence Period under
               Section 6 (f). The Chief Engineer may in his sole and absolute
               discretion extend the Closing Date as necessary, but no later
               than March 31, 2001, to obtain any needed consents and approvals,
               the issuance of which are reasonably foreseeable, and Buyer and
               Seller have proceeded in good faith to have any such consents and
               approvals for the Project issued or assigned to Buyer.

               On the Closing Date, Escrow Agent shall Close Escrow, as follows:

                                       23
<PAGE>

               (A)  Record the Deed (marked for return to Buyer) and Certificate
                    of Acceptance with the County Recorder of Riverside County
                    (which shall be deemed delivery of the Real Property to
                    Buyer).

               (B)  Cause the Title Company to issue the Title Policy.

               (C)  Prorate taxes, assessments, rents, and other charges as
                    provided in Section 10 (e), if applicable, pursuant to
                    California Government Code (S) 6103.

               (4)  Disburse the balance of the Purchase Price for the Project
                    that is payable at Close of Escrow pursuant to Sections 3
                    (c) and 13 (d), less prorated amounts and charges and
                    expenses to be paid by or on behalf of Seller.

               (A)  Charge Buyer for those costs and expenses to be paid by
                    Buyer pursuant to this Agreement and disburse to Buyer any
                    net funds remaining after the preceding disbursements.

               (B)  Prepare and deliver to both Buyer and Seller one (1) signed
                    copy of Escrow Agent's closing statement showing all
                    receipts and disbursements of the Escrow.

               (C)  Record with the County Recorder of Riverside County and
               distribute in accordance with the directions of the Parties any
          recordable documents of transfer or agreements for easements and
     reservations that may be created between the Parties.

               If Escrow Agent is unable to perform simultaneously all of the
               instructions set forth above, Escrow Agent shall notify Buyer and
               Seller

                                       24
<PAGE>

               and retain all funds and documents pending receipt of further
               instructions jointly issued by Buyer and Seller.

     (5)  Prorations. Escrow Agent shall prorate from the Purchase Price the
          ----------
          following costs at the Close of Escrow:

          (i)  Seller shall pay:

               (A)  All governmental conveyancing fees and taxes due upon
                    transfer of the Property, if applicable, pursuant to
                    California Government Code (S) 6103;

               (B)  All charges in connection with the issuance of a California
                    Land Title Association ("CLTA") Standard Owner's Policy of
                    Title Insurance in the amount of the Purchase Price; and

               (C)  One-half of the escrow fee charged by Escrow Agent.
          (ii) Buyer shall pay:

               (A)  The recording charges in connection with recordation of the
                    deed, if applicable, pursuant to California Government Code
                    (S) 6103;

               (B)  That portion of the premium for the Title Policy in excess
                    of the premium for a CLTA Standard Policy of Title
                    Insurance; and

               (C)  One-half of the escrow fee charged by Escrow Agent.

          (iii) All other costs of Escrow not otherwise specifically allocated
                by this Agreement shall be apportioned between the Parties in a
                manner consistent with the custom and usage in Los Angeles
                County, California.

                                       25
<PAGE>

     (f)  Bonds and Assessments. All installments of any bond or assessment
          ---------------------
          that constitutes a lien on the Property and/or Personal Property at
          the Close of Escrow shall be paid by Seller.

11   POSSESSION.

     Possession of the Real Property and Personal Property shall be delivered to
Buyer at the Close of Escrow.

12.  DAMAGE AND DESTRUCTION.

     (a)  In the event of damage or destruction of the Property or any portion
          of the Property prior to Close of Escrow in an amount not exceeding
          $100,000.00, Buyer and Seller shall consummate this Agreement without
          change in the Purchase Price provided that Seller shall assign to
          Buyer Seller's rights under any insurance policy covering the damage
          or destruction and shall indemnify and guaranty Buyer with respect to
          any costs incurred by Buyer in repairing and restoring the Property
          that are not paid by insurance up to the amount of $100,000.00.

     (b)  In the event of damage or destruction of the Property, or any portion
          of the Property, prior to the Close of Escrow that impairs in any
          material manner the ability of Buyer to fully carry out the Project at
          its maximum capacity, the Chief Engineer may elect either to terminate
          this Agreement upon written notice to Seller and Escrow Agent, or to
          consummate this Agreement, in which event Seller shall assign to Buyer
          Seller's rights under any insurance policy covering

                                       26
<PAGE>

          the damage or destruction, but without the indemnity and guaranty
          provided in subsection (a) above. If the Chief Engineer elects to
          terminate this Agreement pursuant to this provision, Escrow Agent
          shall within fifteen (15) days following receipt of the Chief
          Engineer's notice return the Deposit together with accrued interest to
          Buyer. Upon termination, neither party shall have any further
          obligations under this Agreement except as otherwise provided in this
          Agreement.

     (1)  In the event of damage or destruction of the Property, or any portion
          of the Property, prior to Close of Escrow in an amount in excess of
          $100,000.00, but that does not impair the Project as described above,
          Seller and the Chief Engineer shall  negotiate an appropriate
          reduction in the Purchase Price.

13.  SELLER'S WARRANTIES.

     Seller represents, warrants and covenants to Buyer that except as otherwise
disclosed to Buyer in writing, to the best of its knowledge as of the date of
this Agreement, and to the best of its knowledge after reasonable inquiry as of
the Close of Escrow:

     (a)  Hazardous Substances:
          --------------------

          (i)  Except as kept and used under currently-valid permits, the Real
               Property is free and has always been free from Hazardous
               Substances and is not and has never been in violation of any
               Environmental Law;

          (ii) There are no buried or partially buried storage tanks located on
               the Real Property;

                                       27
<PAGE>

          (iii) Seller has received no notice, warning, notice of violation,
                administrative complaint, judicial complaint, or other formal or
                informal notice alleging that conditions on the Real Property
                are or have been in violation of any Environmental Law, or
                informing Seller that the Real Property is subject to
                investigation or inquiry regarding Hazardous Substances on the
                Real Property or the potential violation of any Environmental
                Law;

          (iv)  There is no monitoring program required by the U.S.
                Environmental Protection Agency ("EPA") or any similar state
                agency concerning the Real Property, except for a monitoring
                program required by the Regional Water Quality Control Board;

          (v)   The Real Property has been used by predecessors of Kaiser
                Ventures, Inc., for decades to mine iron ore and for associated
                reclamation activities.

          (vi)  No Hazardous Substances of any kind have ever been spilled,
                disposed of, or stored on, under or at the Real Property whether
                by accident, burying, drainage, or storage in containers, tanks,
                or holding areas, or by any other means that would require
                remediation under currently applicable law.

          (vii) Seller will make available to Buyer all information, records,
                and studies maintained by Seller in connection with the Property
                concerning Hazardous Substances.

                                       28
<PAGE>

     (b)  Violation of Law.
          ----------------

          No condition on the Real Property currently violates any health,
          safety, fire, environmental, sewage, building, or other federal,
          state, or local law, code, ordinance, or regulation.

