TIME-BASED STOCK OPTION GRANT
                             PURSUANT TO THE KAISER
                        1997 OMNIBUS STOCK INCENTIVE PLAN

         1.     GRANT OF STOCK OPTION. Kaiser Aluminum Corporation ("KAC") and
Kaiser Aluminium & Chemical Corporation ("KACC"), both Delaware corporations
(collectively, the "Company"), hereby evidence that the Company has granted to
J. KENT FRIEDMAN ("Optionee") the right, privilege and option as herein set
forth (the "Stock Option") to purchase 167,000 shares of common stock, $.01 par
value per share, of KAC (as more fully defined in Attachment I -- "Definitions
Applicable to Certain Terms", which is incorporated herein and made a part
hereof, the "Option Shares") in accordance with the terms of this document (this
"Stock Option Grant").

         The Stock Option is granted pursuant to the Kaiser 1997 Omnibus Stock
Incentive Plan (the "Plan") and is subject to the provisions of the Plan, a copy
of which has been furnished to Optionee and which is hereby incorporated in and
made a part of this Stock Option Grant, as well as to the provisions of this
Stock Option Grant. By acceptance of the Stock Option, Optionee agrees to be
bound by all of the terms, provisions, conditions and limitations of the Plan
and this Stock Option Grant.

         All capitalized terms used herein shall have the meanings provided in
the Plan document unless otherwise specifically provided in this Stock Option
Grant, including Attachment I. The Stock Option is a Nonqualified Stock Option
under the Plan and is not intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Code.

         All Option Shares, when issued to Optionee upon the exercise of this
Stock Option, shall be fully paid and nonassessable.

         2.     OPTION TERM. Subject to earlier termination as provided herein,
or in the Plan, the Stock Option shall expire on December 1, 2009. The period
during which the Stock Option is in effect shall be referred to as the "Option
Period".

         3.     OPTION EXERCISE PRICE. The exercise price per Option Share
(including any Attributable Securities, as defined in Attachment I) (the "Option
Price") at which Optionee may purchase such Option Shares subject to the Stock
Option shall be equal to the remainder of (i) $9.00 per Option Share minus (ii)
the amount per Option Share of Distributed Cash Value (as defined in Attachment
I) determined as of the date of exercise. Such Option Price shall also be
subject to adjustment as provided in the Plan and this Stock Option Grant. The
Company shall notify Optionee within thirty (30) days of each change in the
Option Price.

         4.     VESTING. The Stock Option may be exercised during the Option
Period only to the extent it has become a "Vested Option". Provided Optionee's
Qualified Service Period (as defined in Attachment I) has not previously
terminated, the Stock Option shall become a "Vested Option" as to 20% of the
Option Shares on the first anniversary of the date of this Agreement, and with
respect to an additional 20% of the Option Shares on each of the second, third,
fourth, and fifth anniversaries of the date of this Agreement, so that the Stock
Option shall be fully exercisable with respect to all of the Option Shares on
such fifth anniversary. Notwithstanding the preceding sentence, if KAC
experiences a Change in Control (as defined in Attachment I) prior to December
1, 2004 and prior to the end of Optionee's Qualified Service Period, then the
Stock Option shall become a fully Vested Option, exercisable as to all Option
Shares from and including the date of the Change in Control until and including
the first anniversary of the Change in Control, upon which anniversary the
Option Period shall terminate and this Stock Option shall expire.

         5.     PARACHUTE PAYMENT GROSS-UP. To the extent that the acceleration
of the vesting of Optionee's Stock Option as a result of a Change of Control of
KAC subjects Optionee to federal income, excise, or other tax at a rate above
the rate ordinarily applicable upon the exercise of the Stock Option ("Penalty
Tax"), whether as a result of the provisions of sections 280G and 4999 of the
Code, any similar or analogous provisions of any statute adopted subsequent to
the date hereof, or otherwise, then KAC shall pay to Optionee an amount (the
"Gross-up Amount") such that the net amount realized by Employee upon exercise
of the Stock Option, after paying any applicable Penalty Tax and any federal or
state income tax on such Gross-up Amount, shall be equal to the amount that
Employee would have realized if such Penalty Tax were not applicable to the
Stock Option.

