Document:

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                                                                     EXHIBIT 4.6

October 21, 2004

Joint Board
James Hardie Industries N.V.
4th Floor, Atrium
Unit 04-07, Strawinskylaan 3077, 1077
Amsterdam, The Netherlands

Dear Sirs and Madams:

I hereby provide notice of termination of my employment by James Hardie
Industries NV (the "COMPANY") and/or its affiliates for "Good Reason" as
permitted by Section 6.03 of my Executive Service Agreement with the Company
dated June 10, 2002 (the "ESA"), and notice of resignation of my position as
Chief Executive Officer and Managing Director of the Company under the terms and
conditions attached to this letter as Attachment A. In addition, and effective
immediately, I hereby give notice of resignation, and do hereby resign, from all
other directorships and offices in the Company's subsidiaries and affiliates,
including without limitation all trustee, committee and other positions held
with such entities. Please sign below in agreement and acknowledgement of all
terms in this letter and Attachment A and in acknowledgement and agreement that
I have the right to terminate due to "Good Reason" as defined in Section 6.03(f)
of the ESA.

Sincerely,

/s/ Peter Donald Macdonald
--------------------------
Peter Donald Macdonald

ACKNOWLEDGED AND AGREED:

JAMES HARDIE INDUSTRIES NV

By: /s/ Meredith Hellicar
    ---------------------
Name: Meredith Hellicar

Title: Chairman of the Joint and Supervisory Boards of Directors

                                                                          Page 1
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                      Attachment A to Letter of Resignation

                           Agreed Terms of Resignation

James Hardie Industries NV (the "COMPANY") will enter into a consulting
agreement with Mr. Macdonald effective as of October 21, 2004, in the form
attached to these terms as Exhibit 1. The Company has due authorization to enter
into such Consulting Agreement.

The effective date of resignation of employment from the Company will be October
21, 2004, U.S. time. The effective date of resignation of Mr Macdonald's
position as Managing Director and from all other directorships and offices held
by Mr Macdonald as described in the letter of resignation shall be October 21,
2004, U.S. time. The Company, the Joint Board and Mr Macdonald shall act with
the greatest diligence to accomplish any task or pass any resolution or execute
any additional document necessary to achieve effective resignation by Mr
Macdonald as a Managing Director.

The Company agrees to pay the cash termination payments called for under Section
6.03 of the executive service agreement ("ESA") on the basis that Mr Macdonald
has resigned for "Good Reason", including:

-        Salary: 24 months of Mr Macdonald's current Annual Base Salary of
US$850,000, for a total of US$1,700,000; payable as set out below.

-        Bonus: 24 months of Mr Macdonald's annual Bonus paid in the year
immediately preceding the year of termination (US$1,726,000) for a total of
US$3,452,000; payable as set out below.

-        Bonus Bank: payment of the FY 04 ending bonus bank (US$1,379,359),
payable as set out below

The Company irrevocably and unconditionally agrees to make those payments no
later than midnight on 21 October 2004 (US time) without set off apart from
withholdings required by law (see further below), and to provide the following
additional termination benefits called for in accordance with Section 6.03 of
the ESA:

-     Stock Options: Under the ESA, subject to the terms of each plan, the stock
      options which are vested on the termination date will remain vested and
      those that would have vested during the remainder of the term of the ESA
      (i.e. through to November 1, 2005) will continue to vest. Thus, again
      subject to the terms of the relevant plan, Mr Macdonald's options will
      generally continue to vest through to November 1, 2005, and thereafter
      will remain exercisable as long as provided in the respective plans. A
      full analysis follows but for the avoidance of doubt, the parties agree
      that the Plan rules and the relevant portions of the ESA shall continue to
      govern the terms upon which the options are held and exercised. The Plan
      and ESA have been definitively interpreted as follows:

      1999 PDM Plan - Option covering 1,200,000 shares: 800,000 shares have
      vested already and 400,000 vest on 17 November 2004. The 1999 PDM Plan is
      silent on what happens if Mr Macdonald terminates for "Good Reason." With
      the 1999 PDM Plan silent, the ESA controls. Thus, in accordance with the
      ESA, the option will vest with respect to the final 400,000 shares on 17
      November 2004, and will lapse if not exercised on the expiry of 6 months
      after the date on which Mr Macdonald ceases to be employed by the Company
      (4.5(b) 1999 Plan).

                                                                          Page 2
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      2001 PDM Plan - Option covering 624,000 shares: This option is a
      performance option that could vest no sooner than July 16, 2004. On or
      after that date (until July 15, 2006), if the performance test is
      satisfied on the first business day of any month, a portion of (456,000
      shares), or all (up to an additional 156,000), of this option vests. As of
      today, the performance test has not been satisfied. As with the 1999 PDM
      Plan, the 2001 PDM Plan is silent on what happens to vesting if Mr
      Macdonald terminates employment for "Good Reason." With the 2001 PDM Plan
      silent, the ESA controls and the option continues to vest following
      termination, and shall lapse if not exercised 6 months after the date of
      resignation (4.5(b) 2001 Plan).

