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Exhibit(a)(1)  (MASONITE LOGO)  NOTICE OF APPLICATION
 AND NOTICE AND MANAGEMENT PROXY CIRCULAR FOR THE SPECIAL MEETING OF SHAREHOLDERS OF MASONITE INTERNATIONAL CORPORATION TO BE HELD ON FEBRUARY 18, 2005  ARRANGEMENT INVOLVING
 MASONITE INTERNATIONAL CORPORATION AND STILE ACQUISITION CORP.  JANUARY 18, 2005




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(MASONITE LOGO) January 18, 2005 Dear Masonite Shareholders: You are cordially invited to attend a special
meeting of the shareholders of Masonite International
Corporation to be held on Friday, February 18, 2005 at 9:30
a.m. (Toronto time) at the Sheraton Centre Toronto Hotel, Essex
Ballroom & Foyer, 123 Queen Street West, Toronto, Ontario.
The meeting has been called to seek shareholder approval for a
proposed arrangement under the Business Corporations Act(Ontario) involving Masonite, its shareholders and Stile
Acquisition Corp., a corporation affiliated with Kohlberg Kravis
Roberts & Co. L.P. On December 22, 2004, Masonite announced
that it had entered into a combination agreement with Stile
pursuant to which all outstanding common shares will be
exchanged with Stile for consideration of C$40.20 per share,
which represents a 21.25% premium over the volume
weighted-average trading price for Masonites common shares
on the Toronto Stock Exchange for the 60 trading days ended
December 21, 2004 and a 15.68% premium over the closing
price of Masonites common shares on the Toronto Stock
Exchange on December 21, 2004, the day prior to the
announcement of the proposed arrangement. Merrill Lynch, the financial advisor to the
Special Committee of the Board of Directors, has delivered to
the Special Committee and the Board of Directors its opinion
that, as of the date of such opinion, and based upon and subject
to the various factors, assumptions and limitations set forth
therein, the consideration to be received pursuant to the
arrangement is fair, from a financial point of view, to Masonite
shareholders. A copy of the Merrill Lynch opinion is included as
Appendix F to the management information circular
accompanying this letter. Based on various factors, including
the Merrill Lynch opinion, the Special Committee has unanimously
concluded that the arrangement is fair to the shareholders and
in the best interests of Masonite. The Board of Directors has
also concluded that the arrangement is fair to the shareholders
and in the best interests of Masonite. The resolution approving the arrangement must be
approved by at least two-thirds of the votes cast at the meeting
by shareholders present in person or represented by proxy and by
at least a majority of the votes cast at the meeting by
shareholders present in person or represented by proxy other
than Masonites senior management. The arrangement is also
subject to certain regulatory approvals and the approval of the
Ontario Superior Court of Justice. The Board of Directors
unanimously recommends that Masonite shareholders vote in favour
of the arrangement resolution. The accompanying notice of meeting and management
information circular provides a detailed description of the
arrangement and includes certain other information, including
the full text of the combination agreement and the Merrill Lynch
opinion, to assist you in considering the matter to be voted
upon. You are urged to read this information carefully and, if
you require assistance, to consult your financial or
professional advisor. Your vote is important regardless of the number
of Masonite common shares you own. If you are unable to be
present at the meeting in person, we encourage you to take the
time now to complete, sign, date and return the enclosed proxy
or vote by phone or through the internet in accordance with the
instructions set out therein and in the accompanying circular,
so that your shares can be voted at the meeting in accordance
with your instructions. We also encourage you to complete, sign,
date and return the enclosed letter of transmittal in accordance
with the instructions set out therein and in the accompanying
circular so that if the proposed arrangement is approved the
consideration for your shares can be sent to you as soon as
possible following the effectiveness of the arrangement. On behalf of the Masonite Board of Directors, I
would like to take this opportunity to thank you for the support
you have shown as shareholders of Masonite. Yours very truly, (Peter A. Crossgrove Signature) Peter A. Crossgrove
 Chairman of the Board of Directors




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NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS A special meeting (the Meeting) of
holders of common shares (Shareholders) of Masonite
International Corporation (Masonite or the
Company) will be held on    February 18,
2005 at    9:30 a.m.  at the
    Sheraton Centre Toronto Hotel 
     Essex Ballroom & Foyer 
     123 Queen Street West 
     Toronto, Ontario for the following purposes:  
    to consider and, if deemed advisable, to pass,
    with or without variation, a special resolution (the
    Arrangement Resolution), the full text of which is
    set forth on Appendix A to the accompanying Management
    Proxy Circular (the Circular), approving an
    arrangement (the Arrangement) pursuant to
    section 182 of the Business Corporations Act(Ontario) (the OBCA) involving Masonite, its
    Shareholders and Stile Acquisition Corp. (Stile),
    all as more particularly described in the Circular; and
    to transact any other business as may properly be
    brought before the Meeting. The full text of the combination agreement
entered into in respect of the Arrangement and the plan of
arrangement are attached as Appendix B to the Circular. Pursuant to the interim order of the Ontario
Superior Court of Justice dated January 18, 2005 (the
Interim Order), registered Shareholders have been
granted the right to dissent in respect of the Arrangement
Resolution. If the Arrangement becomes effective, a registered
Shareholder who dissents (a Dissenting Shareholder)
will be entitled to be paid the fair value for their common
shares if the Executive Vice-President, General Counsel and
Corporate Secretary of Masonite, at 1600 Britannia Road
East, Mississauga, Ontario, L4W 1J2 (fax number: (905)
670-6870), shall have received from such Dissenting Shareholder
prior to 5:00 p.m. (Toronto time) on the last business day
preceding the date of the Meeting a written objection to the
Arrangement Resolution (a Notice of Dissent) and the
Dissenting Shareholder shall have otherwise complied with the
dissent procedures described in the Circular. Failure to
comply strictly with such dissent procedures may result in the
loss or unavailability of any right of dissent. Please see
Rights of Dissenting Shareholders in the Circular
and Appendix E to the Circular. If you cannot attend the Meeting in person,
please vote in accordance with the instructions contained in the
enclosed form of proxy by no later than 5:00 p.m. (Toronto
time) on February 17, 2005. By order of the Board of Directors, (H. Hulster Signature) Harley Ulster
 Executive Vice-President, General Counsel
 and Corporate Secretary
 Toronto, Ontario January 18, 2005