     (c)  Leases.
          ------

          No leases, licenses, or other agreements allowing any third party
          rights to use the Property are or will be in force, except as set
          forth on Exhibit F.

     (d)  Litigation.
          ----------

          Except as provided in this Section, there is no pending or threatened
          litigation, administrative proceeding, or other legal or governmental
          action with respect to the Real Property, the Personal Property, or
          Permits for the Project.  At the election of the Chief Engineer, Close
          of Escrow shall be postponed until any pending litigation concerning
          the Real Property, Personal Property or Permits for the Project have
          been successfully concluded, except as follows.

          (i)  There are currently two civil actions involving the Project
               pending in the United States District Court for the Eastern
               District of California, Riverside Division, (the "District
               Court") entitled Donna Charpied et al. v. United States
               Department of the Interior, et al., Case No. 99-0454 RT (MCx) and
               National Parks and Conservation Association v. Bureau of Land
               Management, etc., et al. Case No. 00-0041 RT (MCx)  (the "Federal
               Litigation").

          (ii) In the event that the Federal Litigation is pending at Close of
               Escrow, the initial payment of $39 million shall be paid into an
               interest-earning

                                       29
<PAGE>

                escrow account ("Primary Account") to be selected by the Parties
                with the investments to be selected by Seller from Buyer's list
                of approved investments. In the event that the Final Payment
                becomes payable to Seller under Section 3 (c) prior to the
                distribution of the Primary Account, the Final Payment, plus
                accrued interest, shall be added to the Primary Account. The
                principal portions of the payments shall thereafter be retained
                in the escrow account until the Federal Litigation becomes
                final. For the purposes of this Section, the Federal Litigation
                shall be considered to be final when the NEPA compliance for the
                EIS for the Project is no longer subject to legal challenge (a
                final decision on the merits of the Federal Litigation), and the
                federal land exchange for the Project is no longer subject to
                being set aside.

          (iii) In the event that the District Court enters any appealable
                judgments, rulings, or orders, in both actions in the Federal
                Litigation that uphold the decision of the Bureau of Land
                Management and the Interior Board of Land Appeals, the interest
                accrued on the payments in the escrow account shall be released
                to Seller, and shall thereafter continue to be released to
                Seller on a quarterly basis until the Federal Litigation is
                considered final, or until four (4) years from Close of Escrow,
                whichever occurs first. Thereafter, interest shall be retained
                in the Primary Account and shall continue to accrue for the
                benefit of the Party ultimately entitled to receive the
                principal, or as otherwise provided in this Section.

                                       30
<PAGE>

          (iv) If the District Court issues an order, over the opposition of the
               Buyer, preventing the Buyer from proceeding with development and
               operation of the Project, and such order remains in effect on the
               date which is the later of seven (7) years after Close of Escrow
               or one (1) year after the first issuance of such court order, the
               Buyer shall have the option for a period of thirty (30) days
               thereafter to receive the principal, plus accrued interest, from
               the Primary Account, and reconvey and reassign its right, title,
               and interest to Seller in the Project, the Property, and
               everything conveyed or transferred by Seller to Buyer as a part
               of the transaction contemplated by this Agreement.

          (v)  If Buyer proceeds with the development and operation of the
               Project during the pendency of the Federal Litigation, free of
               any injunctive relief, interest shall accrue and be released
               quarterly to Seller.

          (vi) In the event that the Seller can obtain an insurance policy or
               other financial assurance that to the satisfaction of the Chief
               Engineer reasonably protects the Buyer from the risk of loss in
               the Federal Litigation, the Buyer may agree to release the escrow
               account to Seller, less any applicable deductible.

     (e)  Condition of Property.
          ---------------------

          There are no natural or artificial conditions upon the Real Property,
          or any part of the Real Property, that are known to Seller after
          reasonable inquiry to present a substantial risk of a material and
          adverse change in the condition of the Real Property.

                                       31
<PAGE>

     (f)  Disclosure.
          ----------

          Any information that Seller has delivered to Buyer, either directly or
          through Buyer's agents, is accurate or was accurate in all material
          respects at the time of the preparation of the information and Seller
          has disclosed all material facts known to Seller with respect to the
          Real Property and the Personal Property.

     (g)  Third Party Approvals.
          ---------------------

          Except as disclosed to Buyer in writing or set forth on Exhibit G,  no
          consents or waivers of or by any third party are necessary to permit
          Seller to consummate the transactions contemplated pursuant to this
          Agreement.

     (h)  Zoning and Building Ordinance Compliance.
          ----------------------------------------

          At the Close of Escrow, the Project, as appropriate to its present
          state of development and implementation, will be in full compliance
          with all zoning ordinances, development requirements, and conditions
          of approval issued for the Project by the County of Riverside.

     (i)  Permits:
          --------

          (i)  The Permits for the Project are valid and in good standing;

          (ii) The Permits for the Project constitute all of the material
               federal, state, and local approvals required for Buyer to proceed
               with development and operation of the Project, subject to
               obtaining local building or construction permits.

                                       32
<PAGE>

     Seller shall notify Buyer of any facts that would cause any of the
representations, warranties and covenants contained in this Agreement to be
untrue in any material respect as of Close of Escrow and shall deliver to Buyer
at the Close of Escrow a certificate ("Closing Certificate") confirming that the
representations contained in this Agreement continue to be true as of the Close
of Escrow. The obligations of Buyer to consummate the transaction contemplated
are conditioned upon the delivery by Seller of the Closing Certificate. If the
Chief Engineer reasonably concludes prior to Close of Escrow that a fact
materially adversely affects the Property or the operation of the Project, which
cannot be promptly cured by Seller, he shall have the option to terminate this
Agreement by delivering written notice to Seller and Escrow Agent. If the Chief
Engineer terminates this Agreement pursuant to this Section, Escrow Agent shall,
within ten (10) days following receipt of the Chief Engineer's notice to
terminate, return to Buyer the Deposit and all accrued interest, and cancel the
Escrow.

14   SELLER'S COVENANTS.

     Commencing with the full execution of this Agreement by the Parties and
until the Close of Escrow:

     (a)  After Buyer approves the Exceptions, Seller shall not permit any new
          liens, encumbrances, or easements to be placed on the Real Property or
          Personal Property, other than the Approved Exceptions, nor shall
          Seller enter into any agreement regarding the sale, rental,
          management, repair, improvement, or any other matter affecting the
          Real Property or Personal Property that would be binding on Buyer, the
          Real Property, or Personal Property after the Close of Escrow without
          the prior written consent of the Chief Engineer.

                                       33
<PAGE>

     (b)   Seller shall not permit any act of waste or act that would tend to
           diminish the value of the Real Property or Personal Property for any
           reason, except that caused by ordinary wear and tear.

     (c)   Seller shall maintain the Real Property in its current condition as a
           proposed sanitary landfill until Close of Escrow.