      2002 PDM Plan - Option covering 1,950,000 shares: This option is a
      performance option that can vest no sooner than the third anniversary of
      the grant date (12 July 2005). The 2002 PDM Plan is silent on what happens
      if Mr Macdonald terminates for "Good Cause." This means that the ESA
      controls and that this option continues to vest through November, 2005, as
      if Mr Macdonald were still employed. On the third anniversary of the grant
      (12 July 2005), if the performance metric is satisfied, Mr Macdonald will
      be able to exercise the option. Furthermore, if the performance metric is
      satisfied between 12 July 2005 and 31 October 2005, on the first business
      day of the month, Mr Macdonald will be able to exercise it. Section 4.5 of
      the 2002 PDM Plan does not state when the option terminates following Mr
      Macdonald's termination for "Good Reason." Thus, assuming the performance
      metric is satisfied by October 31, 2005 (the original end date of the
      ESA), the Option will remain exercisable until the tenth anniversary of
      the issue date (July 2012).

Because option exercises have been suspended pending filing of Form 20-F for the
year ended 31 March 2004 with the SEC (inasmuch as the relevant registration
statement is not current), all exercises of options must be made after filing of
such 20-F. The Company will use all commercially reasonable efforts to make such
20-F filing as soon as practicable. In any event, should the Company fail to
properly file the Form 20-F by the end of November or if for any other reason
caused by the Company Mr Macdonald would otherwise be prohibited from exercising
his vested 1999 and 2001 options within the six month post-termination exercise
period, the Company and Mr Macdonald will discuss in good faith arrangements to
enable the options to be exercised within the exercise period, subject to
complying with applicable laws, or other appropriate arrangements to ensure Mr
Macdonald is not disadvantaged should the failed exercise of the options during
that period be caused by the Company. The parties agree that Mr Macdonald will
not be a "Designated Person" under the Company's Insider Trading Policy
following his resignation of his officer and director relationships, and will
not be subject to the Company's securities transaction rules applicable
exclusively to executive officers or directors following such resignations.
Furthermore, the parties intend that the nature of the consulting that Mr
Macdonald will perform under the Second Term of the Consulting Agreement is such
that Mr Macdonald will not be expected to be an "Insider" within the meaning of
the Company's insider trading policy during that Second Term.

-     Shadow Shares: Mr Macdonald's shadow shares are completely vested, but
cashing out was deferred under the terms of the Plan until November 1, 2005.
Under ESA 6.03(d), these rights, which are similar to stock options, will
therefore remain vested following termination as governed by ESA 6.03(d).

-     Executive Share Purchase Plan: Mr Macdonald acknowledges that the Company
shall withhold an amount (believed to be A$22,240.74 but precise amount to be
confirmed) for payments due under this letter equal to the amount owed by Mr
Macdonald in respect of stock purchased under this plan.

                                                                          Page 3
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-     Medical, Health and All Other Benefits: All medical, health and other
benefits shall continue through to November 1, 2005 as follows:

Medical, prescription, dental, disability, salary continuance, employee life,
group life, dependent life, accidental death, executive wellness program and
travel accident insurance plans, and any other plans offered to senior
executives must be continued by the Company through to November 1, 2005, and to
the extent provided in the Consulting Agreement, will be continued beyond that
date.

Vacation: As Mr Macdonald's paid vacation days are to continue to accrue through
to November 1, 2005 (at the rate of 20 per year) under Section 6.03 of the ESA,
the Company will immediately, and in any event prior to public announcement of
Mr Macdonald's resignation, pay Mr Macdonald for the vacation days that have
accrued to date and would otherwise have accrued through to November 1, 2005.

Motor Vehicle Insurance: Mr Macdonald has privately owned motor vehicles that
have been and are insured under the Company's standard policy. Mr Macdonald has
purchased the vehicles with his own funds and has paid the relevant premiums to
the Company at the standard rate. Mr Macdonald will pay any deductible that
might arise should any of these vehicles be involved in an accident. Mr
Macdonald has been insuring vehicles and paying premiums under this arrangement
for 10 years and has made no claims. This fringe benefit will continue until
November 1, 2005.

Personal Tax: As with other JH employees whose term of employment includes off
shore employment, PwC completes personal tax returns during employment and for
two years after termination. In Mr Macdonald's case, part of his Company income
is also declared in the Netherlands. In the case of Netherlands income tax, the
Company has undertaken to gross up to Mr Macdonald in the US any Dutch taxes on
his Company income which are in excess of taxes that would have been paid had he
been solely a US tax resident. These arrangements will continue for the period
of two years after his employment terminates.

Withholdings: The Company shall make such withholdings as are required under
applicable laws. The precise withholdings are to be confirmed prior to payment.

-     Notice to Company: The Company agrees to dispense with any notice period
or method of notification, and accepts written notice of resignation on behalf
of itself and its affiliates as good, effective and proper.

-     Acknowledgement of Good Reason: The Company agrees and acknowledges that
Mr Macdonald has the right to terminate for "Good Reason" under the ESA and that
the Company will not later take an inconsistent position in relation to Mr
Macdonald's right to terminate for Good Reason, or reverse or alter the basis
upon which termination occurred.

-     Indemnity: The Company acknowledges the terms of its indemnity agreement
previously granted in favour of Mr Macdonald, including clause 3 thereof.

