SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT

. . . EXHIBIT 2.5 II. SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT, DATED OCTOBER 22, 2001

-2- SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT This Second Amendment to Note Purchase Agreement (the "Agreement") is made and entered into as of this 22nd day of October, 2001, by and among JAMES HARDIE U.S. FUNDING, INC., a Nevada corporation ("Issuer"), JAMES HARDIE N.V., a company incorporated under the laws of the Netherlands with its corporate seat in Amsterdam, the Netherlands (the "Guarantor"), JAMES HARDIE AUST. INVESTCO PTY. LIMITED, a company organized under the laws of Australia (the "First Subsidiary Guarantor"), JAMES HARDIE AUSTRALIA FINANCE PTY. LIMITED, a company organized under the laws of Australia (the "Second Subsidiary Guarantor"), JAMES HARDIE INTERNATIONAL FINANCE B.V., a company incorporated under the laws of the Netherlands with its corporate seat in Amsterdam, the Netherlands (the "Third Subsidiary Guarantor"), and the holders of notes listed on the signature pages hereof under the heading "Noteholders" (each a "Noteholder" and, collectively, the "Noteholders") with reference to the following facts. Capitalized terms used herein which are not otherwise defined shall have the meaning ascribed to them in the Purchase Agreement (defined below). A. Issuer presently has obligations under Guaranteed Senior Notes (the "Notes") in the aggregate principal amount of $225,000,000 issued to the purchasers under those certain Note Purchase Agreements with Issuer and the Guarantor, each dated as of November 5, 1998, as amended by that certain Assignment and Assumption Agreement and First Amendment to Note Purchase Agreement dated as of January 24, 2000 (collectively, the "Purchase Agreement"). B. In connection with the establishment of a Dutch finance scheme (the "Finance Scheme"), the Second Subsidiary Guarantor is being replaced as the principal borrowing entity of the James Hardie family of companies by the Third Subsidiary Guarantor. The Issuer wishes to cause the Third Subsidiary Guarantor to become a guarantor of the Notes and to amend the Note Purchase Agreement (i) to add borrowings by the Third Subsidiary Guarantor as exclusions under the definition of "Priority Debt" in the Note Purchase Agreement and (ii) to clarify the applicability of certain other sections to the Third Subsidiary Guarantor. C. This Agreement is required under Section 19 of the Purchase Agreement as a form of written consent to the amendment of certain provisions of the Purchase Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, Issuer, Guarantor, the First Subsidiary Guarantor, the Second Subsidiary Guarantor, the Third Subsidiary Guarantor and the undersigned Noteholders agree as follows: 1. EFFECTIVE DATE The effective date of this Agreement shall be the date of satisfaction of the conditions set forth in Section 15 below (the "Effective Date"). 2. AMENDMENT TO SECTION 7.2(a). Section 7.2(a) of the Purchase Agreement shall be completely replaced by a new Section 7.2(a), which shall read in full as follows: (a) Covenant Compliance - (i) the information (including detailed calculations) required in order to establish whether the Obligors were in compliance with the requirements of Sections 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence) and (ii) with respect only to financial statements delivered pursuant to Section 7.1(b), the information (including detailed calculations) required in order to establish whether the Obligors were in compliance with the requirements of Section 10.9 during the annual period covered by the statements then being furnished; and 3. AMENDMENT TO SECTION 9.8. Section 9.8 of the Purchase Agreement shall be completely replaced by a new Section 9.8, which shall read in full as follows: 9.8. OWNERSHIP OF ISSUER AND SUBSIDIARY GUARANTORS; ACTIVITIES. Subject only to the provisions of Section 10.2(i), the Guarantor will at all times maintain the Issuer, the First Subsidiary Guarantor, the Second Subsidiary Guarantor and the Third Subsidiary Guarantor as Wholly-Owned Subsidiaries of the Guarantor, and the capital stock of, and any other ownership interests in, the Issuer, the First Subsidiary Guarantor, the Second Subsidiary Guarantor and the Third Subsidiary Guarantor will at all times remain free of any Lien. 4. AMENDMENT TO SECTION 10.3. Section 10.3 of the Purchase Agreement shall be amended to delete existing subsection (f) and to replace it with a new subsection (f), which shall read in full as follows: (f) Liens on property or assets of the Guarantor or any of its Subsidiaries securing Debt owing to the Guarantor or to any of its Wholly-Owned Subsidiaries (other than the First Subsidiary Guarantor, the Second Subsidiary Guarantor or the Third Subsidiary Guarantor); 5. ADDITION OF SECTION 10.9. A new Section 10.9 is hereby added to the Purchase Agreement as follows: 10.9 INTEREST COVERAGE EBIT will not be less than twice Net Interest Charges in any year ending 31 March. 2 6. AMENDMENT TO SECTION 13. Section 13 of the Purchase Agreement shall be amended to delete existing subsection (1) and to replace it with a new subsection (1), which shall read in full as follows: (1) any Subsidiary Guarantee shall at any time, for any reason, cease to be in full force and effect or shall be declared to be null and void in whole or in any material part by the final judgment (which is non-appealable or has not been stayed pending appeal or as to which all rights to appeal have expired or been exhausted) of any Governmental Authority having jurisdiction, or the validity or enforceability of any Subsidiary Guarantee shall be contested by or on behalf of the Guarantor or any of its Subsidiaries, or the Guarantor or any such Subsidiary shall renounce a Subsidiary Guarantee or deny that the First Subsidiary Guarantor, the Second Subsidiary Guarantor or the Third Subsidiary Guarantor, as the case may be, is bound thereby or has any further liability thereunder. 