Exhibit
10.6


 


SALE
PARTICIPATION AGREEMENT


 


June 30, 2005


 


To: The Person whose
name is set forth on the signature page hereof


 


Dear Sir or
Madam:


 


You have entered into a Management
Stockholder’s Agreement, dated as of the date hereof, between Masonite Holding
Corporation, a Canadian corporation (the “Company”), and you (the
“Stockholder’s Agreement”) relating to (i) the granting to you by the Company
of New Options (as defined in the Stockholder’s Agreement) to purchase shares
of common stock of the Company (the “Common Stock”) and (ii) the purchase by
you of the Purchased Stock (as defined in the Stockholder’s Agreement). The
undersigned, KKR Millennium Fund (Overseas), Limited Partnership, an Alberta
limited partnership (“KKR Millennium”) and KKR Partners (International) Limited
Partnership, an Alberta limited partnership (“KKR Partners”) hereby agree with
you as follows, effective upon such grant of an Option:


 


1.             In the event that at any time KKR
Millennium or KKR Partners (together with any of its affiliates, to the extent
provided for in Paragraph 8 hereof, the “Selling Investors”) proposes to sell
for cash or any other consideration any shares of Common Stock owned by it, in
any transaction other than (i) a Public Offering (as defined in the Stockholder’s
Agreement), (ii) a sale to an affiliate of the Selling Investors or (iii) an
Initial Syndication (as such term is hereinafter defined), the Selling
Investors will notify you or your Management Stockholder’s Estate or Management
Stockholder’s Trust (as such terms are defined in the Stockholder’s Agreement,
and collectively with you, the “Management Stockholder Entities”), as the case
may be, in writing (a “Notice”) of such proposed sale (a “Proposed Sale”) and
the material terms of the Proposed Sale as of the date of the Notice (the “Material
Terms”) promptly, and in any event not less than 15 days prior to the
consummation of the Proposed Sale and not more than five days after the
execution of the definitive agreement relating to the Proposed Sale, if any
(the “Sale Agreement”). If, within 10 days after the Management Stockholder
Entities’ receipt of such Notice, the Selling Investors receive from the
Management Stockholder Entities a written request (a “Request”) to include
Common Stock held by the Management Stockholder Entities in the Proposed Sale
(which Request shall be irrevocable unless (a) there shall be a material
adverse change in the Material Terms or (b) otherwise mutually agreed to in
writing by the Management Stockholder Entities and the Selling Investor(s)),
the Common Stock held by you will be so included as provided herein; provided
that only one Request, which shall be executed by the Management Stockholder
Entities, may be delivered with respect to any Proposed Sale for Common Stock
held by the Management Stockholder Entities. Promptly after the execution of
the Sale Agreement, the Selling Investors will furnish the Management
Stockholder Entities with a copy of the Sale Agreement, if any. For purposes of
this Paragraph 1, the term “Initial Syndication” shall mean a sale to any
unaffiliated person or group of persons in connection with the initial
syndication of the Selling Investors’ investment in the Common Stock, which
sale(s) occur at any time(s) within the six nine (6) months following the Closing
(as such term is defined


 

















 


in the Stockholder’s
Agreement) at a per share sale price that does not exceed 110% of the Base
Price (as such term is defined in the Stockholder’s Agreement).


 


2.             (a) The number of shares of Common
Stock which the Management Stockholder Entities will be permitted to include in
a Proposed Sale pursuant to a Request will be the product of (i) the sum of the
number of shares of Common Stock then owned by the Management Stockholder
Entities (and held pursuant to the Stockholder’s Agreement) plus all shares of
Common Stock which you are then entitled to acquire under any unexercised
portion of the Option, to the extent such Option is then exercisable or would
become exercisable as a result of the consummation of the Proposed Sale,
multiplied by (ii) a fraction (A) the numerator of which shall be the aggregate
number of shares of Common Stock proposed to be purchased by the buyer in the
Proposed Sale and (B) the denominator of which shall be the total number of
shares of Common Stock owned, or which would be owned upon exercise of any
exercisable Options (to the extent any such Options are then exercisable or
would become exercisable as a result of the consummation of the Proposed Sale),
by the Selling Investors, the Management Stockholder Entities and other holders
of shares of Common Stock who have been granted the same rights granted to the
Management Stockholder Entities to participate in the Proposed Sale (an “Eligible
Holder”), as the case may be.