         6.     METHOD OF EXERCISE. To exercise the Stock Option, Optionee shall
deliver written notice to the Company stating the number of Option Shares with
respect to which the Stock Option is being exercised together with payment for
such Option Shares. Payment shall be made (i) in cash or its equivalent, (ii) by
tendering previously acquired Shares having an aggregate Fair Market Value (as
defined in the Plan) at the time of exercise equal to the total Option Price
(provided that the Shares which are tendered must have been held by Optionee for
at least six months prior to their tender to satisfy the Option Price) or (iii)
by a combination of (i) and (ii).

         7.     TERMINATION OF OPTIONEE'S EMPLOYMENT. Termination of Optionee's
employment as a regular full-time salaried employee of KAC, an Affiliate, a
Subsidiary (as defined in Attachment I), or any branch, unit or division of KAC
or any Subsidiary ("Employment") shall affect Optionee's rights under the Stock
Option as follows:

                (a) Termination by the Company for Cause. If Optionee's
         Employment is terminated by the Company at any time for Cause, then (i)
         the Option Period shall terminate and (ii) Optionee's right to exercise
         the Stock Option shall terminate, in each case immediately upon
         Optionee's becoming subject to termination of Employment for Cause.
         Optionee shall be terminated for "Cause" if terminated as a result of
         (A) Optionee's gross negligence or willful misconduct in the
         performance of the duties and services required of Optionee pursuant to
         the Employment Agreement, (B) Optionee's conviction of a felony, (C)
         Optionee's commission of an act of fraud against KAC, an Affiliate, or
         a Subsidiary, (D) Optionee's breach of any material provision of the
         Employment Agreement which remains uncorrected for 30 days following
         written notice to Optionee by his employer of such breach, (E)
         Optionee's failure to substantially perform his duties under the
         Employment Agreement, other than as a result of illness or injury,
         which failure remains uncorrected for 30 days following written notice
         to Optionee by his employer of such failure, or (F) Optionee's material
         failure to comply with his employer's code of business conduct, which
         failure remains uncorrected for 30 days following written notice to
         Optionee by his employer of such failure.

                (b) Involuntary Termination Other than for Cause. If
         Optionee's Employment is terminated prior to December 1, 2009 other
         than as a result of termination of Optionee's Employment for Cause, and
         other than by reason of Voluntary Termination (as defined in Attachment
         I) then (i) the Stock Option and the Option Period shall not terminate
         and (ii) the Stock Option shall thereafter be exercisable as to all
         Option Shares from and including the date of such termination through
         and including the end of the Option Period.

                (c) Voluntary Termination. If Optionee's Qualified Service
         Period terminates prior to December 1, 2009 by reason of a Voluntary
         Termination, then the Stock Option and the Option Period shall not
         terminate but the Stock Option shall thereafter be exercisable only to
         the extent it has become a Vested Option as of the date of termination
         of Optionee's Qualified Service Period and otherwise is exercisable in
         accordance with the provisions of this Stock Option Grant and the Plan.

The Stock Option may be exercised by Optionee or, in the case of death, by the
executor or administrator of Optionee's estate, or the person or persons to whom
Optionee's rights under the Stock Option shall pass by will or by the applicable
laws of descent and distribution, or in the case of Disability, by Optionee's
personal representative.

         8.     REORGANIZATIONS; REPURCHASE OF STOCK OPTION.

                (a) Freedom to Reorganize the Company and Subsidiaries. The
         existence of the Stock Option shall not affect in any way the right or
         power of the Company and its Subsidiaries or the issuers of
         Attributable Securities or its or their stockholders to make or
         authorize any and all Distribution Events (as defined in Attachment I)
         and any and all other adjustments, recapitalizations, reorganizations
         or other changes in the capital structure or business of the Company or
         its Subsidiaries or the issuers of Attributable Securities, any and all
         issuances of bonds, debentures, common stock, preferred or prior
         preference stock, warrants, rights or other securities, whether or not
         affecting the Option Shares or the rights thereof, any dissolution or
         liquidation of the Company or any Subsidiary, any sale or other
         divestiture or transfer of all or any part of the assets or business of
         the Company or any Subsidiary or any issuer of Attributable Securities
         and any and all other corporate acts or proceedings, whether of a
         similar character or otherwise (collectively, including any
         Distribution Events, collectively, "Reorganizations").

