CONSULTING AGREEMENT

EXHIBIT 10.1

CONSULTING AGREEMENT

     This Consulting Agreement (“Agreement”) is entered into between MAXXAM, Inc. (“Company”) and Diane M. Dudley (“Dudley”). This Agreement is entered into in order to set forth the terms of the consulting services Dudley will perform for the Company.

     Dudley served as Vice President, Chief Personnel Officer for the Company for a number of years until the separation of her employment in December 2004. The Company wishes to benefit from the experience and expertise Dudley developed in her years of employment with the Company. Dudley wishes to provide services to the Company on an independent consulting basis.

     In consideration of the mutual promises contained in this Agreement, the parties agree as follows:

     1. For the period of January 17, 2005 through January 1, 2006, Dudley will provide consulting services relating to her former duties as Vice President, Chief Personnel Officer. Following January 1, 2006, Dudley and the Company may, if they mutually agree to do so, extend the period during which Dudley will provide consulting services. If Dudley and the Company mutually agree to this extension, the terms and conditions set forth in this Agreement will also apply to this extended consulting period, unless Dudley and the Company agree to other terms.

     2. Dudley will perform any and all projects which the Company assigns her during this consulting period. Dudley will also attend conferences and meetings when requested to do so by the Company.

     3. The Company will pay Dudley an hourly fee of $95.00 (ninety five dollars) for her consulting services. The Company will generally provide Dudley with projects that will involve not more than 80 hours of service per month during this Agreement. The Company shall not be responsible for providing Dudley any benefits that it normally provides its employees, or that she received during her employment with the Company. The only compensation or benefits that Dudley is entitled to receive from the Company for her consulting services are set forth in this Agreement.

     4. The Company will only reimburse Dudley for her reasonable out-of-pocket expenses, including, but not limited to, travel, accommodations, and mileage necessarily incurred by Dudley in performing her consulting services under this Agreement, provided these expenses have been approved by the Company before the expenses are incurred.

     5. In providing the consulting services called for by this Agreement, Dudley will serve as an independent contractor. Nothing contained in this Agreement shall be construed to constitute Dudley as an officer, employee, or agent of the Company. Dudley will be responsible for her own actions. Dudley may perform services for other businesses, entities

and/or individuals in addition to the Company. The Company shall not be required to withhold any federal or state income taxes, FICA or FUTA from the fees paid to Dudley for her consulting services. Dudley shall be responsible for maintaining her own books and records and for the filing of any taxes or other information returns with any federal or state agencies.

     6. Except as provided for in paragraph 4, Dudley is responsible for all expenses incurred during the performance of her consulting services under this Agreement. The Company will provide Dudley with a workspace