7. AMENDMENT TO SCHEDULE B. Schedule B of the Purchase Agreement is amended to add new definitions of the terms set forth below, which shall read in full as follows (and shall replace the definitions of any of the same terms in the Purchase Agreement): "BANK CREDIT AGREEMENTS" means (i) the four separate Revolving Loan Agreements, three of which are dated on or about November 3, 1998 and one of which (BankOne, N.A.) is dated on or about April 20, 2000 (together with any related agreements and instruments, the "Australian Bank Loan Agreements"), between the Third Subsidiary Guarantor as successor to the Second Subsidiary Guarantor (as borrower), the Issuer, the First Subsidiary Guarantor and the Guarantor (as guarantors) and, respectively, Australia and New Zealand Banking Group, BNP Paribas, Westdeutsche Landesbank Girozentrale and BankOne N.A. (the "Bank Lenders") under which the Third Subsidiary Guarantor may borrow up to an aggregate of A$200,000,000 (A$ referring to Australian dollars) as such agreements may be amended, modified, refinanced or replaced with the same or different lenders, and (ii) the six separate Standby Loan Agreements, two of which are dated on or about November 4, 1998, one of which (Westdeutsche Landesbank Girozentrale) is dated on or about January 24, 2000, two of which (Bank One N.A. and BBL Australia Limited are dated on or about December 10, 1998 and one of which (Wells Fargo HSBC Trade Bank, N.A.) is dated on or about July 20, 2000 (together with any related agreements and instruments, the "Standby Facilities"), between the Third Subsidiary Guarantor as successor to the Second Subsidiary Guarantor (as borrower), the Guarantor, the Issuer and the First Subsidiary Guarantor (as guarantors) and, respectively, each of the Bank Lenders, BBL Australia Limited and Wells Fargo HSBC Trade Bank, N.A., under which the Third Subsidiary Guarantor may borrow up to an aggregate of $117,500,000 (or the equivalent in Australian currency) as such agreements may be amended, modified, refinanced or replaced with the same or different lenders. "EBIT" means the operating profit of the Guarantor and its Subsidiaries before adjustments for abnormal or exceptional items and income tax but after adding 3 back Net Interest Charges, determined in each case by reference to the latest audited consolidated financial statements of the Guarantor and its Subsidiaries delivered to the Noteholders under Section 7.1(b) of this Agreement. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Guarantor and its Subsidiaries taken as a whole, or (b) the ability of the Issuer or the Guarantor to perform its obligations under this Agreement and the Notes, or (c) the validity or enforceability of this Agreement or the Notes, or (d) the ability of the First Subsidiary Guarantor, the Second Subsidiary Guarantor or the Third Subsidiary Guarantor to perform its obligations under its Subsidiary Guarantee, or (e) the validity or enforceability of any Subsidiary Guarantee. "NET INTEREST CHARGES" means all continuing, regular or periodic costs, charges and expenses (including interest, discount costs, charges and expenses (including but not limited to interest, discount costs and any and all fees associated with or incurred under any Debt)) incurred by the Guarantor and any of its Subsidiaries in effecting, servicing or maintaining at any time its Debt, less interest income received by or arising to the Guarantor or such Subsidiaries in the same period for which such Net Interest Charges are being determined, in each case by reference to the financial statements referred to in Section 7.1(b) of this Agreement. "PRIORITY DEBT" means (a) all Debt of the Guarantor and the Subsidiaries secured by any Lien with respect to any property owned by the Guarantor or any of its Subsidiaries and (b) all unsecured Debt of Subsidiaries, except Debt owed to the Guarantor or a Wholly-Owned Subsidiary, Debt of the First Subsidiary Guarantor, the Second Subsidiary Guarantor or the Third Subsidiary Guarantor and Debt of the Issuer, the First Subsidiary Guarantor, the Second Subsidiary Guarantor or the Third Subsidiary Guarantor under this Agreement, the Notes, the Subsidiary Guarantees, the Australian Bank Loan Agreements (and Guaranties thereof) and the first $100,000,000 of the Standby Facilities (and Guaranties thereof). "THIRD SUBSIDIARY GUARANTOR" means James Hardie International Finance B.V., a company organized under the laws of the Netherlands with its corporate seat in Amsterdam, the Netherlands, and its permitted successors under the Subsidiary Guarantee. "SUBSIDIARY GUARANTEE" means each of the Subsidiary Guarantees executed and delivered by the First Subsidiary Guarantor, the Subsidiary Guarantee executed and delivered by the Second Subsidiary Guarantor and the Subsidiary Guarantee executed and delivered by the Third Subsidiary Guarantor, each substantially in the form of Exhibit 4.10 hereto. 8. STATUS OF PURCHASE AGREEMENT. The provisions of the Purchase Agreement are in full force and effect and shall remain unchanged, except as provided by this Agreement. 4 9. INCONSISTENCIES. In the event of any inconsistency between the provisions of this Agreement and any provision in the Purchase Agreement, the terms and provisions of this Agreement shall govern. 10. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. 11. SEVERABILITY. If any paragraph, clause or provision of this Agreement is construed or interpreted by a court of competent jurisdiction to be void, invalid or unenforceable, such decision shall not affect the remaining paragraphs, clauses or provisions of this Agreement. 12. BINDING ON SUCCESSORS AND ASSIGNS. This Agreement applies to, inures to the benefit of, and binds the Issuer, the Guarantor, the First Subsidiary Guarantor, the Second Subsidiary Guarantor, the Third Subsidiary Guarantor and the Noteholders and their respective heirs, legatees, devisees, administrators, executors, successors and assigns. 13. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto. Any party hereto may execute and deliver a counterpart of this Agreement by delivering by facsimile transmission a signature page of this Agreement signed by such party and such facsimile signature shall be treated in all respects as having the same effect as an original signature. 14. REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE GUARANTOR. The Issuer and the Guarantor jointly and severally represent and warrant to the Noteholders that: 14.1. ORGANIZATION; POWER AND AUTHORITY. The Third Subsidiary Guarantor is a corporation duly incorporated and validly existing under the laws of the Netherlands and has all corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver its Subsidiary Guarantee and to perform the provisions thereof. 14.2. AUTHORIZATION, ETC. This Agreement has been duly authorized by all necessary corporate action on the part of the Issuer, and this Agreement constitutes a legal, valid and binding obligation of the Issuer enforceable against the Issuer in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Subsidiary Guarantee has been duly authorized by all necessary corporate action on the part of the Third Subsidiary Guarantor, and such Subsidiary Guarantee constitutes a legal, valid and binding obligation of 5 the Third Subsidiary Guarantor enforceable against the Third Subsidiary Guarantor in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 14.3. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES (a) Schedule 14.3 contains complete and correct lists of the Guarantor's Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization or incorporation, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Guarantor and each other Subsidiary. (b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 14.3 as being owned by the Guarantor and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Guarantor or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 14.3). (c) Each of the Issuer, the Guarantor, the First Subsidiary Guarantor, the Second Subsidiary Guarantor and the Third Subsidiary Guarantor is a corporation or other legal entity duly organized or incorporated, validly existing and in good standing under the laws of its jurisdiction of organization or incorporation, and is duly qualified as a foreign corporation or other legal entity and, where such concept is relevant, is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Issuer, the Guarantor, the First Subsidiary Guarantor, the Second Subsidiary Guarantor and the Third Subsidiary Guarantor has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact. (d) No Subsidiary is a party to, or otherwise subject to any legal restriction or any agreement (other than restrictions permitted by Section 10.8 of the Purchase Agreement and customary limitations imposed by corporate law statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Guarantor or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary. 14.4. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The execution, delivery and performance by the Issuer of this Agreement, the performance by the Issuer of the Purchase Agreement and the Notes and the execution, delivery and performance by the Third Subsidiary Guarantor of the Subsidiary Guarantee will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Guarantor, the Issuer or any Subsidiary under, any indenture, mortgage, deed 6 of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which the Guarantor, the Issuer or any Subsidiary is bound or by which the Guarantor, the Issuer or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Guarantor, the Issuer or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Guarantor, the Issuer or any Subsidiary. 14.5. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by Issuer, the Guarantor, the First Subsidiary Guarantor, the Second Subsidiary Guarantor or the Third Subsidiary Guarantor of this Agreement or by the Third Subsidiary Guarantor of its Subsidiary Guarantee. 14.6. LITIGATION. Schedule 14.6 sets forth a reasonably detailed description of all material litigation and other proceedings involving or affecting the Guarantor and its Subsidiaries. 14.7. EXISTING DEBT. Except as described therein, Schedule 14.7 sets forth a complete and correct list of all outstanding Debt of the Obligors and the Subsidiaries as of September 30, 2001, since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Obligors or the Subsidiaries. Neither the Obligors nor any Subsidiary are in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of any Obligor or any such Subsidiary and no event or condition exists with respect to any Debt of any Obligor or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment. 15 CONDITIONS TO EFFECTIVENESS. The effectiveness of this Agreement shall be subject to the satisfaction of each of the following conditions precedent: 15.1 EXECUTED AGREEMENT. Issuer shall have received one or more counterparts of this Agreement executed on behalf of the Required Holders. 15.2 THIRD SUBSIDIARY GUARANTY. The Third Subsidiary Guarantor shall have executed and delivered a Subsidiary Guarantee substantially in the form as heretofore delivered to the Noteholders and containing the provisions set forth in Section 11 of the Purchase Agreement. 15.3 OPINIONS OF COUNSEL. Noteholders shall have received opinions of Allens Arthur Robinson (Australian counsel), De Brauw Blackstone Westbroek N.V. (Netherlands counsel) and Gibson, Dunn & Crutcher LLP (U.S. counsel), in customary form 7 and subject only to customary qualifications, addressed to each Noteholder, covering such matters as may be reasonably required by counsel to the Noteholders. 