     (d)   Commencing with the full execution of this Agreement by the Parties
           and continuing thereafter through the Closure operations of Buyer and
           for so long thereafter as Buyer may have any legal responsibilities
           in respect to the Property, other than those nominal responsibilities
           associated with any easements, licenses, and other similar agreements
           or instruments that Seller may otherwise have with respect to the
           Real Property, Seller shall take no action that diminishes the use or
           availability of the Property for the purposes of fully implementing
           the Project.

15.  RELEASE AND INDEMNIFICATION.

     (a)   Release and Indemnification by Seller.
           -------------------------------------

           Seller agrees to release and to indemnify, defend, and hold harmless
           Buyer and all other County Sanitation Districts of Los Angeles
           County, their officers, agents and employees, from all claims,
           losses, costs, liabilities, expenses, damages or other injuries,
           whether foreseeable or unforeseeable, including without limitation,
           attorneys' fees and expenses incurred by reason of or in any manner
           resulting from any of the following:

           (i)   the condition of the Property prior to the Close of Escrow;

                                       34
<PAGE>

           (ii)  the use of the Property prior to the Close of Escrow by Seller
                 or others including, but not limited to, the past use of the
                 Property as an iron ore mine;

           (iii) any fact or circumstance with respect to the Property that
                 occurred prior to the Close of Escrow or that then existed; or

           (iv)  from breach of any warranties and representations set forth in
                 Section 13.

           (v)   the litigation currently pending in Federal Court concerning
                 the Project or any lawsuits challenging the transfer of the
                 Project to Buyer.

     (b)   Assignment of Indemnification Rights from Kaiser.
           ------------------------------------------------

           In addition, Seller will assign and transfer to Buyer at Close of
           Escrow its rights to indemnification and defense under its lease with
           Kaiser Ventures Inc., and any other agreements relating to the
           Project or the Real Property for all claims and liabilities
           associated with the former uses and activities on the Real Property
           conducted by Kaiser Ventures Inc., or any of its predecessors in
           interest.

     (c)   Release and Indemnification by District.
           ---------------------------------------

           Except as to matters attributable to Seller's use of or
           responsibility for the Property which materially restricts the use of
           the Project and such other matters described in this Agreement, Buyer
           agrees to release and to indemnify, defend, and hold harmless Seller,
           its officers, agents and employees, from all claims, losses, costs,
           liabilities, expenses, damages or other injuries, including without
           limitation, attorneys' fees and expenses incurred by reason of or in
           any manner resulting from any of the following:

                                       35
<PAGE>

          (i)    any condition of the Property arising after Close of Escrow,
                 unless such condition can conclusively be demonstrated to have
                 been adversely affected by use of the Property prior to the
                 Close of Escrow by Seller or others including, but not limited
                 to, the past use of the Property as an iron ore mine;

          (ii)   the use of the Property after the Close of Escrow by Buyer or
                 others including, but not limited to, use of the Property to
                 carry out the Project; or

          (iii)  any fact or circumstance with respect to the Property that
                 arises after the Close of Escrow.

     (d)  Scope of Releases and Indemnities.
          ---------------------------------

          The foregoing releases and indemnities shall extend to but not be
          limited to Hazardous Substances and Hazardous Materials as warranted
          by Seller in Section 13.  The foregoing releases and indemnifications
          shall survive the Close of Escrow.  The Parties are familiar with
          Section 1542 of the Civil Code of the State of California which
          provides that "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."  The Parties intend the
          foregoing releases to be effective as a full and final accord of the
          matters to which they pertain, to apply to all claims known or
          unknown, suspected or unsuspected, and hereby waive and relinquish any
          rights and benefits that they may have under Section 1542 as to such
          matters.

                                       36
<PAGE>

     (e)  Defense of Claims.
          -----------------

          (1)    If a claim subject to this Section is made by either Party
                 against the other Party, the potential indemnitee shall give
                 written notice to the potential indemnitor as soon as
                 practicable after becoming aware of any fact, condition, or
                 event that gives rise to a claim for which indemnification may
                 be sought under this Agreement. If a claim subject to this
                 Section by a third party is received by either Party, written
                 notice of such claim shall be given to the potential indemnitor
                 as promptly as practicable and in any event within fifteen (15)
                 days after service of any summons. The failure of an indemnitee
                 to give timely notice hereunder shall not affect rights to
                 indemnification under this Agreement, except to the extent that
                 the indemnitor demonstrates actual damages caused by such
                 failure.

          (2)    The indemnitor shall be obliged to defend any claim subject to
                 this Section; provided that, if the indemnitor fails to
                 undertake a defense of the claim, the indemnitee shall have the
                 right to assume the defense of the claim and receive
                 reimbursement from the indemnitor. The indemnitor shall keep
                 the indemnitee reasonably informed of the progress of any
                 defense, compromise, or settlement. The indemnitor shall be
                 liable for any settlement of any claim effected pursuant to and
                 in acordance with this subsection and for any final judgment
                 (subject to any right to appeal), and the indemnitor agrees to
                 indemnify and hold harmless the indemnitee from and against any
                 damages by reason of such settlement or judgment.

                                       37
<PAGE>

16.  FAILURE TO CLOSE.

     (2)   In the event of any default by Seller and as a consequence thereof
           the transaction contemplated hereby fails to close, Buyer shall be
           entitled to pursue any remedy at law or equity including, without
           limitation, specific performance. In the event of any default by
           Buyer and as a consequence thereof the transaction contemplated
           hereby fails to close, Seller shall be entitled to damages for breach
           of contract.

     (3)   Upon failure to close Escrow, Buyer agrees not to directly or
           indirectly interfere with the permitting, development, construction
           and operation of the Project, and agrees to return to Seller, or
           otherwise keep confidential as provided in Section 24, all
           confidential information provided by Seller. Buyer, however, shall
           not be prohibited from responding to legitimate requests for
           information by regulatory or permitting agencies concerning the site
           developed by the Buyer during its examination of the Project.

17.  CONDEMNATION.

                                       38
<PAGE>

     (a)  If any portion of the Property is taken by condemnation or eminent
          domain or is the subject of a threatened or pending condemnation or
          eminent domain proceeding that has not been consummated prior to the
          Close of Escrow resulting in a decrease in the value of the Property
          in an amount not exceeding $100,000.00, Buyer and Seller shall
          consummate this Agreement without change in the Purchase Price,
          provided that Seller shall assign to Buyer Seller's rights to all
          awards for the condemnation or taking and shall indemnify and
          guarantee Buyer with respect to any costs incurred by Buyer in
          repairing and restoring the Property that are not paid by the awards
          up to the amount of $100,000.00.

     (2)  If any portion of the Property is taken by condemnation or eminent
          domain or is the subject of a threatened or pending condemnation or
          eminent domain proceeding that has not been consummated prior to the
          Close of Escrow that impairs in any material manner the ability of
          Buyer to fully carry out the Project at its maximum capacity,, the
          Chief Engineer may elect either to terminate this Agreement upon
          written notice to Seller and Escrow Agent or to consummate this
          Agreement, in which event Seller shall assign to Buyer Seller's rights
          to all awards for the condemnation or taking, but without the
          indemnity and guarantee provided in subsection (a) above.  If the
          Chief Engineer elects to terminate this Agreement pursuant to this
          provision, Escrow Agent shall, within fifteen (15) days following
          receipt of the Chief Engineer's notice, return the Deposit, together
          with accrued interest, to Buyer.  Upon termination, neither party
          shall

                                       39
<PAGE>

          have any further obligations under this Agreement except as otherwise
          provided in this Agreement.