 


(b)          If
one or more Eligible Holders elect not to include the maximum number of shares
of Common Stock which such holders would have been permitted to include in a
Proposed Sale pursuant to Paragraph 2(a) (such non-included shares, the “Eligible
Shares”), then each of the Selling Investors, the Management Stockholder
Entities or the remaining Eligible Holders, or any of them, will have the right
to sell in the Proposed Sale a number of additional shares of their Common
Stock equal to their pro rata portion of the number of Eligible Shares, based
on the relative number of shares of Common Stock then held by each such holder
plus all shares of Common Stock which each such holder would then be entitled
to acquire under any unexercised portion of the Option, to the extent such Option
is then exercisable or would become exercisable as a result of the consummation
of the Proposed Sale, and such additional shares of Common Stock which any such
holder or holders propose to sell shall not be included in any calculation made
pursuant to Paragraph 2(a) for the purpose of determining the number of shares
of Common Stock which the Management Stockholder Entities will be permitted to
include in a Proposed Sale. The Selling Investors, or any of them, will have
the right to sell in the Proposed Sale additional shares of Common Stock owned
by them equal to the number, if any, of remaining Eligible Shares after giving
effect to the foregoing.


 


3.             Except as may otherwise be provided
herein, shares of Common Stock subject to a Request will be included in a
Proposed Sale pursuant hereto and in any agreements with purchasers relating
thereto on the same terms and subject to the same conditions applicable to the
shares of Common Stock which the Selling Investors propose to sell in the
Proposed Sale. Such terms and conditions shall include, without
limitation:  the pro rata reduction of
the number of shares of Common Stock to be sold by the Selling Investors, the
Management Stockholder Entities and any Eligible Holders to be included in the
Proposed Sale if required by the party proposing such Sale; the sale price; the
form of consideration; the payment of fees, commissions and expenses; the
provision of, and representation and warranty as to, information reasonably
requested by the Selling Investors covering matters regarding the Management
Stockholder Entities’ ownership of shares; and the provision of requisite indemnification;
provided that any


 


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indemnification
provided by the Management Stockholder Entities shall be a several and not
joint obligation and pro rata in proportion with the number of shares of Common
Stock to be sold.


 


4.             Upon delivering a Request, the
Management Stockholder Entities will, if requested by the Selling Investors,
execute and deliver a custody agreement and power of attorney in form and
substance reasonably satisfactory to the Selling Investors with respect to the
shares of Common Stock which are to be sold by the Management Stockholder
Entities pursuant hereto (a “Custody Agreement and Power of Attorney”). The
Custody Agreement and Power of Attorney will contain customary provisions and
will provide, among other things, that the Management Stockholder Entities will
deliver to and deposit in custody with the custodian and attorney-in-fact named
therein a certificate or certificates (if such shares are certificated)
representing such shares of Common Stock (duly endorsed in blank by the
registered owner or owners thereof) and irrevocably appoint said custodian and
attorney-in-fact as the Management Stockholder Entities’ agent and
attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on the Management Stockholder Entities’ behalf
with respect to the matters specified therein.


 


5.             The Management Stockholder Entities’
right pursuant hereto to participate in a Proposed Sale shall be contingent on
the Management Stockholder Entities’ strict compliance with each of the
provisions hereof and the Management Stockholder Entities’ respective willingness
to execute such documents in connection therewith as may be reasonably
requested by the Selling Investors.


 


6.             (a) In the event of a Proposed Sale
pursuant to Section 1 hereof, the Selling Investors may elect, by so specifying
in the Notice, to require the Management Stockholder Entities to, and the
Management Stockholder Entities shall, participate in such Proposed Sale to the
same extent calculated pursuant to Paragraph 2(a) above, in accordance with the
terms and provisions of Paragraph 3 hereof; provided, however, that in such
event, the order in which the shares of Common Stock held by the Management
Stockholder Entities shall be required to be sold shall be: first, any shares
of Common Stock then held by the Management Stockholder Entities that
constitute Purchased Stock (as defined in the Stockholder’s Agreement); and
second, any shares of Common Stock acquired pursuant to the exercise of any
exercisable Options.


 


(b)           In
the event of a transaction which results in a Change in Control (as defined in
the Stockholder’s Agreement) but is not a Proposed Sale in which the Selling
Investors have exercised their rights pursuant to Paragraph 6(a) or the
Management Stockholder Entities have exercised their rights pursuant to
Paragraph 1 (a “Proposed Transaction”), you agree on behalf of the Management
Stockholder Entities, to bear, on a several and not joint basis, your pro rata
share of any fees, commissions, adjustments to purchase price, expenses or
indemnities borne by the Selling Investors.


 


(c)           Your
pro rata share of any amount to be paid pursuant to Paragraph 3 or Paragraph
6(b) shall be based upon the number of shares of Common Stock intended to be
transferred by the Management Stockholder Entities plus the number of shares of
Common Stock you would have the right to acquire under any unexercised portion
of the Option which is 


 


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then vested or
would become vested as a result of the Proposed Sale or Proposed Transaction,
assuming that you receive a payment in respect of such unexercised portion of
the Option.