15.4 REPRESENTATIONS AND WARRANTIES; NO DEFAULT. On the Effective Date, after giving effect to the amendment of the Purchase Agreement contemplated hereby: (a) the representations and warranties contained in Section 14 hereof and the representations and warranties contained in Section 5.8(a), 5.8(b), 5.9, 5.10, 5.11, 5.12, 5.17 and 5.18 of the Purchase Agreement shall be true and correct on and as of the Effective Date as though made on and as of such date; and (b) no Default or Event of Default shall have occurred and be continuing. 15.5 COMPLIANCE CERTIFICATES. (a) OFFICER'S CERTIFICATE. Issuer shall deliver to each Noteholder an Officer's Certificate, dated as of the Effective Date, certifying that the condition specified in Section 15.4 of this Section have been fulfilled. (b) SECRETARY'S CERTIFICATE. Issuer shall have delivered to each Noteholder a certificate certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of this Agreement and the Subsidiary Guarantee and the incumbency and authority of persons executing such documents. 15.6 EVIDENCE OF CONSENT TO RECEIVE SERVICE OF PROCESS. Each Noteholder shall have received, in form and substance reasonably satisfactory to such Noteholder, evidence of the consent of CT Corporation System in New York, New York to the appointment and designation provided for by Section 24.6 of the Purchase Agreement (and the payment of all fees related thereto). 15.7 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all the documents and instruments incident to such transactions shall be satisfactory to each Noteholder and its special counsel, and such Noteholder and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as it or they may reasonably request. 15.8 NOTICE OF EFFECTIVENESS OF FINANCE SCHEME. Each Noteholder shall have received notice that the Finance Scheme has been implemented and the Third Subsidiary Guarantor shall have become the borrower under the Bank Credit Agreements. 15.9 PAYMENT OF AMENDMENT FEE. Each Noteholder shall have received its pro rata share of an amendment fee in the aggregate amount of $225,000. 8 16. LEGAL FEES. The Obligors jointly and severally will pay all legal costs and expenses (including reasonable attorneys' fees of Willkie Farr & Gallagher) incurred by the Noteholders in connection with this Agreement. 17. CONSENT AND CONFIRMATION BY GUARANTORS. The Guarantor, the First Subsidiary Guarantor and the Second Subsidiary Guarantor expressly consent to this Agreement and confirm that their respective Guaranties of the Notes and the Purchase Agreement, as amended, remain in full force and effect. [NEXT PAGE IS SIGNATURE PAGE -- REST OF THIS PAGE INTENTIONALLY BLANK] 9 IN WITNESS WHEREOF, the Issuer, the Guarantor, the First Subsidiary Guarantor, the Second Subsidiary Guarantor, the Third Subsidiary Guarantor and the respective Noteholders listed on the attached signature pages hereof have executed this Agreement effective as of the day and year first above written. ISSUER: GUARANTOR: JAMES HARDIE U.S. FUNDING, INC., JAMES HARDIE N.V., a Nevada corporation a company incorporated under the laws of the Netherlands By: /s/ Phillip Graham Morley ------------------------- By: /s/ Phillip Graham Morley Its: CFO ------------------------- Its: CFO/DIRECTOR FIRST SUBSIDIARY GUARANTOR: SECOND SUBSIDIARY GUARANTOR: JAMES HARDIE AUST. INVESTCO PTY. LIMITED, JAMES HARDIE AUSTRALIA a company organized under the FINANCE PTY. LIMITED, laws of Australia a company organized under the laws of Australia By: /s/ Phillip Graham Morley ------------------------- By: /s/ Phillip Graham Morley Its: CFO/ DIRECTOR ------------------------- Its: CFO/DIRECTOR THIRD SUBSIDIARY GUARANTOR: JAMES HARDIE INTERNATIONAL FINANCE B.V., a company incorporated under the laws of the Netherlands By: /s/ Phillip Graham Morley ------------------------- Its: CFO/ DIRECTOR NOTEHOLDERS: [SEE ATTACHED PAGES] 10 SIGNATURE PAGE TO SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 22, 2001 THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: /s/ Marie Fioramonti -------------------- Name: Marie Fioramonti Its: Vice President SIGNATURE PAGE TO SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 22, 2001 CONNECTICUT GENERAL LIFE INSURANCE COMPANY (CIG & CO.) By: /s/ Stephen A. Osborn --------------------- Name: STEPHEN A. OSBORN Its: PARTNER SIGNATURE PAGE TO SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 22, 2001 CONNECTICUT GENERAL LIFE INSURANCE COMPANY ON BEHALF OF ONE OR MORE SEPARATE ACCOUNTS (CIG & CO.) By: /s/ Stephen A. Osborn --------------------- Name: STEPHEN A. OSBORN Its: PARTNER SIGNATURE PAGE TO SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 22, 2001 LIFE INSURANCE COMPANY OF NORTH AMERICA (CIG & CO.) By: /s/ Stephen A. Osborn --------------------- Name: STEPHEN A. OSBORN Its: PARTNER SIGNATURE PAGE TO SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 22, 2001 PRINCIPAL LIFE INSURANCE COMPANY By: Principal Capital Management, LLC, a Delaware limited liability company, its authorized signatory By: /s/ Jon C. Keiny ---------------------- Its: JON C. KEINY, Counsel By: /s/ James C. Fifield --------------------- Its: JAMES C. FIFIELD, Counsel SIGNATURE PAGE TO SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 22, 2001 USAA LIFE INSURANCE COMPANY (SALKELD & CO.) By: /s/ John C. Spear ------------------ Name: John C. Spear Its: Vice President SIGNATURE PAGE TO SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 22, 2001 THE PAUL REVERE LIFE INSURANCE COMPANY (CUDD & CO.) By: /s/ David Fussell ------------------ Name: DAVID FUSSELL Its: SENIOR VICE PRESIDENT SIGNATURE PAGE TO SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 22, 2001 MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: DAVID L. BABSON AND COMPANY, INCORPORATED Its: INVESTMENT ADVISOR By: /s/ Richard C. Morrison ------------------------ Name: Richard C. Morrison Its: Managing Director SIGNATURE PAGE TO SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 22, 2001 CM LIFE INSURANCE COMPANY C/O MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: DAVID L. BABSON AND COMPANY, INCORPORATED Its: INVESTMENT ADVISOR By: /s/ Richard C. Morrison ----------------------- Name: Richard C. Morrison Its: Managing Director SIGNATURE PAGE TO SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 22, 2001 THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA (CUDD & CO.) By: /s/ Thomas M. Donohue --------------------- Name: THOMAS M. DONOHUE Its: MANAGING DIRECTOR SCHEDULE 14.3 LIST OF SUBSIDIARIES OF JAMES HARDIE N.V. AT 22 OCTOBER 2001