     (3)  If any portion of the Property is taken by condemnation or eminent
          domain or is subject of a threatened or pending condemnation or
          eminent domain proceeding that has not been consummated prior to Close
          of Escrow, resulting in a decrease in the value of the Property in an
          amount in excess of $100,000.00, but that does not impair the Project
          as described above, Seller and the Chief Engineer shall  negotiate an
          appropriate reduction in the Purchase Price.

18.  AUTHORITY OF PARTIES.

     (a)  Seller warrants that this Agreement and all other documents delivered
          prior to or at the Close of Escrow:

          (i)    Have been authorized, executed, and delivered by Seller;

          (ii)   Are binding obligations of Seller;

          (iii)  Are collectively sufficient to transfer all of Seller's rights
                 in the Project, including the Real Property and Personal
                 Property;

          (iv)   Do not violate the provisions of any agreement to which Seller
                 is a party or which affects the Real Property or Personal
                 Property nor to Seller's knowledge violate any law to which
                 Seller is subject (it is understood that certain consents and
                 approvals will be necessary for the transfer of the Permits and
                 other Property); and

          (v)    Seller further warrants that it is a limited liability company
                 organized and existing under the laws of the State of
                 California.

                                       40
<PAGE>

     (b)  Buyer warrants that this Agreement and all documents delivered prior
          to or on the Close of Escrow:

          (i)    Have been authorized, executed, and delivered by Buyer;

          (ii)   Are binding obligations of Buyer;

          (iii)  Do not violate either the provisions of any agreement to which
                 the Buyer is a party nor any law to which Buyer is subject; and

          (iv)   Buyer further represents that it is a county sanitation
                 district formed and exercising its authority pursuant to the
                 County Sanitation District Act (Health and Safety Code
                 (S)(S)4700 et seq.)

     (c)  The Parties each warrant that the persons executing this Agreement on
          their behalf are authorized to do so.

19.  BROKERS.

     Each party warrants and represents to the other party to this Agreement
that no brokers have been retained or consulted by it in connection with this
transaction.  Each party agrees to defend, indemnify and hold harmless the other
party from any claims, expenses, costs, or liabilities resulting from a fee or
commission claim by a broker or finder claiming through one of the Parties,
which shall become the indemnifying party.

20.  ASSIGNMENT.

     Buyer shall have the right to assign all rights and liabilities under this
Agreement to any party that has the financial capability to perform the
Agreement.

                                       41
<PAGE>

21.  ATTORNEYS' FEES.

     If litigation is commenced between the Parties, the Prevailing Party in
that litigation shall be entitled to recover from the non-prevailing party or
parties all reasonable attorneys' fees and costs.  "Prevailing Party" shall
include, without limitation, a party who dismisses an action in exchange for
sums allegedly due; the party who receives performance from the other party for
an alleged breach of contract or a desired remedy where the performance is
substantially equal to the relief sought in the action; or the party determined
to be the prevailing party by a court of law.

22.  NOTICES.

     All notices to be given under this Agreement shall be in writing and sent
by:

     (a)  Certified mail, return receipt requested, in which case notice shall
          be deemed delivered two (2) business days after deposit, postage
          prepaid in the United States Mail;

     (b)  Personal delivery or by a nationally recognized overnight courier, in
          which case notice shall be deemed delivered one (1) business day after
          deposit with that courier provided that it was deposited for timely
          processing by the courier for next day delivery; or

     (c)  Facsimile or similar means if a copy of the notice is also sent by
          United States certified mail, in which case notice shall be deemed
          delivered on receipt by facsimile or other similar means, provided
          that the transmission was received between the hours of 8:00 a.m. and
          5:00 p.m. Pacific Standard Time on a

                                       42
<PAGE>

          business day and a transmission report is generated reflecting the
          accurate transmission of the notices as follows:

               BUYER:         Mr. James F. Stahl
                              Chief Engineer and General Manager
                              County Sanitation Districts of Los Angeles County
                              1955 Workman Mill Road
                              Whittier, CA 90601-1400
                              Post Office Box 4998
                              Whittier, CA 90607-4998
                              Fax No.: (562) 695-8660

                              Copy to:

                              B. Richard Marsh, Esq.
                              Daniel V. Hyde, Esq.
                              Knapp, Marsh, Jones & Doran
                              515 S. Figueroa Street, Suite 1400
                              Los Angeles, CA 90071
                              Fax No.: (213) 627-7897

               SELLER:        Mr. Richard E. Daniels
                              Chairman and CEO
                              Mine Reclamation, LLC
                              43-645 Monterey Avenue, Suite A
                              Palm Desert, CA 92260

                              Copy to:

                              Mr. Rick Stoddard
                              President and Chief Executive Officer
                              Kaiser Ventures, Inc.
                              3633 East Inland Empire Blvd.
                              Suite 850
                              Ontario, California 91764

                              Terry L. Cook, Esq.
                              General Counsel
                              Kaiser Ventures, Inc.
                              3633 East Inland Empire Blvd.
                              Suite 850
                              Ontario, California 91764

                              Richard S. Volpert

                                       43
<PAGE>

                              Munger, Tolles, & Olson, LLP
                              355 South Grand Avenue, 35/th/ Floor
                              Los Angeles, California 90071-1560

          If the facsimile or other transmission is not received between the
          hours specified above, it shall be deemed to have been given as of the
          next business day.

23.  COSTS AND EXPENSES.

     Each Party will bear its own costs and expenses in connection with
negotiating and  preparing the Closing Documents, completing due diligence, and
closing the sale.

24.  CONFIDENTIALITY.

     All communications between the Parties regarding the sale of the Project
will be maintained strictly confidential and will not be disclosed without the
other Party's prior approval, which shall not be unreasonably withheld, or
unless required to do so:

     (a)   in connection with Buyer's efforts to obtain the required board of
           director's approval to execute this Agreement;

     (b)   pursuant to court order, subpoenas, and requests for documents made
           by administrative agencies, such as the Securities and Exchange
           Commission having jurisdiction over the Parties (each Party shall
           have the right to resist such requests);

     (c)   as required by law (including disclosures that may be required to be
           given by Kaiser Ventures, Inc. under applicable Securities and
           Exchange Commission laws, rules, and regulations.).

                                       44
<PAGE>

     (1)   as required to obtain any needed consents and approvals for the
           Parties to perform their obligations under this Agreement.