 


7.             The obligations of the Selling
Investors hereunder shall extend only to the Management Stockholder Entities,
and none of the Management Stockholder Entities’ successors or assigns shall have
any rights pursuant hereto.


 


8.             If the Selling Investors or any of
them transfer any of their interests in the Company to an affiliate of any of
the Selling Investors, as a condition precedent to such transfer, such
affiliate shall agree in writing to assume the obligations hereunder of the
Selling Investors.


 


9.             This Agreement shall terminate and
be of no further force and effect on the fifth anniversary of the first
occurrence of a Public Offering (as defined in the Stockholder’s Agreement).


 


10.           All notices and other communications
provided for herein shall be in writing. Any notice or other communication
hereunder shall be deemed duly given (i) upon electronic confirmation of
facsimile, (ii) one business day following the date sent when sent by overnight
delivery and (iii) five business days following the date mailed when mailed by
registered or certified mail return receipt requested and postage prepaid, in
each case as follows:


 


If to
the Selling Investors, to them at the following address:


 


KKR Millennium
Fund (Overseas), Limited Partnership


c/o Kohlberg
Kravis Roberts & Co. L.P.


9 West 57th
Street


New York, New
York  10019


Attn:  Paul Raether


 


KKR Partners
(International) Limited Partnership


c/o Kohlberg
Kravis Roberts & Co. L.P.


9 West 57th
Street


New York, New
York  10019


Attn:  Paul Raether


 


with a copy to:


Simpson Thacher & Bartlett LLP


425 Lexington Avenue


New York, New York  10017


Attn:  Gary Horowitz, Esq.


 


If to
the Company, to the Company at the following address:


 


Masonite Holding Corporation


c/o Masonite International Corporation


1600 Britannia Road East


Mississauga, Ontario


 


4

















 


Canada L4W 1J2

Attention:  General Counsel


 


with a copy to:


Simpson Thacher & Bartlett LLP


425 Lexington Avenue


New York, New York  10017


Attn:  Gary Horowitz, Esq.


 


If to you, at the address first set forth in
the Stockholders Agreement;


 


If to your Management Stockholder’s Estate or
Management Stockholder’s Trust, to the address provided to the Company by such
entity;


 


or at such
other address as any of the above shall have specified by notice in writing
delivered to the others by certified mail.


 


11.           The laws of the Province of Ontario
and the laws of Canada applicable therein shall govern the interpretation,
validity and performance of the terms of this Agreement. In the event of any
controversy among the parties hereto arising out of, or relating to, this
Agreement which cannot be settled amicably by the parties, such controversy
shall be finally, exclusively and conclusively settled by mandatory arbitration
conducted expeditiously in accordance with the American Arbitration Association
rules, by a single independent arbitrator. Such arbitration process shall take
place within 50 miles of the City of Toronto, Ontario, Canada. The decision of
the arbitrator shall be final and binding upon all parties hereto and shall be
rendered pursuant to a written decision, which contains a detailed recital of
the arbitrator’s reasoning. Judgment upon the award rendered may be entered in
any court having jurisdiction thereof. Each party shall bear its own legal fees
and expenses. Notwithstanding anything herein to the contrary, if any
employment, change in control or severance agreement in effect between you and
the Company or any of its subsidiaries or Rule 405 Affiliates (as defined in
the Stockholder’s Agreement) contains a similar provision relating to
arbitration and/or dispute resolution, such provision in such agreement shall
govern any controversy hereunder. Each party hereto hereby irrevocably waives
any right that it may have had to bring an action in any court, domestic or
foreign, or before any similar domestic or foreign authority with respect to
this Agreement.


 


12.           This Agreement may be executed in
counterparts, and by different parties on separate counterparts, each of which
shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.


 


13.           It
is the understanding of the undersigned that you are aware that no Proposed
Sale is contemplated and that such a sale may never occur.


 


[Signatures on next page]


 


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If the
foregoing accurately sets forth our agreement, please acknowledge your
acceptance thereof in the space provided below for that purpose.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  KKR MILLENNIUM FUND (OVERSEAS), LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  KKR ASSOCIATES MILLENNIUM (OVERSEAS), LIMITED PARTNERSHIP,

  
	
  its General Partner

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  KKR MILLENNIUM LIMITED,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  KKR PARTNERS (INTERNATIONAL) LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  KKR 1996 Overseas Limited, its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
						



 


Accepted and agreed this                
day of               
2005.


 


	
   

  	
   

  
	
  /s/

  	
   

  	
   

  
			



 


Sale Participation Agreement


 


6