-     Public Announcement: The Company agrees that the public announcement
regarding Mr Macdonald's resignation shall be as set forth below (with any
material modifications with respect to statements affecting Mr Macdonald to be
approved by Mr Macdonald):

Last month Mr Peter Macdonald stepped aside as CEO but remained with the company
in a senior operational role. Mr Macdonald has tendered his resignation and will
cease to be a Managing Director of James Hardie effective today. Mr Macdonald is
expected to remain in a consulting capacity with the company for an interim
period.

                                                                          Page 4
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                              CONSULTING AGREEMENT

      This Consulting Agreement is entered into as of October 21, 2004, between
PETER D. MACDONALD ("CONSULTANT") and JAMES HARDIE INDUSTRIES NV ("COMPANY"). In
consideration of the mutual covenants set forth in this Agreement, the parties
agree as follows:

1.    RETENTION AS CONSULTANT

      Upon the terms and conditions set forth in this Agreement, Company hereby
agrees to retain Consultant, and Consultant agrees to act, as a consultant to
Company. During the initial term of this Agreement (the "Initial Term"),
Consultant shall render to Company such services of an advisory or consultative
nature as the management of Company may reasonably request, up to a maximum of
80% of a full time role, so that Company may continue to have the full benefit
of his experience and knowledge regarding Company's business. Consultant shall
make recommendations and give advice to Company's board, management, and shall
be available to consult with directors, management personnel and employees of
Company, during normal business hours Monday through Friday by telephone,
e-mails or in person at Company's office in Mission Viejo, California. The
Initial Term will be not less than three (3) months and not more than six (6)
months in duration, unless otherwise agreed by the parties. Immediately
following the expiration of the Initial Term or earlier termination of the
Initial Term as provided in the final sentence of this Section 1, the second
term of this Agreement shall commence (the "Second Term"), during which
Consultant shall render to Company such services of an advisory or consultative
nature as the management of Company may reasonably request at an average of 20
hours in any calendar month, exclusive of domestic US travel time, over the 24
month period (but which is expected to vary from month to month). The Company
may, on reasonable notice, request that Consultant provide consultancy services
to the Company in excess of such hours over the consultancy period, for a
pro-rata rate, and the Consultant shall use reasonable endeavours to provide
assistance where requested. The Second Term will be for a period of twenty-four
(24) months. During the Initial Term, either party may, upon thirty (30) days
advance written notice to the other party, notify the other party that effective
as of the date set forth in that notice (which date shall not be sooner than
three months from the commencement of the Initial Term), such party is electing
to end the Initial Term and commence the Second Term.

2.    COMPENSATION

      For his services to Company under Section 1 during the Initial Term of
this Agreement, Consultant shall receive from Company a consulting fee of Sixty
Thousand Dollars ($60,000) per month, payable monthly. For his services to
Company during the Second Term, Consultant shall receive from Company a
consulting fee of Ten Thousand Dollars ($10,000) per month, payable monthly. In
addition, Company shall, from 21 October 2005 and for the remainder of the term
of this Agreement, obtain and pay for Consultant's and Consultant's immediate
family's medical, prescription and dental insurance coverage consistent with the
benefits provided to executive-level employees of Company, provided, however,
that if Company is unable to extend such benefits to Consultant due to
prohibitions in the respective Company benefit plans or applicable laws or
regulations, Company shall obtain on behalf of Consultant and his immediate
family and pay for substantially similar benefit plans or, at Consultant's
election, shall increase Consultant's monthly cash compensation under this
Section 2 to cover the additional reasonable expenditure that Consultant must
undertake in order to purchase substantially similar benefits for himself and
his immediate family. Except as set forth in Section 3 below or a separate
agreement between Company and Consultant, no other compensation or benefits will
given to Consultant for his services, unless separately approved in a writing
signed by the Chairman of Company.

3.    EXPENSES

      Company shall reimburse Consultant for reasonable out-of-pocket expenses
incurred by Consultant in connection with Company's business, but only, with
respect to material expenses, if the incurring of any

<PAGE>

such expenses is approved in advance by an executive officer of Company and
Consultant provides Company with such substantiating receipts or other
documentation as Company may reasonably require.

4.    TERM

      The term of this Agreement shall begin on the date set forth in the first
paragraph and shall continue until the end of the Second Term, when it shall
automatically terminate, unless the term is extended or earlier terminated as
follows:

      (a)   Either party may terminate this Agreement prior to its expiration
for material breach of this Agreement if the party who has breached this
Agreement fails to cure the breach within thirty (30) days after receiving
written notice specifying the nature of the breach.

      (b)   The Agreement shall automatically terminate upon Consultant's death.

The termination of this Agreement pursuant to this Section shall not release
either party from any accrued obligation to pay any sum to the other party
(whether then or thereafter payable) or operate to discharge any liability
incurred prior to the termination date. In addition, Company obligations
intended to survive the termination of this Agreement, including its
indemnification obligations under Section 5(k), shall survive the termination of
this Agreement.

5.    MISCELLANEOUS

      (a)   GOVERNING LAW AND JURISDICTION. All questions with respect to the
construction of this Agreement and the rights and liabilities of the parties
shall be governed by the laws of the State of California, excluding its conflict
of laws rules. Each of the parties submits to the jurisdiction of any state or
federal court sitting in Orange County, California, in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court. Each party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court.