25.  TRANSFER OF INFORMATION.

     At Close of Escrow, Seller shall deliver to Buyer all stored information
including, but not limited to, all records, files, plans, maps, electronic
files, permits, samples, data sheets, audio and video tapes, slides,
photographs, compact discs, and all other information stored in any manner in
Seller's possession or control with respect to the Project, but excluding those
privileged materials that do not contain factual or technical information
pertinent to the Project, its Permits, or permit compliance.  Buyer shall have
access to all such information upon Buyer's reasonable request.  Seller shall
provide Buyer with a stored information index that contains a summary of all
stored information and its location.  Also, prior to the Close of Escrow, Seller
shall also deliver to Buyer an obligation summary in a form acceptable to the
Buyer.  The obligation summary shall contain a summary of all of the contractual
and permit obligations of the Project owner and operator, together with its good
faith estimate of implementation schedules and costs.

26.  ENTIRE AGREEMENT.

     This Agreement and any documents referred to or contemplated herein and any
exhibit hereto contains the entire agreement between the Parties and shall not
be modified in any manner except by an instrument in writing executed by the
Parties or their respective successors in interest.

                                       45
<PAGE>

27.  SEVERABILITY.

     If any term or provision of this Agreement shall, to any extent, be held
invalid or unenforceable, the remainder of this Agreement shall not be affected.

28.  WAIVERS.

     A waiver of a breach of a covenant or provision in this Agreement shall not
be deemed a waiver of any other covenant or provision in this Agreement, and no
waiver shall be valid unless in writing and executed by the waiving party.  An
extension of time for performance of any obligation or act shall not be deemed
an extension of time for performance of any other obligation or act.

28.  CONSTRUCTION.

     The section headings and captions of this Agreement are, and the
arrangement of this instrument is, for the sole convenience of the Parties.  The
section headings, captions, and arrangement of this instrument do not in any way
affect, limit, amplify, or modify the terms and provisions of this Agreement.
The singular form shall include plural, and vice versa.  This Agreement shall
not be construed as if it had been prepared by one of the parties, but rather as
if both parties have prepared it.  Any provision thereof that is found by a
court of proper jurisdiction to be ambiguous or inconsistent, either internally
or in relation to other provisions contained herein, shall be construed in
accordance with a fair and ordinary meaning so as to effectuate the intent of
the parties to this Agreement.  Unless otherwise indicated, all references to
sections are to this Agreement.  All exhibits referred to in this Agreement are

                                       46
<PAGE>

attached to it and incorporated in it by this reference. The preamble and all
recitals to this Agreement are also incorporated herein.

30.  MERGER.

     All of the terms, provisions, representations, warranties, and covenants of
the Parties shall survive the Close of Escrow and shall not be merged in the
Deed or other documents.

31.  DUPLICATE ORIGINALS.

     This Agreement shall be executed with duplicate originals to be retained by
each party.

32.  TIME OF THE ESSENCE.
     Time is of the essence in this Agreement.

33.  SUCCESSORS.

     This Agreement shall inure to the benefit of and shall be binding upon the
Parties and their respective successors and assigns.

34.  GOVERNING LAW.

     This Agreement shall be governed and construed in accordance with
California law.

35.  CHIEF ENGINEER'S AUTHORITY.

     The Chief Engineer is hereby authorized to execute on behalf of the Buyer
any documents, or to take related actions necessary to effectuate this
Agreement.

                                       47
<PAGE>

36.  FURTHER ASSURANCES.

     Each Party agrees to execute and deliver any instruments and to perform any
actions that may be necessary, or reasonably requested, in order to give full
effect to this Agreement.  Each party will use all reasonable efforts to provide
such information, execute such further instruments and documents, and take such
action as may be reasonably requested by the other Party not inconsistent with
the provisions of this Agreement and not involving the assumption of obligations
other than those provided for in this Agreement to carry out the intent of this
Agreement.

37.  VENUE.

     Venue for all purposes arising out of this Agreement will be in the County
of Los Angeles, California, unless prohibited by law.

38.  COMPUTATION OF TIME.

     As used in this Agreement, time for an act to be done shall be computed in
calendar days unless otherwise provided, shall exclude the first day and include
the last, and if the last day falls on a Saturday, Sunday, or Federal or State
of California holiday, shall be extended to the next day, which is not a
Saturday, Sunday or Federal or State of California holiday.

                                       48
<PAGE>

     The Parties have executed this Agreement as of the date first written
above.

ATTEST:                                 COUNTY SANITATION DISTRICT NO. 2 OF LOS
                                        ANGELES COUNTY

By:  /s/ M. Alma Horvath                By:  /s/ Leonis C. Malburg
     -------------------------               ---------------------------------

       Secretary                               Chairperson, Board of Directors

Approved as to form:

KNAPP, MARSH, JONES & DORAN, L.L.P.

By:  /s/ Daniel V. Hyde
     -------------------------

     District Counsel

ATTEST:                                 MINE RECLAMATION, LLC

By:  /s/ Terry L. Cook                  By:  /s/ Richard A. Daniels
     -------------------------               ---------------------------------

Approved as to form:

By____________________________________

                               VOTING AGREEMENT
                               ----------------

     Kaiser Ventures, Inc. agrees that it will vote or cause to be voted its
ownership interest in Mine Reclamation Corporation in favor of the sale of the
Project to the District.

                             KAISER VENTURES, INC.

                             By: /s/ Gerald A. Fawcett
                                 ---------------------------
                                 Gerald A. Fawcett
                                 Vice President of the Board

                                       49
<PAGE>

                      Exhibits Available Upon the Written
                      -----------------------------------

                                 Request of the
                                 --------------

                       Securities and Exchange Commission
                       ----------------------------------

                                       50<PAGE>

                                                                    EXHIBIT 10.4
                                                                    ============

                          FIRST AMENDED AND RESTATED
                       ENVIRONMENTAL GUARANTY AGREEMENT

     THIS FIRST AMENDED AND RESTATED ENVIRONMENTAL GUARANTY AGREEMENT is dated
as of May 1, 2000 and is being executed and delivered by the undersigned
Guarantors to and for the benefit of Union Bank of California, N.A. ("Bank") in
connection with the following:

     A.   Bank has made financing arrangements with West Valley MRF, LLC, a
California limited liability company (the "Borrower")  as evidenced by that
certain Reimbursement Agreement dated as of June 1, 1997, between Bank and
Borrower (as amended from time to time, the "1997 Reimbursement Agreement").
Such extension of credit or other financing arrangements, together with any
amendments, replacements, substitutions, extensions or refundings thereof, are
hereinafter referred to as the "1997 Credit Extension".

     B.   In connection with the 1997 Credit Extension, Borrower has undertaken
certain obligations set forth in that certain Environmental Compliance Agreement
dated as of June 19, 1997 between Borrower and Bank (the "1997 ECA").  Pursuant
to that certain Environmental Guaranty Agreement dated as of June 19, 1997 (the
"1997 Kaiser Environmental Guaranty"), the undersigned guaranteed certain of the
Borrower's obligations under the 1997 ECA.

     C.   Concurrently herewith, Bank and Borrower are entering into that
certain Reimbursement Agreement dated as of the date hereof (as amended from
time to time, the "2000 Reimbursement Agreement"), pursuant to which Bank has
agreed to issue its irrevocable Letter of Credit (the "Letter of Credit") to
provide credit support for bond financing for the expansion of the facilities
financed with the proceeds of the 1997 Credit Extension.

