AGREEMENT

     This Agreement is made and entered into to be effective as
of this January 1, 1999, by and between KAISER ALUMINUM &
CHEMICAL CORPORATION, a Delaware corporation with corporate
offices at 5847 San Felipe, Suite 2600, Houston, Texas 77257,
hereinafter referred to as "Kaiser", and Lawrence L. Watts, whose
address is 2372 Bering Drive, Apt B, Houston, TX 77057,
hereinafter referred to as "Consultant".

     In consideration of the mutual promises made herein, the
parties agree as follows:

     1.   Consulting Services.  
          -------------------

          A.   The Company hereby retains Consultant's services
     as a consultant.  Consultant agrees to consult with and
     advise the Company regarding (i) the management,
     administration, organization, structure, policies and
     operations of Kaiser, its business units, subsidiaries and
     their respective successors, if any, (collectively, the
     "Kaiser Entities"), (ii) developing, analyzing and
     implementing strategic plans and transactions involving one
     or more of the Kaiser Entities including, but not limited
     to, the alumina business unit, (iii) information technology
     and systems development, and (iv) such other similar matters
     reasonably requested by Kaiser. 

          B.   Consulting services may be requested by Kaiser
     from time to time during the term of the Agreement.  While
     Kaiser may not utilize Consultant's services fully
     throughout the term of this Agreement, Consultant agrees to
     make his himself generally available upon Kaiser's
     reasonable request during normal business hours and, if
     requested by Kaiser, to devote his entire time, energy and
     skill during normal business hours to the business and
     affairs of Kaiser and the Kaiser Entities and to the
     promotion of their interests.  Consultant further agrees and
     acknowledges that his engagement hereunder may require him
     to undertake reasonable travel on behalf of Kaiser.  

          C.   In connection with the services contemplated by
     this Agreement, Consultant agrees to consult with and keep
     the appropriate members of Kaiser's senior leadership and
     the Board of Directors, officers, consultants and
     representatives of the Kaiser Entities fully informed of
     Consultant's efforts under this Agreement.

     2.   Term.  This Agreement shall be for a term of one year 
          ----
commencing on the effective date and terminating on December 31,
1999, unless otherwise terminated in accordance with the terms
and conditions of this Agreement.  

     3.   Retainer, Payment and Automobile.  
          ---------------------------------

          A.   As consideration for Consultant's willingness to
     hold himself available to Kaiser and the Kaiser Entities
     throughout the term of this Agreement and for providing the
     consulting services contemplated by this Agreement, Kaiser
     agrees to pay Consultant a retainer at a monthly rate equal
     to Consultant's base pay prior to Consultant's termination
     of employment with Kaiser.  The retainer shall be payable by
     Kaiser to Consultant in equal semimonthly installments of
     Twelve Thousand Eighty Four Dollars ($12,084.00) to be paid
     on the fifteenth (15th) and last day of each month during
     which such compensation is due hereunder.

          B.   During the term of this Agreement, Kaiser agrees
     that Consultant may retain the use of the automobile
     provided by Kaiser at the time of Consultant's termination
     of employment upon substantially the same terms and
     conditions except as required under Kaiser's corporate
     policies and procedures as a result of Consultant no longer
     being employed by Kaiser.   

     4.   Reimbursement for Expenses.  Kaiser shall 
          --------------------------
reimburse Consultant upon the presentation of substantiating
invoices, for the following described expenses incurred by
Consultant in connection with, and as a necessity of, the
performance of his services hereunder:

          A.   All reasonable, normal, and necessary travel
     expenses, including airline tickets, meals, lodging, rental
     cars, and related expenses, incurred by Consultant while
     away from his office, consistent with Kaiser's existing
     policies.
     
          B.   Cost of telephone and facsimile when used on
     behalf of Kaiser.
     
          C.   All other reasonable expenses incurred by
     Consultant as the direct and necessary result of providing
     the consulting services contemplated by this Agreement.