                (b) Spin-Offs. If the Board of Directors authorizes any
         Distribution Event or other Reorganization as a result of which holders
         of Shares (as defined in Attachment I) become entitled, in their
         capacities as holders, to receive Marketable Securities, the Board of
         Directors shall, to the extent reasonably practicable, cause the
         Company to provide for or require: (1) that the issuer(s) of such
         Marketable Securities shall undertake to issue and deliver to Optionee,
         upon any subsequent exercise of the Stock Option, such Marketable
         Securities as Optionee would have received if Optionee had so exercised
         the Stock Option prior to such Distribution Event or other
         Reorganization and had participated therein (and in any and all
         subsequent Distribution Events or other Reorganizations) to the maximum
         extent allowed to holders of Shares (including any Attributable
         Securities) outstanding at the time of such Distribution Event or other
         Reorganization; (ii) that such Marketable Securities shall be so issued
         and delivered to Optionee pursuant to an effective registration
         statement under the Securities Act of 1933, as amended, or otherwise
         free of any restriction on resale thereof by Optionee, other than any
         restriction on resale arising from Optionee's being an Affiliate or
         Insider (as such terms are defined in the Plan) of such issuer; (iii)
         that such Marketable Securities shall be so issued and delivered
         without any agreement, condition, payment or other consideration being
         required of Optionee or the Company; (iv) that such issuer(s) shall at
         all times reserve for issuance a sufficient amount of such Marketable
         Securities to fulfill all obligations contemplated hereunder; and (v)
         that upon each such issuance, such Marketable Securities shall be duly
         authorized, validly issued, fully paid and nonassessable. The Company
         shall also provide for or require that: (x) in the event any such
         issuer shall fail or be unable to issue and deliver to Optionee any
         Marketable Securities as provided in the preceding sentence, such
         issuer shall be obligated, in lieu of issuing and delivering such
         Marketable Securities, to pay to Optionee in cash, immediately upon
         exercise of the Stock Option, the Market Value of such Marketable
         Securities determined as of the date of exercise of the Stock Option;
         and (y) in the event the Company is obligated to make a cash payment to
         Optionee pursuant to Paragraph 8(b), such issuer shall be obligated to
         reimburse the Company for a part of such payment proportionate to the
         Distributed Cash Value attributable to Attributable Securities of such
         issuer compared to the total amount of Distributed Cash Value.

                (c) Right to Repurchase Stock Option. Upon receipt of a notice
         of exercise, the Company shall have the right but not the obligation to
         repurchase, and thereby to satisfy all of the Company's obligations
         under, the Stock Option as to the number of Option Shares as to which
         the Stock Option is exercised by paying Optionee in cash an amount, net
         of any taxes required to be withheld, equal to the sum of (A) the
         product of (i) the number of Option Shares as to which the Stock Option
         is exercised multiplied by (ii) the amount, determined as of such date
         of exercise, equal to the remainder of (x) the Market Value of one
         Option Share minus (y) the Option Price plus (B) the amount of cash, if
         any, payable to Optionee pursuant to Paragraph 8(b).

         9.     ADJUSTMENTS.

                (a) In the event of any one or more Distribution Events or
         other Reorganizations affecting the Stock Option and not already
         adjusted for under Paragraph 7, the Option Price and the number of
         Option Shares subject to the Stock Option shall be appropriately
         adjusted by the Board of Directors. In addition, the Board of Directors
         shall, as permitted by Section 3.2, Section 16.2 and other provisions
         of the Plan, construe and interpret the Plan and this Stock Option
         Grant and make all appropriate adjustments in order to prevent dilution
         or enlargement of the benefits or potential benefits intended to be
         made available to Optionee under this Stock Option Grant and the Plan.

                (b) Without limitation to the foregoing, in the event that the
         amount of Distributed Cash Value as of any date of exercise of the
         Stock Option is equal to or greater than $9.00 per Option Share, the
         Option Price shall be deemed to be $.01 per Option Share and the
         Company, in addition to issuing Option Shares to Optionee, shall pay to
         Optionee in respect of each Option Share as to which the Stock Option
         is exercised an amount of cash equal to the remainder of (i) such
         amount of Distributed Cash Value per Option Share minus (ii) $9.00.

         10.    NO RIGHTS IN OPTION SHARES.  Optionee shall have no rights as
a stockholder in respect of Option Shares until such Optionee becomes the holder
of record of such Option Shares.

         11.    OPTION SHARES RESERVED.  The Company shall at all times during
the Option Period reserve and keep available such number of Shares as will be
sufficient to satisfy the requirements of this Stock Option.

         12.    NONTRANSFERABILILY OF STOCK OPTION. The Stock Option granted
pursuant to this Stock Option Grant is not transferable other than by will, the
laws of descent and distribution or by qualified domestic relations order. The
Stock Option will be exercisable during Optionee's lifetime only by Optionee or
by Optionee's guardian or legal representative. No right or benefit hereunder
shall in any manner be liable for or subject to any debts, contracts,
liabilities, or torts of Optionee.