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MANAGEMENT PROXY CIRCULAR
 OF MASONITE INTERNATIONAL
CORPORATION
  January 18, 2005
  Please carefully read this Circular, including its
Appendices. They contain detailed information relating to, among
other things, the proposed Arrangement. If you are in doubt as
to how to deal with these materials or the matters they
describe, please consult your financial or professional
advisor.
  The Arrangement and the Combination Agreement
have not been approved or disapproved by the
U.S. Securities and Exchange Commission or by any U.S.
state securities commission, nor has the U.S. Securities
and Exchange Commission or any U.S. state securities commission
passed upon the merits or fairness of the Arrangement or the
Combination Agreement or passed upon the adequacy or accuracy of
the information contained in this Circular. Any representation
to the contrary is unlawful.




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TABLE OF CONTENTS

|                                                                   |                                                                                       |  |     |    | 
|------------------------------------------------------------------ | ------------------------------------------------------------------------------------- |  | --- | -- | 
|SUMMARY OF CIRCULAR                                                |                                                                                       |  | 1   |   
|                                                                   | The Companies                                                                         |  |     | 1  | 
|                                                                   | Special Meeting                                                                       |  |     | 1  | 
|                                                                   | Vote Required for the Arrangement                                                     |  |     | 1  | 
|                                                                   | Description of the Arrangement                                                        |  |     | 1  | 
|                                                                   | Fairness of the Arrangement                                                           |  |     | 2  | 
|                                                                   | Interests of Directors and Senior Officers in
    the Arrangement                     |  |     | 4  | 
|                                                                   | The Combination Agreement                                                             |  |     | 4  | 
|                                                                   | Court Approval                                                                        |  |     | 5  | 
|                                                                   | Other Conditions and Approvals                                                        |  |     | 6  | 
|                                                                   | Rights of Dissent                                                                     |  |     | 6  | 
|                                                                   | Stock Exchange Listings                                                               |  |     | 6  | 
|                                                                   | Canadian Federal Income Tax
    Considerations                                        |  |     | 6  | 
|                                                                   | United States Federal Income Tax
    Consequences                                     |  |     | 6  | 
|                                                                   | Proxy and Payment of Consideration                                                    |  |     | 6  | 
|GLOSSARY                                                           |                                                                                       |  | 7   |   
|INFORMATION CONTAINED IN THIS
    CIRCULAR                         |                                                                                       |  | 10  |   
|NOTICE TO UNITED STATES SHAREHOLDERS                               |                                                                                       |  | 10  |   
|INFORMATION CONCERNING THE MEETING AND
    VOTING                  |                                                                                       |  | 11  |   
|                                                                   | Additional Information for Non-Registered
    Shareholders                            |  |     | 14 | 
|BACKGROUND TO AND FAIRNESS OF THE
    ARRANGEMENT                  |                                                                                       |  | 15  |   
|                                                                   | History of Discussions Between Masonite and
    KKR                                   |  |     | 15 | 
|                                                                   | Position of the Board and the Special
    Committee as to Fairness                    |  |     | 18 | 
|                                                                   | Opinion of Merrill Lynch                                                              |  |     | 19 | 
|                                                                   | Masonites Financial Models and
    Projections                                       |  |     | 24 | 
|                                                                   | Position of the Executive Signatories as to
    Fairness                              |  |     | 25 | 
|                                                                   | Position of Stile and Stile Holding as to
    Fairness                                |  |     | 26 | 
|REASONS FOR THE ARRANGEMENT                                        |                                                                                       |  | 28  |   
|                                                                   | From Masonites Perspective                                                           |  |     | 28 | 
|                                                                   | From the Perspective of the Executive
    Signatories                                 |  |     | 28 | 
|                                                                   | From the Perspective of Stile and Stile
    Holding                                   |  |     | 28 | 
|PARTICULARS OF THE ARRANGEMENT                                     |                                                                                       |  | 29  |   
|                                                                   | Vote Required to Approve the
    Arrangement                                          |  |     | 29 | 
|                                                                   | Summary of the Arrangement                                                            |  |     | 29 | 
|                                                                   | Interests of Directors and Senior Officers in
    the Arrangement                     |  |     | 30 | 
|                                                                   | Company Options                                                                       |  |     | 31 | 
|                                                                   | Sources of Funds for the Arrangement                                                  |  |     | 32 | 
|                                                                   | Effects of the Arrangement-Plans and
    Proposals                                    |  |     | 33 | 
|                                                                   | Stock Exchange Listings and Status as a
    Reporting Issuer                          |  |     | 34 | 
|                                                                   | Expenses                                                                              |  |     | 34 | 
|THE COMBINATION AGREEMENT                                          |                                                                                       |  | 34  |   
|                                                                   | Effective Date of the Arrangement                                                     |  |     | 34 | 
|                                                                   | Covenants of Masonite                                                                 |  |     | 34 | 
|                                                                   | Covenants of Stile                                                                    |  |     | 35 | 
|                                                                   | Representations and Warranties                                                        |  |     | 35 | 
|                                                                   | Conditions of Closing                                                                 |  |     | 35 | 
|                                                                   | Termination of Combination Agreement                                                  |  |     | 37 | 
|                                                                   | Termination Payment                                                                   |  |     | 38 | 
|                                                                   | Amendment                                                                             |  |     | 38 | 
|PRINCIPAL LEGAL MATTERS                                            |                                                                                       |  | 38  |   
|                                                                   | Court Approval and Completion of the
    Arrangement                                  |  |     | 38 | 
|                                                                   | Principal Regulatory Approvals                                                        |  |     | 39 | 
|CERTAIN CANADIAN FEDERAL INCOME TAX
    CONSIDERATIONS             |                                                                                       |  | 41  |   
|                                                                   | Holders Resident in Canada                                                            |  |     | 42 | 
|                                                                   | Holders Not Resident in Canada                                                        |  |     | 42 | 
|CERTAIN UNITED STATES FEDERAL INCOME TAX
    CONSEQUENCES          |                                                                                       |  | 43  |   
|INFORMATION CONCERNING MASONITE                                    |                                                                                       |  | 44  |   
|                                                                   | General                                                                               |  |     | 44 | 
|                                                                   | Documents Incorporated by Reference                                                   |  |     | 44 | 
|                                                                   | Recent Developments                                                                   |  |     | 44 | 
|                                                                   | Selected Financial Information                                                        |  |     | 45 | 
|                                                                   | Market for Securities                                                                 |  |     | 46 | 
|                                                                   | Exchange Rate Information                                                             |  |     | 48 | 
|                                                                   | Dividend Policy                                                                       |  |     | 48 | 
|                                                                   | Share Ownership of Directors and Senior
    Officers                                  |  |     | 49 | 
|                                                                   | Equity Compensation Plan Information                                                  |  |     | 49 | 
|                                                                   | Executive Compensation                                                                |  |     | 50 | 
|                                                                   | Report of the Human Resource and Compensation
    Committee on Executive Compensation |  |     | 52 | 
|                                                                   | Compensation of Directors                                                             |  |     | 54 | 
|                                                                   | Performance Graph                                                                     |  |     | 55 | 
|INFORMATION CONCERNING STILE AND
    STILE HOLDING                 |                                                                                       |  | 55  |   
|RIGHTS OF DISSENTING SHAREHOLDERS                                  |                                                                                       |  | 55  |   
|PROCEDURES FOR THE SURRENDER OF SHARE
    CERTIFICATES AND PAYMENT |                                                                                       |  | 57  |   
|PURCHASES AND SALES OF
    COMMON SHARES                           |                                                                                       |  | 58  |   
|ADDITIONAL INFORMATION                                             |                                                                                       |  | 58  |   
|APPROVAL BY THE COMPANY                                            |                                                                                       |  | 59  |   
|APPENDIX A  ARRANGEMENT
    RESOLUTION                            |                                                                                       |  | A-1 |   
|APPENDIX B  AMENDED AND RESTATED
    COMBINATION AGREEMENT        |                                                                                       |  | B-1 |   
|APPENDIX C  INTERIM ORDER                                         |                                                                                       |  | C-1 |   
|APPENDIX D  NOTICE OF APPLICATION FOR
    FINAL ORDER             |                                                                                       |  | D-1 |   
|APPENDIX E  RIGHTS OF DISSENTING
    SHAREHOLDERS                 |                                                                                       |  | E-1 |   
|APPENDIX F  MERRILL OPINION                                       |                                                                                       |  | F-1 |   