      (b)   SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors and assigns.

      (c)   ENTIRE AGREEMENT. This Agreement contains all of the terms and
conditions agreed upon by the parties, and supersedes any prior agreements or
understandings with respect to the consulting relationship between Consultant
and Company to begin on the effective date set forth above. To be clear, this
Agreement does not supersede or alter the parties' Joint and Several Indemnity
Agreement dated December 17, 2001, and the indemnification provided for in this
Agreement is in addition to, and not in replacement of, the indemnification
obligations contained in the Joint and Several Indemnity Agreement. Furthermore,
this Agreement does not alter the Executive Services Agreement signed by the
parties as of June 10, 2002, which contains terms that survive the termination
of that agreement.

      (d)   AMENDMENT OR MODIFICATION OF AGREEMENT. This Agreement may be
modified, altered or amended only by the written agreement of both the parties.

      (e)   ATTORNEYS' FEES AND COSTS. In any legal proceeding to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees and costs and necessary disbursements in addition to
any other relief to which it or he may be entitled.

      (f)   COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be a valid original agreement.

<PAGE>

      (g)   SEVERABILITY. If any provision of this Agreement or its application
to any person or circumstances is held to be unenforceable or invalid by any
court of competent jurisdiction, its other applications and the remaining
provisions of this Agreement will be interpreted so as best reasonably to effect
the intent of the parties.

      (h)   NOTICES. Any notice or other communication to a party pursuant to
this Agreement will be deemed to have been duly given if given personally to the
party or on the date of delivery in writing, addressed to the party, at the
following address:

            If to Company:       The Company Secretary
                                 James Hardie Industries NV
                                 4th Floor, Atrium
                                 Unit 04-07, Strawinskylaan 3077, 1077
                                 Amsterdam, The Netherlands

            With a Copy to:      Senior Vice President Human Resources
                                 James Hardie, Inc.
                                 26300 La Alameda, Suite 100
                                 Mission Viejo, California 92691

                                 Fax: (949) 348-4534

            If to Consultant:    Peter Donald Macdonald

Either party may change its or his address for purposes of this paragraph by
giving the other party written notice of the new address in the manner set forth
above.

      (h)   FURTHER ACTIONS. Each party agrees to execute and deliver any
further documents and to do any additional acts reasonably required to carry out
the terms of this Agreement.

      (i)   WAIVERS. Any provision of this Agreement may be waived at any time
by the party entitled to the benefit thereof by a written instrument executed by
the party or by a duly authorized officer of the party. No waiver of any of the
provisions of this Agreement will be deemed, or will constitute, a waiver of any
other provision, whether or not similar, nor will any waiver constitute a
continuing waiver.

      (j)   INDEPENDENT CONTRACTOR. Consultant is retained by Company only for
the purposes and to the extent set forth in this Agreement, and his relationship
to Company shall, during the term of this Agreement, be that of an independent
contractor. The Consultant shall have no authority or right, express or implied,
to assume or create any obligation or responsibility on behalf of Company or to
bind Company in any manner without the express authorization of Company. The
Consultant will not represent the contrary, either expressly or implicitly, to
anyone. Consultant shall not be considered as having employee status or as being
entitled to participate in any plans, arrangements or distributions by Company
pertaining to any pension, stock, bonus, profit sharing or similar benefits for
Company's employees, unless such plans otherwise permit participation by
consultants and except as set forth otherwise in this Agreement. Company shall
not withhold any of Consultant's compensation payments for income tax purposes
and shall not have any obligations with regard to Social Security payments for
Consultant, insurance or workers' compensation coverage for Consultant, or any
similar items. Nothing contained in this Agreement shall be deemed or construed
to constitute a relationship of employer and employee.

      (k)   INDEMNIFICATION. Company shall indemnify, defend and hold harmless
Consultant if Consultant is or was a party or witness or other participant in,
or is threatened to be made a party or witness or other participant in, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of Company or any subsidiary of Company) by reason of any action or
inaction on the part of Consultant in connection with his

<PAGE>

work as a consultant to Company or any subsidiary or parent of Company, or by
reason of the fact that Consultant provides or has provided consultancy services
under this agreement or, following the effective date of this Agreement, has
served in any other capacity at the request of Company to the Company or another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees and experts' fees and costs), and all
liabilities, losses, judgments, fines, penalties, and taxes incurred by
Consultant and amounts paid in settlement (if such settlement is approved in
advance by Company, which approval shall not be unreasonably withheld) actually
and reasonably incurred by Consultant in connection with such action, suit or
proceeding, provided in each case above that Consultant acted in good faith and
in a manner Consultant reasonably believed to be in or not opposed to the best
interests of Company. Notwithstanding anything to the contrary herein, to the
extent that Consultant has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in this Section or the defense of
any claim, issue or matter therein (including, without limitation, dismissal
without prejudice), Consultant shall be indemnified against expenses (including
attorneys' fees and experts fees and costs) actually and reasonably incurred by
Consultant in connection therewith. Company shall advance all expenses incurred
by Consultant in connection with the investigation, defense, settlement or
appeal of any civil or criminal action, suit or proceeding referred to in this
Section (including amounts actually paid in settlement of any such action, suit
or proceeding). Consultant hereby undertakes to repay such amounts advanced only
if, and to the extent that, it shall ultimately be determined that Consultant is
not entitled to be indemnified by Company as authorized hereby.