         13.    AMENDMENT AND TERMINATION. No amendment or termination of the
Stock Option shall be made by the Board of Directors or the Committee (as
defined in the Plan) at any time without the written consent of Optionee. No
amendment of the Plan will adversely affect the rights, privileges and options
of Optionee under the Stock Option without the written consent of Optionee.

         14.    NO GUARANTEE OF EMPLOYMENT. The Stock Option shall not confer
upon Optionee any right with respect to continuance of Employment or other
service with the Company or any Subsidiary or Affiliate, nor shall it interfere
in any way with any right the Company or any Subsidiary or Affiliate would
otherwise have to terminate such Optionee's Employment or other service at
any time.

         15.    WITHHOLDING OF TAXES. The Company shall have the right to deduct
or withhold, or require Optionee to remit to the Company, an amount sufficient
to satisfy all federal, state and local taxes, domestic or foreign, required by
law or regulation to be withheld with respect to any taxable event arising under
this Stock Option Grant or any exercise or other action or event hereunder.

         16.    NO GUARANTEE OF TAX CONSEQUENCES.  Neither the Company nor any
Subsidiary or Affiliate, nor the Board of Directors or any Committee, makes any
commitment or guarantee that any federal or state tax treatment will apply or be
available to any person eligible for benefits under the Stock Option.

         17.    SEVERABILITY. In the event that any provision of the Stock
Option shall be held illegal, invalid, or unenforceable for any reason, such
provision shall be fully severable, but shall not affect the remaining
provisions of the Stock Option, and the Stock Option shall be construed and
enforced as if the illegal, invalid, or unenforceable provision had never been
included herein.

         18.    GOVERNING LAW.  The Stock Option shall be construed in
accordance with the laws of the State of Texas to the extent federal law does
not supersede and preempt Texas law.

Executed effective as of the 1st day of December, 1999.


"COMPANY"

KAISER ALUMINUM CORPORATION

By:   /s/  Raymond J. Milchovich
Printed Name:  Raymond J. Milchovich
Title:  President and COO

KAISER ALUMINUM & CHEMICAL
CORPORATION

By:   /s/  Raymond J. Milchovich
Printed Name:  Raymond J. Milchovich
Title:  President and COO
KAISER ALUMINUM & CHEMICAL
CORPORATION

Accepted effective as of the 1st day of December, 1999.


"OPTIONEE"

/s/  J. Kent Friedman
Printed Name:  J. Kent Friedman
Title:


                                                                    ATTACHMENT I

                          TIME-BASED STOCK OPTION GRANT

                     DEFINITIONS APPLICABLE TO CERTAIN TERMS

"AFFILIATE" -- see Section 2.1 of the Plan.

"ATTRIBUTABLE SECURITIES" -- see the definition of "Option Share".

"CAUSE" -- see Paragraph 6(a) of this Stock Option Grant.

"CHANGE IN CONTROL" means (a) the sale, lease, conveyance, or other disposition
of all or substantially all of KAC's assets as an entirety or substantially as
an entirety to any person, entity, or group of persons acting in concert other
than in the ordinary course of business; (b) any transaction or series of
related transactions (as a result of a tender offer, merger, consolidation or
otherwise) that results in any person (as defined in Section 13(h)(8)(E) under
the Securities Exchange Act of 1934) becoming the beneficial owner (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, or more than 50% of the aggregate voting power of all classes of
common equity of KAC, except if such Person is (i) a Subsidiary, (ii) an
employee stock ownership plan for employees of KAC or (iii) a company formed to
hold KAC's common equity securities and whose shareholders constituted, at the
time such company became such holding company, substantially all the
shareholders of KAC; or (c) a change in the composition of KAC's Board of
Directors over a period of thirty-six (36) consecutive months or less such that
a majority of the then current Board members ceases to be comprised of
individuals who either (x) have been Board members continuously since the
beginning of such period, or (y) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (x) who were still in office at the time such election or
nomination was approved by the Board.

"DISABILITY" -- See Section 2.12 of the Plan.

"DISTRIBUTED CASH VALUE" means, as of any determination date, the aggregate
amount of cash (other than regular quarterly cash dividends, if any) plus the
aggregate value, as determined by the Board of Directors as of the date of
distribution, of all property (other than cash and Attributable Securities)
distributed or set aside for distribution to the holder of one Original Share
and all Attributable Securities, if any, during the period commencing December
1, 1999 and ending on the determination date.