     5.   Independent Contractor.
          ----------------------

          A.   It is understood and agreed that Consultant is
     acting as an independent contractor and not as an agent or
     employee of Kaiser in the execution and performance of this
     Agreement and that Consultant has no authority to act for,
     legally represent, or otherwise bind or legally commit
     Kaiser in any way.

          B.   It is further understood and agreed that
     Consultant is not and will not be eligible to participate
     in, or accrue benefits under any employee benefit plans of
     Kaiser, including but not limited to pensions, insurance,
     disability and/or vacation plans, for services performed
     under this Agreement. This provision will not affect
     Consultant's eligibility for such benefits based on services
     previously performed by Consultant as an employee of Kaiser.

          C.   Finally, it is understood and agreed that
     Consultant shall be solely responsible for paying, and
     agrees to pay, any and all applicable federal, state, and
     local taxes and fees in connection with his activities in
     connection with this Agreement, and he will abide by all
     applicable federal, state, and local laws in connection
     therewith.  Consultant acknowledges that Kaiser shall not
     deduct or be responsible for the withholding of taxes of any
     kind.

     6.   Protection of Proprietary or Confidential Information.  
          -----------------------------------------------------

          A.   Any and all communications between any of the
     Kaiser Entities and Consultant shall be privileged and
     confidential, subject to waiver only by the appropriate
     Kaiser Entity, and may not be divulged by Consultant to any
     third party without the prior written authorization of the
     appropriate Kaiser Entity except to the extent necessary to
     perform the services contemplated by this Agreement.
     Consultant acknowledges that by reason of his experience
     with Kaiser as an officer and employee prior to the
     effective date of this Agreement he has had access to
     proprietary and confidential information with respect to the
     Kaiser, its business units, subsidiaries and affiliates and
     their respective financial and business affairs and
     strategic plans ("Confidential Information") and that he
     will continue to be exposed to such information during his
     engagement under this Agreement.  In recognition of the
     foregoing, Consultant agrees not to disclose, use, transfer
     or sell, except in the course of Consultant's engagement
     hereunder, any Confidential Information so long as such
     information has not otherwise been disclosed or is not
     otherwise in the public domain, except as required by law or
     pursuant to legal process.  Upon the request of Kaiser,
     Consultant shall surrender to Kaiser any and all personal
     property, software, disks, work papers, reports, manuals,
     documents and the like (including all originals and copies
     thereof) in his possession or control which contain any
     Confidential Information.


          B.   Consultant further acknowledges (i) that the
     Confidential Information  constitutes valuable and unique
     property, that irreparable damage would result to Kaiser if
     any of the Confidential Information were disclosed to a
     third party except as expressly provided in this Agreement,
     (ii) that the appropriate amount of any money damages would
     be difficult to ascertain, and (iii) that, as a result,
     money damages would not be a sufficient remedy for a breach
     or anticipated breach by Consultant of the foregoing
     paragraph. Therefore, Consultant acknowledges that Kaiser
     shall be entitled, in addition to any other rights and
     remedies which may be available to Kaiser, to specific
     performance and/or injunctive or other equitable relief as a
     remedy for any such breach or anticipated breach of the
     foregoing paragraph.  If a court exercising applicable
     jurisdiction determines that Kaiser is entitled to
     injunctive and/or other equitable relief, Consultant agrees
     to, and hereby does, waive any requirement for the securing
     or posting of any bond in connection with any such remedy. 
     No failure or delay by Kaiser in exercising any right,
     power, or privilege hereunder, at law or in equity, shall
     operate as a waiver thereof, nor shall any single or partial
     exercise thereof preclude or limit any other or further
     exercise thereof.

