July 21, 1998 Mr. Lawrence L. Watts Kaiser Aluminum & Chemical Corporation 5847 San Felipe, Suite 2600 Houston, Texas 77057 Dear Larry: This letter reflects our agreement that the supplemental non-recurring 1998 annual incentive payment to be paid to...

                                        July 21, 1998




Xx. Xxxxxxxx X. Xxxxx
Xxxxxx Aluminum & Chemical Corporation
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000

Dear Xxxxx:

     This letter reflects our agreement that the supplemental 
non-recurring 1998 annual incentive payment to be paid to you
under our existing agreement will be in the amount of $335,000. 
This amount will be paid promptly following the execution of this
letter and your consulting agreement. 

     Please acknowledge your acceptance of the foregoing and its
terms in the space provided below.




Very truly yours,

/s/ Xxxxxx X. Xxxxxxxx, Xx.

Xxxxxx X. Xxxxxxxx, Xx.
Chairman and Chief
Executive Officer



Agreed and accepted:

/s/ Xxxxxxxx X. Xxxxx


Xxxxxxxx X. Xxxxx
July 21, 1998