"DISTRIBUTION EVENTS" means any and all distributions, dividends,
recapitalizations, forward or reverse splits, reorganizations, mergers,
consolidations, spin-offs, combinations, repurchases, share exchanges, or other
similar or substantially equivalent corporate transactions or events in which
the holder of a security becomes, as such, entitled to receive cash, securities
or other property in addition to or in exchange for or upon conversion of such
security.

"EMPLOYMENT" -- see Paragraph 6 of this Stock Option Grant.

"EMPLOYMENT AGREEMENT" means the Executive Employment Agreement, dated December
1, 1999 between MAXXAM, Inc. and Optionee.

"INSIDER" -- see Section 2.19 of the Plan.

"KAC" -- see Paragraph 1 of this Stock Option Grant.

"KACC" -- see Paragraph 1 of this Stock Option Grant.

"MARKET VALUE" means, as of any Trading Day, the average of the highest and
lowest sales prices as reported by the consolidated tape (or, if such prices are
not quoted, the average of the quoted closing bid and asked prices) on such
Trading Day for one Option Share (including, as applicable, the Market Values of
any Attributable Securities). In the event that sales prices or closing bid and
asked prices are not quoted on a particular Trading Day, the Market Value for
that Trading Day shall be deemed to be the Market Value for the immediately
preceding Trading Day. In the event that any Attributable Security shall cease
to be a Marketable Security, it shall thereupon be deemed to have no further
Market Value and shall be deemed instead to have, as of the date it ceases to be
a Marketable Security, such Distributed Cash Value as shall be determined by the
Board of Directors.

"MARKETABLE SECURITIES" means securities (a) of a class that is registered under
the Securities Exchange Act of 1934, as amended, (b) for which sales prices or
bid and asked prices are regularly quoted and (c) that, if issued and delivered
to Optionee upon exercise of the Stock Option, would not be subject to any
restriction on resale, other than any restriction arising from Optionee's being
an Affiliate or Insider (as such terms are defined in the Plan) of the issuer of
such Marketable Securities.

"OPTION PERIOD" -- see Paragraph 2 of this Stock Option Grant.

"OPTION PRICE" -- see Paragraph 3 of this Stock Option Grant.

"OPTION SHARE" means (a) one Share as constituted on December 1, 1999 (an
"Original Share") and (b) in the event of any one or more successive
Distribution Events, all Marketable Securities ("Attributable Securities") into
which or for which an Original Share or any Attributable Securities may be
converted or exchanged or that a Stockholder may have the right to receive in
respect of such Original Share or Attributable Securities.

"OPTIONEE" -- see Paragraph 1 of this Stock Option Grant.

"ORIGINAL SHARE" -- see the definition of "Option Share".

"PLAN" -- see Paragraph 1 of this Stock Option Grant.

"QUALIFIED SERVICE PERIOD" means the period from and including December 1, 1999
through and including the earlier of (a) November 30, 2004 or (b) the date
immediately preceding the date of termination of Optionee's Employment by reason
of Voluntary Termination.

"REORGANIZATION" -- see Section 7(a) of this Stock Option Grant.

"SHARE" means one share of common stock, par value $.01 per share, of KAC.

"STOCK OPTION" - see Paragraph 1 of this Stock Option Grant.

"SUBSIDIARY" - see Section 2.32 of the Plan. For avoidance of doubt, KACC shall
be considered a Subsidiary of KAC so long as KAC has a majority voting interest
in KACC, and KAC shall be considered to have a majority voting interest whether
it holds such interest directly or indirectly through one or more Subsidiaries.

"TRADING DAY" means as to an Option Share (including any Attributable
Securities) a day when the New York Stock Exchange (or other principal
securities exchange, including Nasdaq, on which such securities are traded) is
open.

"VOLUNTARY TERMINATION" means termination of Optionee's employment by Optionee,
other than (a) a termination because of a material breach by Optionee's employer
of any material provision of the Employment Agreement which remains uncorrected
for 30 days following written notice of such breach by Optionee to his employer,
(b) a termination within six months of a material reduction in Optionee's rank
or responsibility with his employer which remains uncorrected for 30 days
following written notice of such reduction by Optionee to his employer, or (c) a
termination within 12 months of a "Change of Control" of his employer as such
term is defined in the Employment Agreement.