     7.   Non-Competition and Non-Disparagement. 
          -------------------------------------

          A.   Without the consent in writing of Kaiser,
     Consultant will not for a period of eighteen (18) months
     beginning on the effective date of this Agreement and ending
     on June 30, 2000, acting alone or in conjunction with
     others, directly or indirectly (i) engage (either as owner,
     partner, stockholder, employer or employee) in any business
     in which he has been directly engaged, or has supervised or
     advised in any manner, as an employee of Kaiser or an
     officer of any of the Kaiser Entities and which is directly
     in competition with a business conducted by any of the
     Kaiser Entities; (ii) induce any customers of the Kaiser
     Entities with whom Consultant has had or will have contacts
     or relationships, directly or indirectly, during and within
     the scope of his employment with Kaiser or during the term
     of this Agreement to curtail or cancel their business with
     any of the Kaiser Entities; (iii) solicit or canvas business
     from any person who was a customer of any of the Kaiser
     Entities at or during the two-year period immediately
     preceding termination of Consultant's employment with Kaiser
     or at any time during the term hereof; or (iv) induce, or
     attempt to influence, any employee of any of the Kaiser
     Entities to terminate his or her employment.  The provisions
     of clauses (i), (ii), (iii) and (iv) above are separate and
     distinct commitments independent of each of the other
     subparagraphs.  It is agreed that the ownership of not more
     than of 5% of the equity securities of any company having
     securities listed on an exchange or regularly traded in the
     over-the-counter market shall not, of itself, be deemed
     inconsistent with clause (i) above.

          B.   The foregoing covenants on the part of Consultant
     shall be construed as agreements independent of any other
     provision of this Agreement, and the existence of any claim
     or cause of action by Consultant against Kaiser, whether
     predicated on this Agreement or otherwise, shall not
     constitute a defense to the enforcement by Kaiser of any of
     those covenants.  

          C.   Consultant shall not, at any time, make any
     statement which might be reasonably regarded as disparaging
     to any of the Kaiser Entities, their respective Boards of
     Directors, Directors, officers, employees, operations,
     businesses, business practices, strategic and business plans
     or which may be reasonably expected to reflect unfavorably
     on any Kaiser Entity, except as may be required by law.

     8.   Cooperation.  Consultant agrees to cooperate with 
          -----------
Kaiser and each of the Kaiser Entities by making himself
available to testify on behalf of any of them in any action, suit
or proceeding, whether civil, criminal, administrative or
investigative, and to assist any of the Kaiser Entities in any
such action, suit or proceeding, by providing information and
meeting and consulting with the representatives or counsel of any
of the Kaiser Entities.  Kaiser agrees to reimburse Consultant
for all reasonable expenses actually incurred in connection with
his provision of testimony or assistance.

     9.   Termination of Engagement.  
          --------------------------

          A.   Consultant may terminate this Agreement by giving
     thirty (30) days' prior written notice of termination to
     Kaiser.  

          B.   Kaiser may terminate this Agreement upon the
     earlier to occur of (i)  the death or permanent disability
     of Consultant such that Consultant is no longer capable in
     the reasonable opinion of Kaiser to perform the services
     contemplated by this Agreement, (ii) the conviction of
     Consultant for the commission of any felony in any state or
     federal court in the United States of America, or in any
     jurisdiction where he is engaged, and (iii) Consultant's
     breach of this agreement, which breach continues beyond the
     thirty (30) day period beginning on the date Consultant
     receives written notice of such breach from Kaiser.   

          C.   Termination of Consultant's services hereunder by
     Kaiser shall not be construed to be a breach of this
     Agreement by Kaiser, and shall terminate all compensation
     and benefits to which Consultant is entitled under this
     Agreement.  Further, in the event of such termination,
     Kaiser shall have no further liability to Consultant under
     this Agreement and all rights and obligations hereunder
     shall cease, except for (i) the rights and obligations under
     Sections 3 and 4 to the extent that Consultant has not been
     paid his retainer for any period in which this Agreement
     remained in effect and has not been reimbursed for his
     expenses in accordance with the terms of this Agreement,
     (ii) the rights and obligations under Section 6 regarding
     protection of confidential information, (iii) the
     obligations under Section 7 regarding, among other things,
     Consultant's agreement not to compete or otherwise interfere
     with the business or customers of any of the Kaiser
     Entities, and (iv) all procedural and remedial provisions of
     this Agreement.