     D.   It is a condition precedent to Bank's obligation to proceed with the
issuance of the Letter of Credit that (i) Borrower amend and restate the 1997
ECA by executing and delivering to Bank that certain First Amended and Restated
Environmental Compliance Agreement of even date herewith (as from time to time
amended, the "Environmental Agreement"); and (ii) the undersigned guarantors
amend and restate the 1997 Kaiser Environmental Guaranty in its entirety by
executing and delivering to Bank this Amended and Restated Environmental
Guaranty Agreement (this "Guaranty").  Capitalized terms used herein without
definition shall have the respective meanings ascribed thereto in the
Environmental Agreement.

     E.   Each Guarantor expects to derive benefit, either directly or
indirectly, as a result of the maintenance of the 1997 Credit Extension and the
issuance of the Letter of Credit and acknowledges that Bank would not proceed
with the performance of its obligations with respect to the Credit Extensions
without receiving the Environmental Agreement from Borrower and this Guaranty
from the Guarantors.

     NOW, THEREFORE, the undersigned Guarantors do hereby agree as follows:

                                      -1-
<PAGE>

1.   Obligations Guaranteed.

     (a)  For consideration, the adequacy, sufficiency and receipt of which is
hereby acknowledged, the undersigned (collectively, "Guarantors" and
individually each or any "Guarantor"), jointly and severally guarantee to Bank
that, upon the occurrence of an Event of Default under the Environmental
Agreement arising as a result of Borrower's failure to pay or perform any
Kaiser-Related Environmental Obligation (hereinafter a "Guaranteed Obligation"),
Guarantors shall promptly pay and/or perform such Guaranteed Obligation without
further notice or demand except for the notices required pursuant to the
Environmental Agreement and shall pay to Bank and hold Bank harmless from all
damages, costs, expenses and liabilities incurred by Bank as a result of
Borrower's failure to perform such Guaranteed Obligations, whether Borrower is
liable individually or jointly or with others, whether incurred before, during
or after any bankruptcy, reorganization, insolvency, receivership or similar
proceeding ("Insolvency Proceeding"), and whether recovery thereof is or becomes
barred by a statute of limitations or is or becomes otherwise unenforceable,
together with all reasonable expenses of, for and incidental to collection,
including reasonable attorneys' fees.

     (b)  Without limiting Guarantors' liability under clause (a) above,
Guarantors jointly and severally guarantee to Bank that, if all the following
                                                         --
events occur, namely: (i) the occurrence of an Event of Default under the
Environmental Agreement arising as a result of Borrower's failure to pay or
perform any Burrtec-Related Environmental Obligation; and (ii) the breach of
such Burrtec-Related Environmental Obligation caused or contributed to the
release, at, on, in, under, above, around or that affects any Portion of the
Property, of some Hazardous Substances or newly-formed Hazardous Substances not
present at, on, in, under, above, around, or that affects any portion of the
Property on or prior to June 19, 1997; and (iii) as a matter of applicable
federal or state law, either Guarantor is liable with respect to the release of
such newly formed Hazardous Substance; and (iv) Bank obtains a judgment against
BWI arising out of BWI's liability as a guarantor of such Burrtec-Related
Environmental Obligation and such release; and (v) such judgement remains
unsatisfied after the later to occur of (1) completion by the Bank of a
judgement debtor's examination of BWI and the recordation of abstracts of
judgement in each county in the State of California in which BWI holds title to
real property as disclosed in such debtor's examination; or (2) ninety (90) days
shall have elapsed after entry of judgement against BWI; then, Guarantors,
                                                         ----
jointly and severally agree to pay to Bank immediately upon demand the amount of
the judgment obtained against BWI in the above-described circumstances; provided
                                                                        --------
however, if an Insolvency Proceeding is commenced by or against BWI prior to
-------
Bank's obtaining a judgment against BWI, then upon Bank's obtaining a final
determination of its claim against BWI from the court having jurisdiction in
such Insolvency Proceeding, then Guarantors jointly and severally agree to pay
to Bank immediately upon demand the amount determined by such court to be due,
provided Guarantors would also be liable under (iii) of this paragraph and upon
Bank's assignment of its claim in the bankruptcy to the Guarantors.  Guarantors'
obligations under this Environmental Guaranty Agreement are in addition to (i)
any other guaranties of the Guaranteed Obligations; and (ii) any other
guaranties now or hereafter given by Guarantors to Bank in connection with any
other obligations of Borrower to Bank; provided, however, that no other
guaranties now or hereafter given by Guarantors to Bank in connection with any
other

                                      -2-
<PAGE>

obligations of Borrower to Bank shall apply to the Environmental Agreement or
any obligations thereunder.

2.   Reinstatement. All of Bank's rights pursuant to this Guaranty continue with
respect to amounts previously paid to Bank on account of any Guaranteed
Obligations which are thereafter restored or returned by Bank, whether in an
Insolvency Proceeding of Borrower or for any other reason, all as though such
amounts had not been paid to Bank, and each Guarantor's liability under this
Guaranty (and all its terms and provisions) shall be reinstated and revived,
notwithstanding any surrender or cancellation of this Guaranty.  Bank, in its
sole discretion, may determine whether any amount paid to it must be restored or
returned; provided, however, that if Bank elects to contest any claim for return
or restoration, each Guarantor agrees to indemnify and hold Bank harmless from
and against all reasonable costs and expenses, including reasonable attorneys'
fees, expended or incurred by Bank in connection with such contest.  If any
Insolvency Proceeding is commenced by or against Borrower or any Guarantor, at
Bank's election, each Guarantor's obligations under this Guaranty shall
immediately and without notice or demand become due and payable, whether or not
then otherwise due and payable.

3.   Authorization. Each Guarantor authorizes Bank, subject to the Environmental
Agreement, without notice and without affecting such Guarantor's liability under
this Guaranty, from time to time, whether before or after any revocation of this
Guaranty, to (a) renew, extend, accelerate, release, subordinate or waive, the
interest rate, time or place for payment or any other terms of all or any part
of the Guaranteed Obligations; provided however, without limiting Bank's rights
                               ----------------
under the preceding clause of this subsection 3(a), no amendment or modification
of the Guaranteed Obligations agreed to between Bank and Borrower shall be
binding upon either Guarantor without such Guarantor's written consent; (b)
accept delinquent or partial payments on the Guaranteed Obligations; (c) take or
not take security or other credit support for this Guaranty or for all or any
part of the Guaranteed Obligations, and exchange, enforce, waive, release,
subordinate, fail to enforce or perfect, sell or otherwise dispose of any such
security or credit support; (d) apply proceeds of any such security or credit
support and direct the order or manner of its sale or enforcement as Bank, in
its sole discretion, may determine; and (e) release or substitute Borrower or
any Guarantor or other person or entity liable in respect of all or any part of
the Guaranteed Obligations.