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SUMMARY OF CIRCULAR The following is a summary of the contents of
this management information circular (the Circular).
This summary is not intended to be complete and is qualified in
its entirety by the more detailed information contained
elsewhere in this Circular. Shareholders should read the entire
Circular, including the Appendices. References in this Circular
to C$ are to Canadian dollars and references to US$ are to
United States dollars. Certain capitalized terms used in this
summary and in the Circular are defined in the Glossary
contained on pages 7 to 10 of the Circular. The Companies Masonite The principal business of Masonite is the
manufacturing of doors, door components and door entry systems
for new residential construction, home repair, renovation and
remodelling and commercial use. Masonite manufactures a broad
line of interior doors, exterior doors and door components which
are sold to large distributors, jobbers, home centre chains and
wholesale and retail building supply dealers across North
America, South America, the United Kingdom, Europe and other
countries in the Middle East and Asia. The Company operates over
75 facilities in 16 countries and has approximately 14,000
employees. The common shares of Masonite (the Common
Shares) are listed on the Toronto Stock Exchange (the
TSX) and the New York Stock Exchange (the
NYSE) under the symbol MHM. See
Information Concerning Masonite  Market for
Securities. Stile and Stile Holding Stile is a company affiliated with Kohlberg
Kravis Roberts & Co. L.P. (KKR) and is the
acquisition vehicle for the Common Shares. It was incorporated
on December 21, 2004 under the OBCA and is a wholly-owned
Subsidiary of Stile Holding Corp. (Stile Holding).
Stile has no Subsidiaries. Stile Holding is a company affiliated
with KKR. It was incorporated on January 4, 2005 under the
OBCA and continued on January 14, 2005 under the Canada
Business Corporations Act. See Information Concerning
Stile and Stile Holding. Special Meeting The Meeting will be held at the Sheraton Centre
Toronto Hotel, Essex Ballroom & Foyer, 123 Queen Street
West, Toronto, Ontario, on February 18, 2005 commencing at
9:30 a.m. (Toronto time). At the Meeting, the Shareholders will
be asked to consider and, if thought advisable, to pass, with or
without variation, the Arrangement Resolution, the full text of
which is set forth on Appendix A to this Circular. See
Information Concerning the Meeting and Voting. Vote Required for the Arrangement The Arrangement Resolution must be approved by at
least 66 2/3% of the votes cast by Shareholders present in
person or by proxy and entitled to vote at the Meeting. In
addition, because of the interests of Senior Management in the
transaction, the Arrangement Resolution must be approved by a
majority of the votes cast by Shareholders present in person or
represented by proxy and entitled to vote at the Meeting
excluding votes in respect of Common Shares held by Senior
Management. As of January 17, 2005, members of Senior
Management beneficially owned a total of 532,570 Common
Shares, representing less than 1% of the outstanding Common
Shares. Each of the Executive Signatories has indicated to the
Company his intention to vote the Common Shares he beneficially
owns in favour of the Arrangement Resolution. As of
December 22, 2004, each of the directors had advised the
Company that he intended to vote the Common Shares beneficially
owned by him in favour of the Arrangement Resolution. See
Particulars of the Arrangement  Vote Required
to Approve the Arrangement. Description of the Arrangement At the Effective Time of the Arrangement, the
following steps will occur:  
    Stile or one of its Affiliates will provide
    (i) the Company Credit Facility Payoff Loans to Masonite
    (and/or one of its Subsidiaries) in an aggregate amount equal to
    the aggregate of all amounts owing under the Company Credit
    Facility, (ii) a loan to Masonite in an amount equal to the
    total amount payable to holders of Company Options pursuant to
    the Plan of Arrangement and (iii) a loan to Masonite equal
    to the total amount payable to cancel and pay out the
    outstanding RSUs and DSUs granted by the Company.
    Masonite and its Subsidiaries will, immediately
    upon receipt of the Company Credit Facility Payoff Loans, repay
    in full all amounts owing under the Company Credit Facility.






