Exhibit 10.4


 


Kohlberg Kravis Roberts & Co.
L.P. 

9 West 57th Street

New York, New York 10019


 


April 6, 2005


 


Stile U.S. Acquisition Corp.,


Stile Acquisition Corp.,


c/o Masonite International Corporation 

1600 Britannia Road East


Mississauga, Ontario L4W 1J2


 


Ladies
and Gentlemen:


 


This letter serves to confirm the retention
by Stile U.S. Acquisition Corp. and Stile Acquisition Corp. (the “Company”)
of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) to provide management
and advisory services to the Company and its affiliates (collectively, “Masonite”),
as follows:


 


1.             The Company has retained us, and we hereby agree to accept
such retention, to provide to Masonite, when and if called upon, certain
management and advisory services of the type customarily performed by us. The
Company agrees to pay us an annual fee equal to two million dollars
($2,000,000) (the “Annual Fee”), such fee to be increased at a rate of
5% annually, effective as of April 5 of each such year, payable in quarterly
installments in advance at the beginning of each calendar quarter and
commencing on the date hereof (such first payment to be made pro rata based on
the number of days in the quarter remaining).


 


2.             In
consideration for our services rendered in connection with the transactions
contemplated by the Combination Agreement, dated as of December 22, 2004, as
amended and restated on January 16, 2005 and as further amended and restated on
February 17, 2005, between Stile Acquisition Corp., an Ontario corporation, and
Masonite International Corporation (the “Combination Agreement”), which
such services included, but were not limited to, financial advisory services
and capital structure review, the Company agrees to also pay, on the date
hereof, a one-time transaction fee to KKR in the amount of thirty million
dollars ($30,000,000).


 


3.             We
may also invoice the Company for additional fees in connection with acquisition
or divestiture transactions or in the event that we, or any of our respective
affiliates, perform services for Masonite above and beyond those called for by
this agreement.


 


4.             In
addition to any fees that may be payable to us under this agreement, the
Company also agrees to reimburse us and our respective affiliates, from time to
time upon request, for all reasonable out-of-pocket expenses incurred,
including unreimbursed expenses incurred to the date hereof, in connection with
this retention and/or the transactions contemplated


 





















 


by the
Combination Agreement, including travel expenses and expenses of our respective
counsel and other advisors.


 


5.             The
Company agrees to indemnify and hold us, our affiliates (including, without
limitation, affiliated investment entities) and their and our respective
partners, executives, officers, directors, employees, agents and controlling
persons (each such person, including us, being an “Indemnified Party”)
harmless from and against (i) any and all losses, claims, damages and
liabilities (including, without limitation, losses, claims, damages and
liabilities arising from or in connection with legal actions brought by or on
behalf of the holders or future holders of the outstanding securities of
Masonite or creditors or future creditors of Masonite), joint, several or
otherwise, to which such Indemnified Party may become subject under any
applicable federal or state law, or otherwise, related to or arising out of any
activity contemplated by this agreement or our retention pursuant to, and our
or our affiliates’ performance of the services contemplated by, this agreement
and (ii) any and all losses, claims, damages and liabilities, joint, several or
otherwise, related to or arising out of any action or omission or alleged
action or omission related to the Company or any of its direct or indirect
subsidiaries or the securities or obligations of any such entities. The Company
will further reimburse any Indemnified Party for all expenses (including
counsel fees and disbursements) upon request as they are incurred in connection
with the investigation of, preparation for or defense of any pending or threatened
claim or any action or proceeding arising from any of the foregoing, whether or
not such Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by the Company; provided, however,
that the Company will not be liable under the foregoing indemnification
provision (and amounts previously paid that are determined are not required to
be paid by the Company pursuant to the terms of this paragraph shall be repaid
promptly) to the extent that any loss, claim, damage, liability or expense is
found in a final judgment by a court to have resulted from our willful
misconduct or gross negligence. The Company agrees that no Indemnified Party
shall have any liability (whether direct or indirect, in contract or tort or otherwise)
to Masonite related to or arising out of our retention pursuant to, or our
affiliates’ performance of the services contemplated by, this agreement except
to the extent that any loss, claim, damage, liability or expense is found in a
final, non-appealable judgment by a court to have resulted from our willful
misconduct, bad faith or gross negligence.


 


The Company also agrees that, without our
prior written consent, it will not settle, compromise or consent to the entry
of any judgment in any pending or threatened claim, action or proceeding to
which an Indemnified Party is an actual or potential party and in respect of
which indemnification could be sought under the indemnification provision in
the immediately preceding paragraph, unless such settlement, compromise or
consent includes an unconditional release of each Indemnified Party from all
liability arising out of such claim, action or proceeding.