     10.  Assignment.  Consultant shall neither, without the 
          ----------
prior written consent of Kaiser, assign this Agreement or any of
the rights hereunder, in whole or in part, nor delegate any of
the duties hereunder, in whole or in part. 

     11.  Applicable Law.  This Agreement is made in the State of 
          --------------
Texas and shall in all respects be governed by and construed in
accordance with the internal laws of Texas, without regard to the
rules of the conflict of laws of such state.  Except as otherwise
permitted by Section 6 in connection with seeking specific
performance and/or injunctive or other equitable relief as a
remedy for any such breach or anticipated breach of Section 6 of
this Agreement, any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by
arbitration in Houston, Texas by three arbitrators in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time of submission to arbitration. 
Judgment may be entered on the arbitrators' award in any court
having jurisdiction.  

     12.  Notices.   Where a notice is called for by this 
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Agreement, it shall mean a notice in writing signed by the party
giving the notice and delivered to:  

     For Consultant:     Lawrence L. Watts


     For Kaiser:         Kaiser Aluminum & Chemical Corporation
                         5847 San Felipe, Suite 2600
                         Houston, Texas 77257-2887
                         Attention: Chairman

Any notice so delivered to the party to whom it is addressed
shall be deemed to have been given and received (i) if by
personal delivery, on the day of such delivery, (ii) if by
certified or registered mail, on the seventh day after mailing
thereof, (iii) if by facsimile, the day on which such facsimile
was sent and a confirmation of successful transmission is
received or (iv) if by next-day or overnight mail delivery, on
the day delivered, provided that if any such day is not a 
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business day then the notice shall be deemed to have been given
and received on the business day next following such day.

     13.  Entire Agreement.  This Agreement and the termination 
          ----------------
letter entered into by Consultant and the Company, as amended or
supplemented, contain the entire understanding and agreement
between the parties hereto as to the subject matter hereof, and
supersede all prior or contemporaneous communication, agreements
and understandings between the parties, whether written or oral
with respect to the subject matter hereof and thereof.

     14.  Amendment.  This Agreement can be amended, 
          ---------
supplemented, or superseded only by an instrument in writing
signed by both of the parties hereto.

     15.  Severability.  If any provision of this Agreement is 
          ------------
held to be illegal, invalid, or unenforceable under present or
future laws effective during the term hereof, such provision
shall be fully severable and this Agreement and each separate
provision hereof shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised
a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or
by its severance from this Agreement.  In addition, in lieu of
such illegal, invalid, or unenforceable provision, there shall be
added automatically as a part of this Agreement a provision as
similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and
enforceable.  

             16.    Headings.  The headings contained in this Agreement are 
          --------
for reference purposes only and shall not affect in any way the
meaning, interpretation, or scope of this Agreement.

             17.    Successors and Assigns.   This Agreement shall inure to 
          ----------------------
the benefit of and be binding upon the respective parties hereto,
their permitted respective successors and assigns.

             18.    Waiver of Default.  Any waiver by either party of a 
          -----------------
breach of any provision of this Agreement shall not operate or be
construed as a waiver by such party of any subsequent breach of
this Agreement.

     IN WITNESS WHEREOF, the parties have executed this Agreement 
as of the date first above written.





/s/ Lawrence L. Watts
----------------------------
LAWRENCE L. WATTS


KAISER ALUMINUM & CHEMICAL
CORPORATION


by:/s/ George T. Haymaker,Jr.
   --------------------------
     George T. Haymaker, Jr.
     Chairman and Chief 
     Executive Officer