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
    Each Cashed-out Option will be cancelled by
    Masonite in exchange for a cash payment by Masonite in an amount
    equal to the total In-the-Money Amount of such Cashed-out Option
    (less any required withholding taxes).
    Each Company Option issued and outstanding
    immediately prior to the Effective Time, other than a Cashed-out
    Option or an Employee Rollover Option, will cease to represent a
    right to receive any Common Shares. Instead, beginning
    immediately after the Effective Time, the sole entitlement of a
    holder of such a Company Option will be to receive, upon
    exercise of the Company Option, a cash payment from Masonite
    equal to the In-the-Money Amount of such Company Option (less
    any required withholding taxes).
    Each RSU and DSU will be cancelled by the Company
    in exchange for a cash payment by the Company in the amount of
    C$40.20 per RSU or DSU, as applicable (less any required
    withholding taxes).
    Two minutes after the completion of the
    immediately preceding step, the outstanding Common Shares
    (excluding Employee Rollover Shares) held by Qualifying Company
    Shareholders will be transferred by the holders thereof to Stile
    without any further act or formality, in exchange for cash in
    the amount of C$40.20 per Common Share and Stile will be deemed
    to be the legal and beneficial owner thereof, free and clear of
    all liens, charges, claims and encumbrances.
    The transactions in respect of the exchange of
    Employee Rollover Options for Replacement Options contemplated
    by the Employee Rollover Agreements will be deemed to occur
    contemporaneously with the transfers in the immediately
    preceding step. Immediately following the effectiveness of the
Arrangement, Stile Holding will acquire each Employee Rollover
Share in exchange for C$40.20 worth of common shares of Stile
Holding (except cash may be paid in lieu of issuing fractional
shares). See Particulars of the Arrangement. Fairness of the Arrangement Position of the Special Committee and the
Board as to Fairness On November 24, 2004, the Board of Directors
of Masonite (the Board) appointed a special
committee of independent directors (the Special
Committee) to consider the current proposal from KKR, to
review the alternatives available to the Company, to conduct any
negotiations with respect to a transaction involving KKR or any
similar transaction, to conclude any agreements with respect to
such a transaction, or to supervise management in the carrying
out of any of the foregoing activities, and to consider whether
any transaction proposed by KKR would be fair to the
Shareholders and in the best interests of the Company. The
Special Committee retained Merrill Lynch as its financial
advisor and retained its own legal counsel. Based on, among
other things:  
    the Merrill Opinion (described below);
    the C$40.20 per Common Share consideration to be
    received by Shareholders under the Arrangement represents a
    21.25% premium over the volume weighted-average trading price
    for the Common Shares on the TSX during the 60 trading days
    ended December 21, 2004 and a 15.68% premium over the
    closing price of the Common Shares on the TSX on
    December 21, 2004, the last trading day before the proposed
    Arrangement was announced. It also exceeds the highest price at
    which the Common Shares traded on the TSX prior to the date of
    the announcement of the transaction;
    the fact that the consideration pursuant to the
    Arrangement will be paid entirely in cash which provides
    certainty of value;
    the Arrangement is conditional upon the approval
    of the Arrangement Resolution by (i) at least two-thirds of
    the votes cast by Shareholders represented in person or by proxy
    at the Meeting and (ii) at least a majority of the votes
    cast by Shareholders represented in person or by proxy at the
    Meeting excluding votes in respect of Common Shares held by
    Senior Management;
    the fact that the Court will make a determination
    as to the fairness of the Arrangement;
    the availability of the Dissent Rights; and
    the ability of the Board, in certain
    circumstances, to consider and recommend approval of a Superior
    Proposal, the Special Committee advised the Board on
December 22, 2004 that it had concluded that the
Arrangement is fair to the Shareholders and in the best
interests of the Company and recommended that the Board approve
the Arrangement. After careful consideration,