 


Promptly after receipt by an Indemnified
Party of notice of any suit, action, proceeding or investigation with respect
to which an Indemnified Party may be entitled to indemnification hereunder,
such Indemnified Party will notify the Company in writing of the assertion of
such claim or the commencement of such suit, action, proceeding or
investigation, but the failure to so notify the Company shall not relieve the
Company from any liability which it may have hereunder, except to the extent
that such failure has materially prejudiced the


 

















 


Company. If the Company so elects within a
reasonable time after receipt of such notice, the Company may participate at
its own expense in the defense of such suit, action, proceeding or
investigation. Each Indemnified Party may employ separate counsel to represent
it or defend it in any such suit, action, proceeding or investigation in which
it may become involved or is named as a defendant and, in such event, the
reasonable fees and disbursements of such counsel shall be borne by the
Company; provided, however, that the Company will not be required
in connection with any such suit, action, proceeding or investigation, or
separate but substantially similar actions arising out of the same general
allegations or circumstances, to pay the fees and disbursements of more than
one separate counsel (other than local counsel) for all Indemnified Parties in
any single action or proceeding. Whether or not the Company participates in the
defense of any claim, the Company and we shall cooperate in the defense thereof
and shall furnish such records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith.


 


If the indemnification provided for in clause
(i) of the first sentence of this Section 5 is finally judicially determined by
a court of competent jurisdiction to be unavailable to an Indemnified Party, or
insufficient to hold any Indemnified Party harmless, in respect of any losses,
claims, damages or liabilities (other than any losses, claims, damages or
liabilities found in a final judgment by a court to have resulted from our
willful misconduct or gross negligence), then the Company, on the one hand, in
lieu of indemnifying such Indemnified Party, and KKR, on the other hand, will
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received, or sought to be
received, by Masonite on the one hand and KKR, solely in its capacity as an advisor
under this agreement, on the other hand, in connection with the transactions to
which such indemnification, contribution or reimbursement is sought, or (ii) if
(but only if) the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative fault of
Masonite on the one hand and KKR on the other, as well as any other relevant
equitable considerations; provided, however, that in no event
shall KKR’s aggregate contribution hereunder exceed the amount of fees actually
received by it in respect of the transaction at issue pursuant to this
agreement. The amount paid or payable by a party as a result of the losses,
claims, damages and liabilities referred to above will be deemed to include any
legal or other fees or expenses reasonably incurred in defending any action or
claim. The Company and we agree that it would not be just and equitable if
contribution pursuant to this paragraph were determined by pro rata allocation
or by any other method which does not take into account the equitable
considerations referred to in this paragraph. The indemnity, contribution and
expense reimbursement obligations that the Company has under this letter shall
be in addition to any the Company or Masonite may have, and notwithstanding any
other provision of this letter, shall survive the termination of this
agreement.


 


6.             Any
advice or opinions provided by us may not be disclosed or referred to publicly
or to any third party (other than Masonite’s legal, tax, financial or other
advisors), except in accordance with our prior written consent.


 


7.             We
shall act as an independent contractor, with duties solely to Masonite. The
provisions hereof shall inure to the benefit of and shall be binding upon the
parties hereto


 

















 


and their respective successors and assigns. Nothing
in this agreement, expressed or implied, is intended to confer on any person
other than the parties hereto or their respective successors and assigns, and,
to the extent expressly set forth herein, the Indemnified Parties, any rights
or remedies under or by reason of this agreement. Without limiting the
generality of the foregoing, the parties acknowledge that nothing in this agreement,
expressed or implied, is intended to confer on any present or future holders of
any securities of the Company or its subsidiaries or affiliates, or any present
or future creditor of the Company or its subsidiaries or affiliates, any rights
or remedies under or by reason of this agreement or any performance hereunder.


 


8.             This
agreement shall be governed by and construed in accordance with the internal
laws of the State of New York.


 


9.             This
agreement shall continue in effect from year to year unless amended or
terminated by the consent of all parties hereto.


 


10.           Each
party hereto represents and warrants that the execution and delivery of this
agreement by such party has been duly authorized by all necessary action of
such party.


 


11.           If
any term or provision of this agreement or the application thereof shall, in
any jurisdiction and to any extent, be invalid and unenforceable, such term or
provision shall be ineffective, as to such jurisdiction, solely to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable any remaining terms or provisions hereof or affecting the
validity or enforceability of such term or provision in any other jurisdiction.
To the extent permitted by applicable law, the parties hereto waive any
provision of law that renders any term or provision of this agreement invalid
or unenforceable in any respect.


 


12.           Each
party hereto waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) related to or
arising out of our retention pursuant to, or our performance of the services
contemplated by this agreement.


 


13.           It
is expressly understood that the foregoing paragraphs 2-6, 8, 11 and 12, in
their entirety, survive any termination of this agreement.


 


14.           This
agreement may be executed in counterparts, each of which shall be deemed an
original agreement, but all of which together shall constitute one and the same
instrument.


 


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left blank.]


 

















 


If the foregoing
sets forth the understanding between us, please so indicate on the enclosed
signed copy of this letter in the space provided therefor and return it to us,
whereupon this letter shall constitute a binding agreement among us.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  Kohlberg
  Kravis Roberts & Co. L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Raether

  	
   

  
	
   

  	
   

  	
  Name: Paul Raether

  
	
   

  	
   

  	
  Title: Member

  
	
   

  	
   

  
	
  AGREED
  TO AND ACCEPTED BY:

  
	
   

  
	
   

  	
  Stile
  Holding Corp.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/
  Tagar Olson

  	
   

  
	
   

  	
  Name:
  Tagar Olson

  	
   

  
	
   

  	
  Title:
  Vice President