      EXECUTED at Mission Viejo, California as of the date first written above.

                                         COMPANY:

                                         JAMES HARDIE INDUSTRIES NV

                                         By: /s/ Louis Gries
                                             ---------------

                                         Name: Louis Gries

                                         Title: Interim CEO

                                         CONSULTANT:

                                         /s/ Peter Donald Macdonald
                                         --------------------------
                                         Peter Donald Macdonald<PAGE>
                                                                     EXHIBIT 4.7

                              EMPLOYMENT AGREEMENT

      This Employment Agreement ("Agreement") is made and entered into as of
July 29, 2004 with effect from June 1, 2004 between Peter Shafron ("Executive")
and James Hardie Building Products, Inc. and its affiliates (collectively "JH"),
and is effective by its terms as herein provided.

      WHEREAS, Executive and JH desire to enter into this Agreement to establish
and set forth the terms and conditions of Executive's employment with JH.

      WHEREAS, Executive and JH acknowledge that the terms of the Agreement
constitute good and valuable consideration, the adequacy and sufficiency of
which Executive and JH also acknowledge.

      NOW THEREFORE, in consideration of the mutual covenants herein contained,
and as a result of the voluntary agreement of Executive and JH to execute and
abide by the terms of the Agreement, Executive and JH agree as follows:

      1.    POSITION, DUTIES AND RESPONSIBILITIES

      (a)   Position. The Executive hereby agrees to serve as a senior executive
of JH in the position of Chief Financial Officer subject to all JH policies and
procedures in effect from time to time as amended in the discretion of JH. The
failure of JH to continue to employ Executive in the foregoing position shall be
deemed a constructive termination of the Agreement by JH pursuant to Section
4(a). The Executive shall devote his best efforts and his full business time and
attention to the performance of services to JH in this capacity and in such
other senior executive capacity as may reasonably be requested by the Board of
Directors of the Company ("Board"). JH shall retain full direction and control
of the means and methods by which the Executive performs the above services.

      (b)   Place of Employment. During the term of this Agreement, the
Executive shall perform the services required by this Agreement at JH's present
principal place of business or at such other location(s) as may be mutually
agreed by JH and the Executive; provided, however, that JH may from time to time
require the Executive to travel temporarily to other locations throughout the
world on JH's business consistent with the business needs of JH.

      (c)   Other Activities. Except with the prior written approval of the
Board (which the Board may grant or withhold in its sole and absolute
discretion), the Executive, during the Employment Period, will not (i) accept
any other employment, (ii) serve on the board of directors or similar body of
any other business entity, or (iii) engage, directly or indirectly, in any other
business activity (whether or not pursued for pecuniary advantage) that is or
may be competitive with, or that might place him in a competing position to,
that of JH.

      2.    TRADE SECRETS

      (a)   Executive acknowledges by executing the Agreement, the requirement
to adhere to all JH practices and policies including those concerning the
preservation of JH's

<PAGE>

confidential information including but not limited to customer lists, pricing
practices and lists, marketing plans, manufacturing processes and techniques,
financial information including financial information set forth in internal
records, files and ledgers or incorporated in profit and loss statements,
financial reports and business plans, inventions, discoveries, devices,
algorithms, as well as computer hardware and software (including but not limited
to source code, object code, documentation, diagrams, flow charts, know how,
methods and techniques associated with the development of a use of any of the
foregoing computer software), all internal memoranda, legal opinions, any other
records of JH including electronic and data processing files and records and any
other information designated as a "Trade Secret" and/or constituting a trade
secret and any communication within the applicable attorney-client privilege
under any governing law and any other proprietary information not generally
available to the public that JH considers confidential information collectively
called "Confidential Information."

      (b)   Executive agrees as a consequence of the Agreement, that he will not
directly or indirectly use or disclose to any person, firm, or corporation any
Confidential Information during the term of this Agreement or after this
Agreement has expired by its terms, except in the normal course of business on
behalf of JH, with the prior written consent of JH or to the extent necessary to
comply with law or a valid order of a court of competent jurisdiction, in which
event Executive will provide notice, in writing to JH at least ten (10) days
prior to the date disclosure is sought to be made, or the amount of prior notice
that Executive received, whichever is greater. Executive will at all times use
his best efforts to prevent such prohibited use or disclosure of Confidential
Information by any other person, firm or corporation.

      (c)   Executive acknowledges his obligation to voluntarily execute
documents and written Agreements upon request by JH concerning the preservation
of and/or the nondisclosure of JH Confidential Information which both parties
acknowledge are effective, notwithstanding the Agreement, and shall remain in
effect in accordance with its terms and conditions and are intended to provide
independent protection to JH in addition to the Agreement concerning the
non-disclosure of Confidential Information simultaneously, as such documents
reflect Executive's continuing obligation concerning the protection of JH's
Confidential Information in the broadest manner possible consistent with
applicable law.

      (d)   Executive must not make, otherwise than for the benefit of JH, any
personal notes, memoranda, diary entries and the like relating to any matter
within the scope of the business of JH or concerning any of its dealings or
affairs nor shall Executive either during the term of the Agreement of after its
termination use or permit to be used any such personal note, memoranda or diary
entry otherwise than for the benefit of JH.