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members of the Board present and voting at the
Board meeting on December 22, 2004 concurred with the
recommendations of the Special Committee. Philip Orsino, the
Chief Executive Officer of Masonite, declared his interest with
respect to the Arrangement and abstained from voting. The
Board unanimously recommends that the Shareholders vote to
approve the Arrangement Resolution.See Background to
and Fairness of the Arrangement  Position of the
Board and the Special Committee as to Fairness.
 Fairness Opinion of Merrill Lynch Merrill Lynch has provided the Merrill Opinion to
the Special Committee and the Board stating that, as of the date
of such opinion, and based upon and subject to the various
factors, assumptions and limitations set forth therein, the
consideration to be received by the Shareholders pursuant to the
Arrangement is fair, from a financial point of view, to the
Shareholders. A copy of the Merrill Opinion is attached to this
Circular as Appendix F and should be read carefully in its
entirety. See Background to and Fairness of the
Arrangement  Opinion of Merrill Lynch. Position of Executive Signatories as to the
Fairness of the Arrangement Each of the Executive Signatories believes the
Arrangement is fair to the Shareholders other than the Executive
Signatories for many of the same reasons as the Special
Committee and the Board. These reasons include:  
    the Special Committee settled with KKR the key
    terms of the Combination Agreement and oversaw the negotiation
    of the other terms of the Combination Agreement and the
    Arrangement, and concluded that the Arrangement is fair to the
    Shareholders;
    the C$40.20 per Common Share consideration to be
    received by Shareholders under the Arrangement represents a
    21.25% premium over the volume weighted-average trading price
    for the Common Shares on the TSX for the 60 trading days ended
    December 21, 2004 and a 15.68% premium over the closing
    price of the Common Shares on the TSX on December 21, 2004,
    the last trading day before the proposed Arrangement was
    publicly announced; and
    the Arrangement is subject to the approval of the
    Arrangement Resolution by (i) at least two-thirds of the
    votes cast by Shareholders represented in person or by proxy at
    the Meeting and (ii) at least a majority of the votes cast
    by Shareholders represented in person or by proxy at the Meeting
    excluding votes in respect of Common Shares held by Senior
    Management. See Background to and Fairness of the
Arrangement  Position of the Executive Signatories as to
Fairness. Position of Stile and Stile Holding as to
Fairness Although neither Stile nor Stile Holding has
undertaken any formal evaluation of the fairness of the
Arrangement to the unaffiliated Shareholders, Stile and Stile
Holding believe that the Arrangement is substantively and
procedurally fair to the unaffiliated Shareholders. Stile and
Stile Holding believe this conclusion is supported by several
factors, including:  
    the Special Committee settled with KKR the key
    terms of the Combination Agreement and oversaw the negotiation
    of the other terms of the Combination Agreement and the
    Arrangement, and concluded that the Arrangement is fair to the
    Shareholders;
    the Special Committee unanimously concluded that
    the Arrangement is fair to the Shareholders and the Board
    unanimously recommends that the Shareholders vote in favour of
    the Arrangement Resolution;
    the Arrangement is conditioned upon approval of
    the Arrangement Resolution by (i) at least two-thirds of
    the votes cast by Shareholders represented in person or by proxy
    at the Meeting and (ii) at least a majority of the votes
    cast by Shareholders represented in person or by proxy at the
    Meeting excluding votes in respect of Common Shares held by
    Senior Management;
    the C$40.20 per Common Share consideration
    payable pursuant to the Arrangement represents a 21.25%
    premium over the volume weighted-average trading price for the
    Common Shares on the TSX for the 60 trading days ended
    December 21, 2004 and a 15.68% premium over the closing
    price per Common Share on the TSX on December 21, 2004, the
    last trading day before the proposed Arrangement was publicly
    announced. It also exceeds the highest price at which the Common
    Shares traded on the TSX prior to the date of the announcement
    of the transaction; and
    completion of the Arrangement will be subject to
    a determination as to its fairness by the Court. See Background to and Fairness of the
Arrangement  Position of Stile and Stile Holding as to
Fairness.