SCHEDULE 14.6 LEGAL PROCEEDINGS The Guarantor and its subsidiaries (collectively the "Group") are involved from time to time in various legal proceedings and administrative actions incident to the normal conduct of the Group's business. Although it is impossible to predict the outcome of any pending legal proceeding, management believes that such proceedings and actions should not, individually or in the aggregate, have a Material Adverse Effect. SCHEDULE 14.7 OUTSTANDING DEBT OF THE OBLIGORS AND THE SUBSIDIARIES 1. Guaranteed Senior Notes USD 225 million 2. Revolving Loan Facility

3. Standby Facility

GUARANTY THIS GUARANTY ("Guaranty"), is entered into effective as of October 22, 2001, by James Hardie International Finance B.V. a company incorporated under the laws of the Netherlands with its corporate seat in Amsterdam, the Netherlands ("Additional Guarantor"), in favor of the Noteholders (as defined in the Purchase Agreement described below). RECITALS: A. James Hardie U.S. Funding, Inc. (the "Issuer"), James Hardie N.V. (the "Guarantor"), James Hardie Aust. Investco Pty. Limited, James Hardie Australia Finance Pty. Limited, the Additional Guarantor and certain of the Noteholders have entered into that certain Second Amendment to Note Purchase Agreement dated as of the date hereof (the "Second Amendment"). The Second Amendment amends those certain Note Purchase Agreements with Issuer and the Guarantor, each dated as of November 5, 1998, as amended by that certain Assignment and Assumption Agreement and First Amendment to Note Purchase Agreement dated as of January 24, 2000 (collectively with the Second Amendment, the "Purchase Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Agreement. B. It is a condition to the effectiveness of the Second Amendment that Additional Guarantor execute and deliver this Guaranty. C. Additional Guarantor will receive substantial direct and indirect benefit from the effectiveness of the Second Amendment. AGREEMENT: NOW, THEREFORE, as a material inducement to the Noteholders to execute and deliver the Second Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Additional Guarantor hereby does irrevocably and unconditionally warrant and represent unto and covenant with the Noteholders as follows: 1. GUARANTY. Additional Guarantor hereby absolutely unconditionally and irrevocably guarantees to each and every holder of any of the Notes from time to time (a) the due and punctual payment of (i) the principal of and Make-Whole Amount (if any) and interest on all outstanding Notes (including interest on such principal and Make-Whole Amount and, to the extent permitted by applicable law, on any overdue interest), whether at the stated maturity, by acceleration, pursuant to any prepayment or otherwise, in accordance with the Notes and the Purchase Agreement, and (ii) all other sums that may become due from the Issuer to any Noteholder under the Notes or the Purchase Agreement, including costs, expenses and taxes; and (b) the due and punctual performance and observance by the Issuer of all covenants, agreements and conditions on its part to be performed and observed under the Purchase Agreement. Such payment and other obligations so guaranteed are collectively called the "Guaranteed Obligations". If default shall be made in the performance of any of the Guaranteed Obligations, Additional Guarantor will also pay to the holder of any Note such amounts, to the extent lawful, as shall be sufficient to pay the costs and expenses of collection or of otherwise enforcing any of such holder's rights under the Purchase Agreement, including reasonable counsel fees. The obligations of Additional Guarantor under this Section 1 shall survive the transfer or payment of the Notes. 2. ADDITIONAL GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Additional Guarantor hereby warrants and represents to the Noteholders as follows: (a) This Guaranty constitutes the legal, valid and binding obligation of Additional Guarantor and is fully enforceable against Additional Guarantor in accordance with its terms. (b) Additional Guarantor is solvent and the execution of this Guaranty does not render Additional Guarantor insolvent. (c) There are no legal proceedings or material claims or demands pending against or, to the best of Additional Guarantor's knowledge threatened against, Additional Guarantor or any of its assets. (d) The execution and delivery of this Guaranty and the assumption of liability hereunder have been in all respects authorized and approved by Additional Guarantor and its shareholders. Additional Guarantor has full authority and power to execute this Guaranty and to perform its obligations hereunder. (e) Neither the execution nor the delivery of this Guaranty nor the fulfillment and compliance with the provisions hereof will conflict with, result in a breach of, constitute a default under or result in the creation of any lien, charge, or encumbrance upon any property or assets of Additional Guarantor under any agreement or instrument to which Additional Guarantor is now a party or by which it may be bound. 