      (e)   Executive hereby assigns to JH all existing and future intellectual
property, including copyright, in all material created by Executive arising out
of employment or relating to any matter within the scope of the business of JH
or concerning its dealings or affairs. Executive acknowledges that by virtue of
this clause all such existing rights vest in JH and on their creation all such
future rights also vest in JH. Any document (including personal notes,
memoranda, or diary entries) created by Executive or relating to any matters
within the scope of the business of JH and/or concerning its dealings or affairs
will be the property of JH and must be left at its principle office or at such
other place JH may direct upon termination of your employment under Section 4 of
the Agreement.

                                       2
<PAGE>

      (f)   Executive will immediately inform JH and provide it with full
details relating to any or all processes, inventions, improvements, innovations
and discoveries which Executive may make either alone or jointly with others in
relation to or arising during the course of your employment ("Discoveries")
whether or not the Discoveries are capable of being protected by patent,
copyright, registered design or otherwise.

      (g)   The Discoveries will be the sole and exclusive property of JH.
Executive assigns to JH all existing and future rights relating to or arising
from the Discoveries and on their creation all such rights vest in JH. Executive
will sign all documents and do all acts necessary to obtain intellectual
property protection for the Discoveries and to vest the ownership of such rights
to JH.

      3.    COMPENSATION RELATED MATTERS

      (a)   Salary. During the Employment Period, JH shall pay the Executive
annual salary of not less than USD$337,000, to be paid consistent with the
standard JH payroll practices (e.g., timing of payments and standard employee
deductions, such as income tax withholdings, social security, etc.) applicable
to similarly situated executives. The Executive's performance and salary shall
be subject to review and adjustment consistent with the standard practices of JH
in its discretion as approved by the Board.

      (b)   Business Expenses. JH shall reimburse the Executive in connection
with the conduct of the JH business upon presentation of sufficient evidence of
such expenditures consistent with JH policies as in place from time to time (and
subject to the limitations set forth herein).

      (c)   Other Benefits. The Executive shall be entitled to participate in or
receive health, welfare, life insurance, long-term disability insurance,
vacation, and similar benefits as JH provides generally from time to time to
similarly situated executives. The cost of all benefits described in the
preceding sentence shall be that amount charged to similarly situated executives
employed in the United States which shall be deducted from the Executive's
salary as specified in Section 3(a). JH will pay the Executive an annual sum of
$7,500 (net) on or around 1 July each year in respect of travel compensation as
agreed between the company in a letter dated June 5, 2001 - - for so long as
this arrangement remains in place for other executives at a similar level in the
company

      (d)   Annual Bonus. A cash bonus (the "Annual Bonus") to be paid each year
pursuant to the JH Economic Profit Bonus Plan ("Plan"), subject to the
achievement of goals established in accordance with the Plan, at the same time
bonuses are generally paid to similarly situated executives of JH for the
relevant fiscal year. Each year of the term of this Agreement, the Chief
Executive Officer (CEO) of JH shall approve goals, which shall be reduced to
writing and presented to the Executive. The targeted annual Bonus shall be 65%
percent of the Executive's Annual Base Salary, which target shall not constitute
a guarantee.

      (e)   Gross Amounts. The Annual Base Salary and Annual Bonus set forth in
this Section 3(a) and (d) shall be the gross amounts of such Annual Base Salary
and Annual Bonus. The Executive is responsible for paying any and all taxes due
on any amounts received

                                       3
<PAGE>

by him as salary or annual bonus, including, but not limited to, any income tax,
social security tax, Medicare tax or capital gains tax.

      (f)   Car Allowance. JH will either lease an automobile for business and
personal use by the Executive, or, in the alternative, the Executive will be
entitled to an automobile lease allowance not to exceed USD$750 per month during
the term of the Agreement. JH shall be responsible for all costs relating
thereto, including gasoline, repairs, maintenance and insurance. All automobile
insurance policies for such automobile shall name JH and the Executive as
co-insureds. Personal taxation costs arising from the Executive's personal use
of such automobile shall be the Executive's sole responsibility.

      (g)   Annual Australia Trip and Taxation Advice . JH will provide one (1)
annual trip for Executive and his immediate family. Costs to be compensated will
be for round trip (Coach) airfare Los Angeles to Sydney. JH will also meet the
reasonable costs of personal taxation advice and return preparation (Australia
and United States) for the Executive and his wife during the term of this
agreement and for the tax year (Australia and United States) following
termination or separation.

      (i)   Stock Incentive Plans. The Executive will participate in any and all
stock or option compensation plans in place within the JH group at a level
commensurate with the Executive's past participation and then current
responsibilities and the decisions and policies of the board of James Hardie
Industries NV as made and in place from time to time.

      4.    TERMINATION

      (a)   The Agreement and the employment of Executive as provided herein,
shall terminate upon the written resignation by Executive upon thirty (30) days
written notice to JH and/or may be terminated by JH in its discretion upon
thirty (30) days written notice, by the delivery to Executive of a written
notice terminating the Agreement effective as of the date specified in such
notice; however, Executive and JH specifically agree that Sections 2, 5, 6 and 7
shall survive the termination of this Agreement. Upon the termination of the
Agreement as provided above, the obligation of JH to compensate Executive as set
forth in Section 3 shall cease, except Executive may be entitled to compensation
under any applicable incentive compensation plans described in 3(d) and/or
welfare benefit plans described in 3(c) pursuant to the terms of the applicable
plan not already paid Executive as of the date specified in the written
resignation by Executive, or the written notice issued by JH, and/or as provided
by applicable law.