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Interests of Directors and Senior Officers in
the Arrangement Mr. Orsino, a director and senior officer,
and certain other senior officers of Masonite have interests in
the Arrangement that are different from or in addition to the
interests of other Shareholders. It is a condition to
Stiles obligation to complete the Arrangement that, at the
Effective Time, none of the Executive Signatories shall have
resigned and they shall have invested at least
US$19.5 million in the equity of Stile Holding and that
certain employees and officers of Masonite (expected to be
approximately 40 individuals worldwide) shall have invested
at least US$25 million, including the US$19.5 million
from the Executive Signatories, in the equity of Stile Holding.
The management investment is currently anticipated to represent
approximately 5% of the equity of Stile Holding and will be made
at the same price per share that funds affiliated with KKR are
paying for such equity. It is expected that, following
completion of the Arrangement, Stile Holding will institute a
stock option plan pursuant to which employees and officers of
Masonite who invest in Stile Holding will be entitled to acquire
up to approximately an additional 7 to 13% of the equity of
Stile Holding on a fully-diluted basis. In addition, Stile has
agreed to continue indemnification arrangements and
directors and officers liability insurance for the
current and former directors and officers of Masonite with
respect to matters occurring prior to the Effective Time. See
Particulars of the Arrangement  Interests of
Directors and Senior Officers in the Arrangement. The Combination Agreement The following is a summary of certain material
terms of the Combination Agreement. Shareholders should read the
more detailed summary contained elsewhere in this Circular. See
The Combination Agreement and the full text of the
Combination Agreement attached as Appendix B to this
Circular. The Combination Agreement contains customary
covenants and representations and warranties for an agreement of
this type. In addition, Masonite has provided certain
non-solicitation covenants in favour of Stile. Masonite has
agreed, except as otherwise provided in the Combination
Agreement, that it will not, directly or indirectly through any
officer, director, employee, representative or agent of Masonite
or any of its Subsidiaries or otherwise, (i) solicit,
initiate, knowingly encourage or otherwise facilitate the
initiation of any inquiries or proposals regarding an
Acquisition Proposal, (ii) participate in any discussions
or negotiations regarding, or provide any confidential
information with respect to, any Acquisition Proposal,
(iii) approve or recommend, or publicly propose to approve
or recommend, any Acquisition Proposal, (iv) accept or
enter into or publicly propose to accept or enter into, any
letter of intent, agreement, arrangement or understanding
related to any Acquisition Proposal, or (v) withdraw or
modify or publicly propose to withdraw or modify, in a manner
adverse to Stile, the approval or recommendation of the Board or
the Special Committee of the Arrangement. Masonite is permitted to respond to a bona fide
request for information that could reasonably be expected to
lead to an Acquisition Proposal, solely by advising that no
information can be given unless a bona fide written
Acquisition Proposal is made, and then only in compliance with
Masonites non-solicitation covenants. Prior to the
Meeting, provided that Masonite has complied with its
non-solicitation covenants, if the Board concludes in good
faith, after consultation with its outside legal and financial
advisors, that it would be necessary to do so in order to
fulfill its fiduciary duties, the Board is permitted to
consider, participate in any discussions or negotiations, or
enter into a confidentiality agreement and provide information
in connection with, an unsolicited, bona fide written
Acquisition Proposal that the Board concludes in good faith,
after consultation with its outside legal and financial
advisors, is or is reasonably likely to be a Superior Proposal.
The Board may, upon terminating the Combination Agreement and
paying to Stile the Termination Payment, withdraw or change, in
a manner adverse to Stile, its approval or recommendation in
favour of the Arrangement and instead recommend a Superior
Proposal to the Shareholders, but only after extending to Stile
a right to match the Superior Proposal. See The
Combination Agreement  Covenants of Masonite. Conditions to the Arrangement The obligations of Masonite and Stile to complete
the Arrangement are subject to the satisfaction or waiver of
certain customary conditions set out in the Combination
Agreement. These conditions include the receipt of the requisite
Shareholder approval of the Arrangement Resolution, Court
approval and the receipt of certain regulatory approvals. In
addition, Stiles obligation to complete the Arrangement is
subject to the satisfaction or waiver of additional conditions,
including the following:  
    no Material Adverse Change shall have occurred
    from December 22, 2004 to the Effective Date;
    Dissent Rights shall not have been exercised by
    Shareholders holding more than 15% of the outstanding Common
    Shares;
    none of the Executive Signatories shall have
    resigned, they shall have each waived any change in control
    payments which they would otherwise be entitled to receive as a
    result of the completion of the Arrangement, they shall have
    invested in Stile (or its direct or indirect parent) as
    described under Particulars of the Arrangement 
    Interests of


-4-



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##### 



Directors and Senior Officers in the
    Arrangement and the aggregate investment of employees and
    officers of Masonite in Stile (or its direct or indirect parent)
    shall be not less than US$25 million;
    Stile shall have received the funds described
    under Particulars of the Arrangement  Sources
    of Funds for the Arrangement on the terms and conditions
    set forth in the commitment letters relating thereto; and
    there shall not have occurred any actual change
    or amendment to (or any proposal to amend or change) the Tax Act
    or Code, as applicable, or other tax legislation, which
    individually or in the aggregate, directly or indirectly, has or
    could reasonably be expected to have a material adverse effect
    with respect to the Arrangement or Stiles ownership of the
    Company, and which was not publicly announced or proposed on or
    prior to December 22, 2004. See The Combination Agreement 
Conditions of Closing. Termination of Combination Agreement Masonite and Stile may agree to terminate the
Combination Agreement at any time before completion of the
Arrangement. In addition, the Combination Agreement may be
terminated:  
    by Masonite or Stile, if:  (i)
    the Arrangement has not been completed by March
    31, 2005, so long as failure of the terminating party to comply
    with the Combination Agreement has not been the cause of or
    resulted in the failure of the consummation of the Arrangement;(ii)
    the Shareholders do not approve the Arrangement
    at the Meeting by the requisite vote; or(iii)
    any law is passed that makes the Arrangement
    illegal or otherwise prohibited;  
    by Masonite:  (i)
    if there has been a material breach by Stile of
    any of its representations, warranties or covenants in the
    Combination Agreement; or(ii)
    in order to enter into a definitive agreement
    with respect to a Superior Proposal provided Masonite is not in
    breach of its non-solicitation covenants and has paid the
    Termination Payment to Stile;  
    by Stile, if:  (i)
    there has been a material breach by Masonite of
    any of its representations, warranties or covenants in the
    Combination Agreement;(ii)
    the Board fails to recommend or withdraws or
    modifies its recommendation of the Combination Agreement, the
    Arrangement or the Arrangement Resolution;(iii)
    the Board approves or recommends an Acquisition
    Proposal other than the Arrangement;(iv)
    Masonite breaches its non-solicitation covenants;(v)
    an Acquisition Proposal has been publicly made,
    publicly announced or otherwise disclosed before the Meeting and
    the Board has not sent to Shareholders or publicly disclosed a
    statement re-affirming its recommendation of the Arrangement; or(vi)
    the Meeting has not occurred by March 1,
    2005. See The Combination Agreement 
Termination of the Combination Agreement. Effect of Termination Under certain circumstances, if the Combination
Agreement is terminated, Masonite has agreed to pay to Stile the
Termination Payment of C$27.4 million. See The
Combination Agreement  Termination Payment. Court Approval The Arrangement requires the approval of the
Court pursuant to the Final Order. Prior to the mailing of this
Circular, Masonite obtained the Interim Order authorizing and
directing Masonite to call, hold and conduct the Meeting and to
submit the Arrangement