3. WAIVER. (a) The obligations of Additional Guarantor under this Guaranty constitute a present and continuing guaranty of payment and not of collectibility and shall be absolute and unconditional and, to the extent permitted by applicable law, the Guaranteed Obligations shall not be subject to any counterclaim, setoff, deduction or defense based upon any claim Additional Guarantor may have against the Issuer or any other Person, and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected or impaired by any thing, event, happening, matter, circumstance or condition whatsoever (whether or not 2 Additional Guarantor shall have any knowledge or notice thereof or consent thereto), including without limitation: (i) any amendment or modification of any provision of the Purchase Agreement or any of the Notes or any assignment or transfer thereof, including without limitation the renewal or extension of the time of payment of any of the Notes or the granting of time in respect of such payment thereof, or of any furnishing or acceptance of security or any additional guarantee or any release or any security or guarantee so furnished or accepted for any of the Notes; (ii) any waiver, consent, extension, granting of time, forbearance, indulgence or other action or inaction under or in respect of the Purchase Agreement or the Notes, or any exercise or nonexercise of any right, remedy or power in respect thereof, (iii) any bankruptcy, receivership, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar proceedings with respect to the Issuer or any other Person or the properties or creditors of any of them; (iv) the occurrence of any Default or Event of Default under, or any invalidity or any unenforceability of, or any misrepresentation, irregularity or other defect in, the Purchase Agreement; (v) any transfer of any assets to or from the Issuer, including without limitation any transfer or purported transfer to the Issuer from any Person, any invalidity, illegality of, or inability to enforce, any such transfer or purported transfer, any consolidation or merger of the Issuer with or into any Person, or any change whatsoever in the objects, capital structure, constitution or business of the Issuer; (vi) any failure on the part of the Issuer or any other guarantor to perform or comply with any term of the Purchase Agreement, the Notes or any other agreement; (vii) any suit or other action brought by any beneficiaries or creditors of, or by, the Issuer or any other person for any reason whatsoever, including without limitation any suit or action in any way attacking or involving any issue, matter or thing in respect of the Purchase Agreement, the Notes or any other agreement; (viii) any lack or limitation of status or of power, incapacity or disability of the Issuer or any trustee or agent thereof; or (ix) any other thing, event, happening, matter, circumstance or condition whatsoever, not in any way limited to the foregoing. (b) Additional Guarantor hereby unconditionally waives diligence, presentment, demand of payment, protest and all notices whatsoever and any requirement that any holder of a Note exhaust any right, power or remedy against the Issuer under the Purchase Agreement or the Notes or any other agreement or instrument referred to herein or therein, or 3 against any other guarantor or any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations. (c) In the event that Additional Guarantor shall at any time pay any amount on account of the Guaranteed Obligations or take any other action in performance of its obligations hereunder, Additional Guarantor shall have no subrogation or other rights hereunder, under the Purchase Agreement or under the Notes and Additional Guarantor hereby waives all rights it may have to be subrogated to the rights of any holder of a Note, and all other remedies that it may have against the Issuer, in respect of any payment made hereunder unless and until the Guaranteed Obligations shall have been indefeasibly paid in full. If any amount shall be paid to Additional Guarantor on account of any such subrogation rights or other remedy, notwithstanding the waiver thereof, such amount shall be received in trust for the benefit of the holders of the Notes and shall forthwith be paid to such holders to be credited and applied upon the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof. Additional Guarantor agrees that its obligations under this Guaranty shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Issuer is rescinded or must be otherwise restored by any holder of any Note, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid. Each default in the payment or performance of any of the Guaranteed Obligations shall give rise to a separate claim and cause of action hereunder, and separate claims or suits may be made and brought, as the case may be, hereunder as each such default occurs. Additional Guarantor will from time to time deliver, upon the reasonable request of any holder of a Note, a satisfactory acknowledgment of its continued liability hereunder. 4. REMEDIES CUMULATIVE. Additional Guarantor hereby agrees with the Noteholders that all rights, remedies and recourses afforded to the Noteholders by reason of this Guaranty or otherwise are (a) separate and cumulative and may be pursued separately, successively or concurrently, as occasion therefor shall arise, and (b) non-exclusive and shall in no way limit or prejudice any other legal or equitable right, remedy or recourse which the Noteholders may have. 5. LAW GOVERNING AND SEVERABILITY; JURISDICTION. (a) This Guaranty shall be governed by and construed in accordance with the laws of the State of New York and is intended to be performed in accordance with, and only to the extent permitted by, such laws. If any provision of this Guaranty or the application thereof to any person or circumstance, for any reason and to any extent, shall be invalid or unenforceable, neither the remainder of this Guaranty nor the application of such provision to any other persons or circumstances shall be affected thereby, but rather the same shall be enforced to the greatest extent permitted by law. (b) Additional Guarantor hereby expressly waives all rights to object to jurisdiction or execution in any legal action or proceeding relating to this Guaranty, the Purchase Agreement or the Notes that it may now or hereafter