      (b)   JH expressly reserves the right to provide thirty (30) days' notice
as provided above although not to assign any duties to Executive during that
thirty (30) day period, provided Executive receives monthly compensation during
the notice period.

      5.    SEVERANCE

      (a)   Should JH exercise its discretion to terminate Executive's
employment pursuant to Section 4, JH will provide one payment of Annual Salary
and target Annual Bonus to Executive in the amount set forth in Section 3(a) and
3(d) less applicable deductions together

                                       4
<PAGE>

with a proportion of the Annual Bonus represented by the months actually served
by the Executive in the bonus year, at the target rate, the latter too be paid
following the end of the year and finalization of accounts. For the purposes of
this Section 5, a reduction by the Company in the Executive's Annual Base Salary
to less than (a) $337,000 or (b) the Executive's Annual Base Salary at the time
of such reduction constitutes termination of the Executive's employment unless
done so with the written agreement of the Executive.

      (b)   Payment to Executive pursuant to (a) above constitutes severance pay
and shall be payable only upon the return to JH of a General Release and
Covenant Not To Sue ("Release") in the form set forth in the Exhibit to the
Agreement, executed by Executive in accordance with the provisions of the
Release.

      (c)   Executive agrees that the opportunity and/or the actual receipt of
severance pay described in (a) or (b) above in any amount, is sufficient
consideration for the provisions set forth in the Agreement as well as the
Release.

      (d)   For the period of twelve (12) months after his last day of
employment as set forth in Section 4 subject to (c) above, Executive will be
paid the amount charged by JH in accordance with applicable law for continued
coverage under the applicable JH medical welfare benefit plan available to
Executive as of his last day of employment within which he was a participant
under the same terms, while JH simultaneously complies with Consolidated Omnibus
Budget Reconciliation Act, as amended ("COBRA"), thereafter the payment of the
entire premium being the sole responsibility of Executive for the remainder of
the COBRA period.

      (e)   Within 7 day's of the Executive's last day of employment as
described in Section 4, Executive shall, relinquish and/or surrender possession,
custody and control of any automobile or other vehicle or device provided by JH
to Executive during the period of his employment pursuant to Section 3(f) or
otherwise as a consequence of Executive's employment, which Executive
acknowledges is the property of JH.

      (f)   The rights of Executive in any JH plan that JH has voluntarily
designated Executive as a participant concerning stock options shall vest in
accordance with the terms of the plan, as amended or modified by JH in its
discretion from time to time.

      6.    CONFIDENTIALITY

      Executive and his representatives, if any, agree that they will keep
strictly confidential the terms and conditions of the Agreement and the
consideration provided hereunder. The sole exceptions of confidentiality are for
communications to Executive's personal attorneys (and attorney's employees,
personal tax advisor, attorney and/or accountant) or as required by law.
Executive further agrees to take all steps necessary to ensure that
confidentiality is maintained by all the individuals or entities to whom
authorized disclosure is or was made, including but not limited to informing
them that the terms and execution of the Agreement are strictly confidential and
are not to be disclosed to any person or entity.

                                       5
<PAGE>

      7.    MISCELLANEOUS

      (a)   Other than pursuant to a valid subpoena or order commanding
attendance or testimony, Executive will not instigate the commencement of or
participate or assist in any judicial or administrative proceeding or matter
that may in any way involve the subject matter of the Agreement, his employment
and/or former employment, and/or any allegations that Executive could have
raised against JH in any forum on behalf of himself or other persons against JH
and (b) Executive will not instigate the commencement of, or participate or
assist in any judicial or administrative proceeding or matter brought on behalf
of any current or former employees and/or current or former supplier or vendor
against JH. In the event that Executive is commanded to attend any proceedings
or provide testimony within the meaning of this Section, Executive agrees to
provide in writing to JH at least ten (10) days prior notice of such attendance
or testimony, or the amount of prior notice of such attendance or testimony that
he received, whichever is greater.

      (b)   Executive warrants that he will return to JH as of his last day of
employment described in Section 4 all Confidential Information, including but
not limited to documents, software, equipment (including, but not limited to,
computers and computer related items), and all other property and materials
belonging to JH including, but not limited to, computers and computer related
items), and all other property and materials belonging to JH including, but not
limited to, identification cards, keys, and the like, correspondence, notes and
notebooks, drawings, prints, photographs, tape recorders, other written, typed,
printed or recorded materials to which Executive had access or which Executive
developed during the course of his employment with JH wherever such items may be
located, and together with all copies (in whatever form thereof) of all
materials relating to Executive's employment or obtained or created in the
course of Executive's employment with JH.

      (c)   Executive represents that other than those materials that he must
return to JH pursuant to Section 7(b) above, he has not copied or caused to be
copied, printed out or caused to be printed out, any Confidential Information,
software or documents other than those documents generally available to the
public, or retained any other materials originating or belonging to JH.
Executive warrants that he has not and will not retain in his possession any
such Confidential Information, software, documents or other materials in machine
or human readable form.