-5-



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##### 



Resolution to the Shareholders for approval. A
copy of the Interim Order is attached as Appendix C to this
Circular. Subject to the requisite approval of the Arrangement
Resolution by the Shareholders, the hearing in respect of the
Final Order is expected to take place on February 21, 2005.
The Notice of Application for the Final Order is attached as
Appendix D to this Circular. See Principal Legal
Matters  Court Approval and Completion of the
Arrangement.
 Other Conditions and Approvals The completion of the Arrangement is also subject
to a number of additional conditions, including receipt of
certain regulatory approvals, in addition to Shareholder and
Court approval, which are described in more detail under
The Combination Agreement  Conditions of
Closing and Principal Legal Matters  Principal
Regulatory Approvals. Rights of Dissent Under the Interim Order, registered Shareholders
have the right to dissent from the Arrangement upon strict
compliance with the Plan of Arrangement and Section 185 of
the OBCA. Persons who are beneficial holders of Common Shares
should be aware that only registered holders of Common Shares
are entitled to exercise Dissent Rights. See Rights of
Dissenting Shareholders and Appendix E to the
Circular. It is a condition to the completion of the Arrangement
that Dissent Rights shall not have been exercised by
Shareholders holding more than 15% of the outstanding Common
Shares. Stock Exchange Listings The Common Shares will be delisted from the TSX
and NYSE following the Effective Date. See Particulars of
the Arrangement  Stock Exchange Listings and Status
as a Reporting Issuer. Canadian Federal Income Tax
Considerations A Canadian resident who holds Common Shares as
capital property will generally recognize a capital gain (or
capital loss) for Canadian federal income tax purposes equal to
the amount by which the amount of cash received for such Common
Shares under the Arrangement exceeds (or is less than) such
holders adjusted cost base of the Common Shares. Any
capital gain realized by a non-resident holder upon such
holders disposition of Common Shares generally will not be
subject to Canadian federal income taxation unless such Common
Shares represent taxable Canadian property to such non-resident
holder and do not constitute treaty-protected property. See
Certain Canadian Federal Income Tax Considerations. United States Federal Income Tax
Consequences For United States federal income tax purposes,
the Arrangement will be treated as a taxable sale or exchange of
Common Shares for cash by each Shareholder. A Shareholder who is
a U.S. person for tax purposes and who, on the date on which the
Arrangement is completed, holds Common Shares as a capital asset
will recognize capital gain or loss by reason of the disposition
of Common Shares pursuant to the Arrangement in an amount equal
to the difference between the amount of cash received by the
Shareholder and the Shareholders tax basis in its Common
Shares. See Certain United States Federal Income Tax
Consequences. Proxy and Payment of Consideration Shareholders who are unable to be present at the
Meeting may still vote through the use of proxies. By voting in
accordance with the instructions contained in the enclosed form
of proxy, registered Shareholders can participate in the Meeting
through the person or persons named in the form. See
Information Concerning the Meeting and Voting for
additional information concerning voting by proxy, particularly
if your Common Shares are held through an intermediary. In order to receive payment for their Common
Shares, Shareholders (who are not Dissenting Shareholders) must
complete and sign the Letter of Transmittal and surrender their
certificate or certificates representing their Common Shares and
all other required documents. If Common Shares are held through
an intermediary, Shareholders should contact that intermediary
for instructions and assistance in receiving payment for those
Common Shares. Computershare Investor Services Inc. is
acting as the Depositary under the Plan of Arrangement. The
Depositary will be responsible for receiving deposits of Common
Shares, Letters of Transmittal and accompanying documentation.
Stile will cause the Depositary to give notices in connection
with the Plan of Arrangement, if required, and to cause payment
to be made for all Common Shares acquired under the Plan of
Arrangement. It is recommended that Shareholders complete and
return their Letter of Transmittal to the Depositary on or
before February 17, 2005. All certificate(s) representing
Common Shares deposited with the Depositary may be withdrawn at
or prior to the Meeting. The Effective Date is expected to occur
on or about February 28, 2005. See Procedures for the
Surrender of Share Certificates and Payment.


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GLOSSARY

Acquisition Proposalmeans any proposal or offer with
respect to any merger, amalgamation, arrangement, business
combination, liquidation, dissolution, recapitalization,
take-over bid, tender offer, purchase of any assets representing
greater than 20% of the fair market value of the Arrangement, or
purchase of more than 20% of the equity (or rights thereto) of
Masonite or a Subsidiary of Masonite, or similar transactions or
series of transactions involving Masonite or any of its
Subsidiaries, excluding the Arrangement.

Affiliatehas the meaning ascribed thereto in
the Securities Act.

Arrangementmeans the arrangement under
Section 182 of the OBCA on the terms and conditions set out
in the Plan of Arrangement attached as Schedule 1.1.A to
the Combination Agreement which is attached as Appendix B
to this Circular.

Arrangement Resolutionmeans the special resolution of the
Shareholders approving the Plan of Arrangement as required by
applicable law and the Interim Order, substantially in the form
attached as Appendix A to this Circular.

Articles of Arrangementmeans the articles of arrangement of
Masonite in respect of the Arrangement in the form required by
the OBCA to be sent to the Director after the Final Order is
made.

Business Daymeans any day on which commercial
deposit taking banks are generally open for business in Toronto,
Ontario and New York, New York other than a Saturday, a Sunday
or a day observed as a holiday in such location under applicable
laws.

Cashed-out Optionmeans each Company Option in respect
of which a Cash Election (as defined in the Company Stock Option
Plan) has been duly made by a holder of Company Options prior to
the Effective Time in accordance with the terms and conditions
of the Company Stock Option Plan.

CDSmeans the Canadian Depository for
Securities Limited.

Codemeans the United States Internal
Revenue Code of 1986, as amended.

Combination Agreementmeans the combination agreement dated
December 22, 2004 between Masonite and Stile, as amended
and restated on January 16, 2005, which is attached to this
Circular as Appendix B, including all schedules and
exhibits attached thereto, as it may be further amended,
modified or supplemented from time to time.

Common Sharemeans a common share of Masonite.