have by reason of its domicile or by reason of any subsequent or other domicile. Additional Guarantor agrees that any legal action or 4 proceeding with respect to this Guaranty, the Purchase Agreement or any Note, or any instrument, agreement or document mentioned or contemplated herein, or to enforce any judgment obtained against Additional Guarantor in any such legal action or proceeding against it or any of their respective properties or revenues may be brought by the holder of any Note in the courts of the State of New York or of the United States of America located in New York, New York, as the holder of any Note may elect, and by execution and delivery of this Guaranty, Additional Guarantor irrevocably submits to each such personal jurisdiction. In addition, Additional Guarantor hereby irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any of the actions, suits or proceedings described above arising out of or in connection with this Guaranty, the Purchase Agreement or the Notes brought in any of such courts, and waives and agrees not to plead or claim that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Additional Guarantor hereby irrevocably designates, appoints and empowers CT Corporation System with offices at 1633 Broadway, New York, New York, and its successors, as the designee, appointee and agent of Additional Guarantor to receive, accept and acknowledge, for and on behalf of Additional Guarantor and its respective properties, service of any and all legal process, summons, notices and documents which may be served in any such action, suit or proceeding in the case of the courts of the State of New York or of the United States of America located in New York, New York, which service may be made on any such designee, appointee and agent in accordance with legal procedures prescribed for such courts. Additional Guarantor shall take any and all actions necessary to continue such designation in full force and effect and should such designee, appointee and agent become unavailable for this purpose for any reason, Additional Guarantor will forthwith irrevocably designate a new designee, appointee and agent with offices in New York, New York, which shall irrevocably agree to act as such, with the powers and for the purposes specified in this Section 5(b). Additional Guarantor further irrevocably consents and agrees to service of any and all legal process, summons, notices and documents out of any of such courts in any such action, suit or proceeding delivered to Additional Guarantor in accordance with this Section 5(b) or to its then designee, appointee or agent for service. Service upon Additional Guarantor or any such designee, appointee and agent as provided for herein shall constitute valid and effective personal service upon Additional Guarantor and the failure of any such designee, appointee and agent to give any notice of such service to Additional Guarantor shall not impair or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon. Nothing herein shall, or shall be construed so as to, limit the right of any holder of Notes to bring actions, suits or proceedings with respect to the obligations and liabilities of Additional Guarantor under, or any other matter arising out of or in connection with, this Guaranty, the Purchase Agreement or the Notes, or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, in the courts of whatever jurisdiction in which the respective offices of the holders of the Notes may be located or assets of Additional Guarantor may be found or as otherwise shall to any holder of Notes seem appropriate, or to affect the right to service of process in any jurisdiction in any other manner permitted by law. 6. PAYMENTS IN DOLLARS; CURRENCY INDEMNITY. 5 (a) Additional Guarantor shall make payments under this Guaranty in United States currency ("Dollars") and the obligation of Additional Guarantor to make such payments shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment, which is expressed in or converted into any currency other than Dollars, except to the extent such tender or recovery shall result in the actual receipt by the holder of any Note of the full amount of Dollars expressed to be payable in respect of any such obligations. The obligation of Additional Guarantor to make payment in Dollars as aforesaid shall be enforceable as an alternative or additional cause of action for the purpose of recovery in Dollars of the amount, if any, by which such actual receipt shall fall short of the full amount of Dollars expressed to be payable in respect of any such obligations, and shall not be affected by judgment being obtained for any other sums due under this Guaranty, the Purchase Agreement or the Notes. (b) The Additional Guarantor shall indemnify the Noteholders against any deficiency which arises whenever for any reason (including as a result of a judgment or order or any official management, receivership, compromise, arrangement, amalgamation, administration, reconstruction, winding up, dissolution, assignment for the benefit of creditors, arrangement or compromise with creditors, bankruptcy or death) any Noteholder receives or recovers an amount in a currency (the "Payment Currency") other than Dollars and the amount actually received or recovered by such Noteholder in accordance with its normal practice when it converts the Payment Currency into Dollars is less than the relevant amount that would otherwise have been due in Dollars. 