      (d)   If any of the provisions, terms, clauses or waivers, or releases of
claims or rights contained in the Agreement are declared illegal, void, invalid,
unenforceable, or ineffective in a court of competent jurisdiction, all
remaining provisions, terms, clauses or waivers and releases of claims contained
in the Agreement shall remain valid and binding upon both Executive and JH, and
the provisions declared illegal, invalid, unenforceable or ineffective shall be
modified to the extent necessary to allow it to be enforceable against either
Executive or JH.

      (e)   Executive and JH acknowledge that they have retained counsel or have
had the opportunity to retain counsel concerning this Agreement, that they have
read and fully understand the terms of the Agreement or have had it analyzed by
their counsel, with sufficient

                                       6
<PAGE>

time that they are fully aware of its contents and of its legal effect.
Executive and JH enter the Agreement freely and voluntarily and with a full
understanding of its terms.

      (f)   As part of the consideration for the benefits of the Agreement as
well as the acceptance of obligations set forth in the Agreement, Executive
expressly guarantees and has represented and does hereby express, warrant and
represent to JH that:

            (a)   he is legally competent and duly authorized to execute this
      Agreement and it has been read and explained to him in a language and a
      manner fully understandable to him; and

            (b)   he has not assigned, pledged, or otherwise in any manner sold,
      hypothesized, or otherwise transferred or pledged either by instrument in
      writing or otherwise, any right, title, interest, or claim which he has or
      may have by reason of any claims, damages or otherwise sustained as of the
      effective date of the Agreement.

      (g)   Executive agrees that damages may not be an adequate remedy for the
breach of the covenants contained in Sections 2, 5, 6 and 7 above as Executive
recognizes that such conduct constitutes irreparable harm to JH, therefore JH
shall be entitled to immediate injunctive relief without notice against
Executive and to receive from Executive all legal fees and other costs in
incurred by JH to enforce such covenants, as well as any other remedy as
provided by law.

      8.    ENTIRE AGREEMENT: NO AMENDMENT

      Other than confidentiality, IP assignment, non-compete and indemnity
agreements, no agreements or representations, oral or otherwise, express or
implied, have been made by either party with respect to Executive's employment
by JH that are not set forth expressly in the Agreement, and there are no
agreements or understandings whether express or implied, written or oral,
between Executive and JH (other than as may exist in relation to express
indemnities and D & O insurance) except the Agreement. Executive acknowledges
that unless a written document is executed by the Chief Executive Officer (CEO)
of JH amending the terms of the Agreement, he may not reasonably rely on
representations of any officer and/or representative of JH to vary, modify
and/or change the terms of the Agreement.

      9.    GOVERNING LAW

      The Agreement is to be construed and implemented under the laws of the
State of California, without regard to principles of conflict of law or
decisional authority in this regard, of the state or jurisdiction within which
the Agreement is being enforced..

      10.   COUNTERPARTS

      The parties agree that this Agreement may be executed in counterparts,
each of which shall be deemed to constitute an executed original.

                                       7
<PAGE>

      11.   AMBIGUITY

      In the event that it shall be determined that there is any ambiguity
contained in the Agreement, said ambiguity shall not be construed against either
JH or Executive as a result of such party's preparation of the Agreement, which
shall be construed in favor of or against either Executive or JH in light of all
the facts, circumstances and intentions of the parties at the time this
Agreement is effective.

      12.   ASSIGNMENT

      Executive may not assign any right (other than the right to receive
income, if any) under the Agreement without the prior written consent of JH. If
JH, or any entity resulting from any merger or consolidation with or into JH, is
merged with or consolidated into, or with any other entity or entities, or if
substantially all the assets of the aforementioned entities are sold or
otherwise transferred (including through liquidation) to another entity, then
the Agreement may be assigned without the consent of Executive and the
provisions of the Agreement shall be binding upon and shall inure to the benefit
of, a surviving benefit of, a surviving entity in, or the entity resulting from,
such merger or consolidation, or the entity to which such assets are sold or
transferred.

      13.   EFFECTIVE DATE

      Executive acknowledges that he has been advised to consult with counsel,
and agrees that the Agreement shall only be effective if he voluntarily executes
the Agreement and returns it to Peter Macdonald, James Hardie Building Products,
Inc., 26300 La Alameda, Suite 100, Mission Viejo, CA 22691 within twenty-one
(21) days from the date Executive received the Agreement. Executive acknowledges
that if he signs the Agreement, he will have seven (7) days after the executes
it voluntarily to revoke it and the Agreement will not become effective until
seven (7) days has expired, without Executive's revocation, from the date
Executive voluntarily chooses to execute it.

      TO WITNESS WHEREOF, Executive and JH have caused the Agreement to be
executed this twenty ninth day of July, 2004.

Date: 29 July 04                      /s/ Peter Shafron
                                      -----------------
                                      Peter Shafron

Date:29 July 04                       /s/ Peter Macdonald
                                      -------------------
                                      Peter Macdonald
                                      James Hardie Building Products, Inc.

Date: _____________________           __________________________
                                      Witness

                                       8

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