4.   Waivers.  To the maximum extent permitted by law and subject the provisions
of the Environmental Agreement, each Guarantor waives (a) all rights to require
Bank to proceed against Borrower or proceed against, enforce or exhaust any
security for the Guaranteed Obligations or to marshal assets or to pursue any
other remedy in Bank's power whatsoever; (b) all defenses arising by reason of:
any disability or other defense of Borrower, the cessation for any reason of the
liability of Borrower, any defense that any other indemnity, guaranty or
security was to be obtained, any claim that Bank has made such Guarantor's
obligations more burdensome or more burdensome than Borrower's obligations, and
the use of any proceeds of the Guaranteed Obligations other than as intended or
understood by Bank or such Guarantor; (c) all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor, notices of acceptance of this Guaranty, and all other notices or
demands to which such Guarantor might otherwise be entitled; (d) all conditions
precedent to the effectiveness of this

                                      -3-
<PAGE>

Guaranty except as provided herein; (e) all rights to file a claim in connection
with the Guaranteed Obligations in an Insolvency Proceeding filed by or against
Borrower; (f) all rights to require Bank to enforce any of its remedies and (g)
until the Guaranteed Obligations are satisfied or fully paid, with such payment
not subject to return: (i) all rights of subrogation, indemnification or
reimbursement, (ii) all rights of recourse to any assets or property of Borrower
or to any collateral or credit support for the Guaranteed Obligations, (iii) all
rights to participate in or benefit from any security or credit support Bank may
have or acquire, and (iv) all rights, remedies and defenses such Guarantor may
have or acquire against Borrower; provided however that anything in this
Guaranty to the contrary notwithstanding, the Guarantors shall only be required
to waive and forebear the enforcement of any rights of subrogation,
indemnification or reimbursement against any person or entity so long as such
person or entity is in default in the payment or performance of any obligation
due and owing to Bank; during the continuance of any such default all such
rights of subrogation, indemnification and reimbursement shall be subordinated
as provided in Section 6 below. Bank may foreclose, either by judicial
foreclosure or by exercise of power of sale, any deed of trust which secures any
Guaranteed Obligations, and even though such foreclosure or exercise may destroy
or diminish the rights of the Guarantors, or any of them, against Borrower, each
Guarantor shall remain liable for any part of the Guaranteed Obligations
remaining unpaid after foreclosure. Under California law, in the absence of
waivers and agreements to the contrary, if a creditor forecloses by trustee's
sale on a deed of trust securing a loan, the creditor cannot thereafter enforce
a guarantor's liability for the unpaid balance of the loan. This results because
the trustee's sale would eliminate the guarantor's right of subrogation, and
therefore the guarantor would be unable to obtain reimbursement from the
Borrower. Each Guarantor waives the right to assert the defense described in the
two immediately preceding sentences, and each Guarantor agrees that such
Guarantor shall remain liable for any part of the Guaranteed Obligations
remaining unpaid after a trustee's sale, although such Guarantor would not
become subrogated to any part of the Guaranteed Obligations that such Guarantor
has paid and would therefore be unable to obtain reimbursement for those
payments from Borrower. Each Guarantor may therefore incur a partially or
totally unreimbursable liability under the Guaranty. Each Guarantor waives all
benefits under California Civil Code sections 2808, 2809, 2810, 2819, 2839,
2845, 2846, 2848, 2849, 2850, 2855, 2899 and 3433 and California Code of Civil
Procedure sections 580a, 580b, 580d and 726.

5.   Guarantor to Keep Informed. Each Guarantor warrants having established with
Borrower adequate means of obtaining, on an ongoing basis, such information as
such Guarantor may require concerning all matters bearing on the risk of
nonpayment or nonperformance of the Guaranteed Obligations.  Each Guarantor
assumes sole, continuing responsibility for obtaining such information from
sources other than from Bank.  Bank has no duty to provide any information to
any Guarantor until Bank receives such Guarantor's written request for specific
information in Bank's possession and Borrower has authorized Bank to disclose
such information to such Guarantor.

6.   Subordination.  All liabilities and commitments of Borrower to any
Guarantor, and all liabilities and commitments of any guarantor of any of the
Guaranteed Obligations to any other Guarantor, which presently or in the future
may exist ("Guarantor Claims") are hereby subordinated to the Guaranteed
Obligations; provided however that so long as the party against which such

                                      -4-
<PAGE>

Guarantor Claims are asserted is not in default in the payment of any
obligations due and owing to Bank, payments and distributions from Borrower to
any Guarantor or among or between any of the guarantors (including any
Guarantor) of any of the Guaranteed Obligations shall be permitted in the
ordinary course of business. Whenever any such default shall have occurred and
be continuing, Guarantor Claims against such party in default will be enforced,
and performance thereon received by any Guarantor only as a trustee for Bank,
and each Guarantor will promptly pay over to Bank upon demand all proceeds
recovered for application to the Guaranteed Obligations without reducing or
affecting such Guarantor's liability under other provisions of this Guaranty.

7.   Representations and Warranties.

     a.   Corporate Existence and Power.  Each Guarantor (i) is a corporation
          -----------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware, (ii) is duly qualified or licensed as a foreign corporation
and is in good standing in the State of California and in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed and (iii) has all requisite
corporate power and authority to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted.

     b.   Authorization.  The execution, delivery and performance by the
          -------------
Guarantors of this Guaranty, and the consummation of the transactions
contemplated hereby and thereby, are within each Guarantor's corporate powers,
have been duly authorized by all necessary corporate action of such Guarantor
and do not contravene such Guarantor's charter documents or bylaws.

     c.   Binding Effect.  This Guaranty has been duly executed and delivered by
          --------------
the Guarantors.  This Guaranty is the legal, valid and binding obligation of
each Guarantor, enforceable against such Guarantor in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors, rights
generally.

     d.   Other Information.   To the actual knowledge of Guarantors, no
          -----------------
information, exhibit or report furnished by any Guarantor to Bank in connection
with this Guaranty contains any material misstatement of fact or omits to state
a material fact or any fact necessary to make the statements contained therein,
in light of the circumstances in which made, not misleading.

     e.   Litigation.  Except as previously disclosed in writing to Bank, there
          ----------
is no action, suit, investigation, litigation or proceeding affecting the
Guarantors pending or, to the best knowledge of the Guarantors, threatened
before any court, governmental agency or arbitrator (a) that would be reasonably
likely to have a materially adverse effect on the business, condition (financial
or otherwise), operations, performance, properties or prospects of the Guarantor
or (b) that purports to affect the legality, validity or enforceability of this
Guaranty or the consummation of the transactions contemplated hereby.