7. ADDITIONAL PAYMENTS. For the purposes of this Section 7: the term "Government Agency" shall mean any government or governmental, semi-governmental or judicial entity or authority or any self regulatory organization established under statute; the term "Tax" includes any tax, levy, impost, deduction, charge, rate, duty, compulsory loan or withholding which is levied or imposed by a Government Agency, and any related interest, penalty, charge, fee or other amount; and the term "Excluded Tax" means a Tax imposed by a jurisdiction on the net income of a Noteholder because a Noteholder has a connection with that jurisdiction, but not a Tax which is calculated by reference to the gross amount of a payment derived by a Noteholder under this Guaranty or another document referred to in this Guaranty (without the allowance of a deduction) or which is imposed as a result of a Noteholder being considered to have a connection with that jurisdiction solely as a result of it being a party to this Guaranty or a transaction contemplated by this Guaranty. Whenever Additional Guarantor is obliged to make a deduction in respect of Tax from any payment under this Guaranty, (a) it shall promptly pay the amount deducted to the appropriate Government Agency and (b) unless the Tax is an Excluded Tax, it shall pay the relevant Noteholder on the due date of the payment any additional amounts necessary (as determined by that Noteholder) to ensure that that Noteholder receives when due a net amount (after payment of any Taxes in respect of those additional amounts) in the relevant currency equal to the full amount that it would have received had a deduction not been made. Additional Guarantor shall indemnify the relevant Noteholder on demand against the Tax and any amounts recoverable from that Noteholder in respect of the Tax. Additional Guarantor waives any statutory right to recover from a Noteholder any amount paid under this Section 7. 8. NOTICES. All notices, requests, demands, consents, approvals, agreements or other communications to or by a party to this Guaranty must be in writing and must be signed by a 6 duly authorized officer of the sender. Any such communication will be taken to be duly given or made: (a) (in the case of delivery in person or by post, facsimile transmission or cable) when delivered, received or left at the address of the recipient shown in this Guaranty or to any other address of which it may have notified the sender; or (b) (in the case of a telex) on receipt by the sender of the answerback code of the recipient at the end of transmission, but if delivery or receipt is on a day on which business is not generally carried on in the place to which the communication is sent or is later than 4:00 pm (local time), it will be taken to have been duly given or made at the commencement of business on the next day on which business is generally carried on in that place. 9. TRANSACTION EXPENSES. Whether or not the transactions contemplated hereby are consummated, the Additional Guarantor agrees that it will pay all costs and expenses (including reasonable attorneys' fees of a special counsel and, if reasonably required, local or other counsel) incurred by any Noteholder in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Guaranty, the Purchase Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Guaranty, the Purchase Agreement or the Notes or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Guaranty, the Purchase Agreement or the Notes, or by reason of being a holder of any Note, and (b) the costs and expenses, including financial advisors' fees, incurred in connection with the insolvency or bankruptcy of Additional Guarantor or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. Additional Guarantor will pay, and will save each holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those retained by any such holder). The obligations of Additional Guarantor under this Section 9 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Guaranty, the Purchase Agreement or the Notes, and the termination of this Guaranty. 10. FURTHER ASSURANCES. Additional Guarantor will at its own expense and when requested by any Noteholder from time to time to do so, promptly do, execute and deliver all such other and further acts and instruments as are necessary or, in the reasonable opinion of such Noteholder, desirable for more satisfactorily giving effect to this Guaranty and for more fully vesting in such Noteholder all rights, remedies and powers conferred or intended to be conferred by this Guaranty and must cause any relevant third parties to do, execute and deliver the same. 11. SUCCESSORS AND ASSIGNS. This Guaranty and all the terms, provisions and conditions hereof shall be binding upon Additional Guarantor and Additional Guarantor's heirs, legal representatives, successors and assigns and shall inure to the benefit of each Noteholder, its successors and assigns and all subsequent holders of the Notes. Additional Guarantor may not 7 assign or transfer any of its rights or obligations under this Guaranty without the prior written consent of each Noteholder. 12. AMENDMENTS. No amendment or waiver of any provision of this Guaranty and no consent to any departure by Additional Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the Required Holders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all of the Noteholders (a) reduce or limit the obligations of Additional Guarantor hereunder or otherwise limit Additional Guarantor's liability with respect to the Guaranteed Obligations owing to the Noteholders under or in respect of this Guaranty, the Notes or the Purchase Agreement, (b) postpone any date fixed for payment hereunder or (c) change the number of Noteholders or the percentage of the aggregate unpaid principal amount of the Notes that, in each case, shall be required for the Noteholders or any of them to take any action hereunder. 13. PARAGRAPH HEADINGS. The paragraph headings inserted in this Guaranty have been included for convenience only and are not intended, and shall not be construed, to limit or define in any way the substance of any paragraph contained herein. 14. BENEFIT. Additional Guarantor warrants and represents that Additional Guarantor has received, or will receive, direct or indirect benefit from the execution and delivery of this Guaranty. 15. NO REPRESENTATIONS BY NOTEHOLDERS. No Noteholder or anyone acting on behalf of any Noteholder has ma