                                      -5-
<PAGE>

8.   Covenants.  The Guarantors covenant and agree that, unless Bank otherwise
consents in writing and so long the Guaranteed Obligations remain unpaid (i)
each of the Guarantors will, preserve, renew and keep in full force and effect
its corporate existence (in the jurisdiction thereof) and the rights,
privileges, franchises and governmental approvals necessary or desirable for the
normal conduct of its business; and (ii) neither Guarantor will merge or
consolidate with or into, or sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to, any Person,
unless, in the case of any merger or consolidation, the Guarantor is the
surviving entity. Reference is made to the Operation & Maintenance Agreement
(the "O&M Agreement") dated as of June 11, 1997 between KVI and the California
Environmental Protection Agency, Department of Toxic Substances Control (the
"Department"), referred to in Section 6 of the Environmental Agreement. KVI
agrees to provide Bank with true and complete copies of all written reports and
review summaries provided by KVI to the Department pursuant to the O&M
Agreement, including those required under Sections 3, 4, 5 or 6 of the O&M
Agreement, promptly after their submission to the Department. KVI hereby
confirms that, except as previously disclosed to Bank in writing, the O&M
Agreement has not been modified or amended.

9.   Assignments.  Without notice to any of the Guarantors, Bank may assign the
Guaranteed Obligations and this Guaranty, in whole or in part, and may disclose
to any prospective or actual purchaser of all or part of the Guaranteed
Obligations any and all information Bank has or acquires concerning any
Guarantor, this Guaranty and any security for this Guaranty.  The Bank agrees to
use reasonable efforts to ensure that any of the information referred to in this
paragraph which is not contained in a report or other document otherwise
available to the public generally, to the extent permitted by law and except as
may be required by valid subpoena or in the normal course of business
operations, will be treated confidentially by the Bank and will not be
distributed or otherwise made available by the Bank to any person or entity,
other than (i) the Bank's employees, authorized agents or representatives who
need to review or be informed of such information in connection with their
employment by Bank; and (ii) such prospective or actual purchaser (which shall
be required to give appropriate written assurance of confidential treatment of
such information).

10.  Counsel Fees and Costs.  The prevailing party shall be entitled to
attorneys' fees (including a reasonable allocation for any appropriately
documented fees of Bank's internal counsel), and all other reasonable costs and
expenses which it may incur in connection with the enforcement or preservation
of its rights under, or defense of, this Guaranty or in connection with any
other dispute or proceeding relating to this Guaranty, whether or not incurred
in an Insolvency Proceeding, arbitration, administrative hearing, litigation or
other proceeding.

11.  [Intentionally omitted]

12.  Multiple Guarantors/Borrowers.  When there is more than one Borrower named
herein, or when this Guaranty is executed by more than one Guarantor, then the
words "Borrower" and "Guarantor," respectively, shall mean all and any one or
more of them, and their respective successors and assigns, including debtors-in-
possession and bankruptcy trustees, and words used herein in the singular shall
be considered to have been used in the plural where the context and

                                      -6-
<PAGE>

construction so requires in order to refer to more than one Borrower or
Guarantor, as the case may be. This Guaranty may be executed in any number of
counterparts and by different parties hereto on separate counterparts. Each
counterpart, when so executed and delivered, shall be deemed to be an original
and all counterparts, taken together, shall constitute but one and the same
Guaranty.

13.  Waiver of Jury Trial.  EACH GUARANTOR AND BANK HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS GUARANTY, ANY OF THE
GUARANTEED OBLIGATIONS, OR ANY RELATED AGREEMENTS OR INSTRUMENTS, OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DISCUSSIONS, DEALINGS OR ACTIONS
OF SUCH PARTIES OR ANY OF THEM (WHETHER ORAL OR WRITTEN) WITH RESPECT THERETO,
OR TO THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.  EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED IN ACCORDANCE WITH THE PROVISIONS OF THE ALTERNATIVE
DISPUTE RESOLUTION AGREEMENT REFERRED TO IN PARAGRAPH 18 BELOW.  EACH GUARANTOR
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER DOCUMENT TO WHICH IT
IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK AGREEING
TO THE CREDIT EXTENSION REFERRED TO HEREIN.

14.  Integration/Severability/Amendments.  This Guaranty is intended by each of
the Guarantors and Bank as the complete, final expression of their agreement
concerning its subject matter.  It supersedes all prior understandings or
agreements with respect thereto and may be changed only by a writing signed by
Bank and the Guarantor intended to be bound by such writing.  No course of
dealing, or parol or extrinsic evidence shall be used to modify or supplement
the express terms of this Guaranty.  If any provision of this Guaranty is found
to be illegal, invalid or unenforceable, such provision shall be enforced to the
maximum extent permitted, but if the provision is fully unenforceable, such
provision shall be severable, and this Guaranty shall be construed as if such
provision had never been a part of this Guaranty and the remaining provisions
shall continue in full force and effect.

15.  Joint and Several.  If more than one Guarantor signs this Guaranty, the
obligations of each Guarantor under this Guaranty are joint and several in
accordance with the terms of this Agreement, and independent of the Guaranteed
Obligations and of the liabilities and commitments of any other person or
entity.  A separate action or actions may be brought and prosecuted against any
Guarantor, whether action is brought against Borrower, any other Guarantor or
any other person or entity liable in respect of all or any part of the
Guaranteed Obligations, and whether Borrower or such others are joined in any
such action.

                                      -7-
<PAGE>

16.  Notice.  Any notice given by any party under this Guaranty shall be
effective only upon its receipt by the other party and only if (a) given in
writing and (b) personally delivered or sent by United States mail, postage
prepaid, and addressed to Bank or Guarantor at their respective addresses for
notices indicated below.  Each Guarantor and Bank may change the place to which
notices, requests, and other communications are to be sent to them by giving
written notice of such change to the other.

17.  California Law.  Subject to paragraph 13 of this Guaranty, this Guaranty
shall be governed by and construed according to the laws of California, and each
Guarantor submits to the nonexclusive jurisdiction of the state or federal
courts in California.

18.  Dispute Resolution.  This Guaranty hereby incorporates any alternative
dispute resolution agreement previously, concurrently or hereafter executed
between any Guarantor and Bank.

19.  Scope of Guaranty.  The parties acknowledge that this Guaranty is given
solely with respect to environmental obligations that may arise as specified in
the Environmental Agreement and as set forth herein.

     Each Guarantor acknowledges having received a copy of this Guaranty and
having made each waiver contained in this Guaranty with full knowledge of its
consequences.

Dated as of May 1, 2000

                                    GUARANTORS

                                    KAISER VENTURES INC.,
                                    a Delaware corporation

                                    By: /s/James F. Verhey
                                        ---------------------------------------
                                        Name:  James F. Verhey
                                        Title:  Executive Vice President - CFO

                                    KAISER RECYCLING CORPORATION,
                                    a Delaware corporation

                                    By: /s/Eric D. Herbert
                                        ---------------------------------------
                                        Name:  Eric D. Herbert
                                        Title:  Vice President

Address for both Guarantors:  c/o Kaiser Ventures, Inc.
                              3633 E. Inland Empire Blvd., Suite 850
                              Ontario, CA   91764

                                      -8-
<PAGE>

Address for Bank:             Union Bank of California, N.A.
                              530 B Street, Fourth Floor
                              San Diego, California  92101
                              Attention: Commercial Markets Group

                                      -9-

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