Companyor Masonitemeans
Masonite International Corporation.

Company Credit Facilitymeans the amended and restated credit
agreement dated July 31, 2002, as amended on
January 23, 2004, June 1, 2004 and June 23, 2004
among Masonite Holdings, Inc., Masonite, the lenders party
thereto and SunTrust Bank, as Administrative Agent.

Company Credit Facility Payoff
Loansmeans the loans to be made
by Stile and/or one of its Affiliates to the Company on the
Effective Date in order to repay the amount outstanding under
the Company Credit Facility.

Company Optionsmeans the outstanding stock options
granted under the Company Stock Option Plan to purchase Common
Shares.

Company Stock Option Planmeans the Masonite International
Corporation Share Option Plan, as amended and restated as of
March 16, 2004, as the same may be further amended.

Courtmeans the Ontario Superior Court of
Justice.

Demand for Paymentmeans a written notice to Masonite by
a Dissenting Shareholder demanding payment of the fair value of
its Common Shares in compliance with the Dissent Procedures.

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Depositarymeans Computershare Investor
Services Inc., being the depositary appointed by the
Company and Stile for the purpose, amongst other things, of
exchanging certificates representing Common Shares for cash.

Directormeans the Director appointed under
Section 278 of the OBCA.

Dissent Proceduresmeans the dissent procedures described
under Rights of Dissenting Shareholders and in
Appendix E hereto.

Dissent Rightsmeans the rights of dissent which each
Dissenting Shareholder is entitled to exercise in respect of the
Arrangement Resolution in compliance with the Dissent Procedures.

Dissenting Shareholdermeans a registered Shareholder who
complies with the Dissent Procedures.

DSUsmeans deferred share units granted to management and certain key
employees of the Company pursuant to the Companys 2002
Deferred Share Plan effective as of October 21, 2003, as
amended, and the Companys 2004 Full Value Incentive Plan
dated as of March 23, 2004, as amended, and the deferred
share units granted to directors of the Company pursuant to the
Directors Deferred Unit Plan dated as of March 23,
2004, as amended.

Effective Datemeans the date upon which the Plan of
Arrangement becomes effective as established by the date of
issue shown on the certificate of arrangement issued by the
Director pursuant to subsection 183(2) of the OBCA.

Effective Timemeans 11:30 a.m. on the Effective
Date.

Employee Rollover
Agreementmeans a written
agreement between Stile (or one of its Affiliates) and an
officer or employee of the Company or its Subsidiaries in a form
acceptable to the Board, (i) pursuant to which
(A) Stile (or one of its Affiliates) has agreed to acquire,
and such officer or employee has agreed to sell, that number of
Common Shares held by such officer or employee stipulated in the
agreement (if any) for consideration not exceeding C$40.20 per
Common Share, which consideration consists of shares in the
capital of Stile (or such Affiliate), except that cash may be
paid in lieu of issuing fractional shares and/or (B) such
officer or employee has agreed to dispose of that number of the
Company Options held by such officer or employee stipulated in
the agreement (if any) for consideration consisting solely of
Replacement Options and for which the total In-the-Money Amount
of such Replacement Options shall, at the time of granting such
Replacement Options, equal (subject to rounding down to take
into account fractional shares) the total In-the-Money Amount of
the Company Options exchanged for such Replacement Options;
(ii) which has been entered into prior to the Effective
Time but is to be completed immediately after the Effective Time
in the case of a transaction referred to in (i)(A) or to occur
contemporaneously with the transfer of Common Shares for cash
pursuant to the Plan of Arrangement in the case of a transaction
referred to in (i)(B); (iii) under which all conditions to
closing (other than completion of the Arrangement) have been
satisfied or waived as of the Effective Time; and
(iv) which has not been terminated by such officer or
employee or by Stile (or one of its Affiliates) as of the
Effective Time.

Employee Rollover Optionsmeans Company Options which are to be
disposed of in exchange for Replacement Options pursuant to an
Employee Rollover Agreement.

Employee Rollover Sharesmeans Common Shares to be acquired by
Stile or an Affiliate pursuant to an Employee Rollover Agreement.

Executive Signatoriesmeans Philip S. Orsino, the President
and Chief Executive Officer of Masonite, John F. Ambruz, the
Executive Vice-President, Strategic Development of Masonite,
James U. Morrison, the Executive Vice-President and Group Chief
Operating Officer of Masonite and Lawrence P. Repar, the
Executive Vice-President and Group Chief Operating Officer of
Masonite.

Final Ordermeans the final order of the Court
made in connection with the approval of the Arrangement as such
order may be amended or varied by the Court at any time prior to
the Effective Date or, if appealed, then, unless such appeal is
withdrawn or denied, as affirmed.

Interim Ordermeans the interim order of the Court
made in connection with the approval of the Arrangement dated
January 18, 2005, a copy of which is attached hereto as
Appendix C.

In-the-Money Amountmeans, (i) for each Company
Option, the difference between C$40.20 and the exercise price of
that Company Option, and (ii) for each Replacement Option,
the difference, if any, between the fair market value of each
share issuable upon the exercise of such Replacement Option and
the per share exercise price of that Replacement
Option, provided that, where

-8-



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##### 



more than one share is issuable upon the exercise
of a Replacement Option, the In-the-Money Amount of such
Replacement Option will be the difference as so determined
multiplied by the number of shares issuable.


Letter of Transmittalmeans the letter of transmittal
delivered to Shareholders by Masonite with this Circular for use
by Shareholders in connection with the Arrangement.

Material Adverse Changewhen used in connection with the
Company, means any change, effect, event or occurrence with
respect to the condition (financial or otherwise), properties,
assets, liabilities, obligations (whether absolute, accrued,
conditional or otherwise), businesses, operations or results of
operations or prospects of the Company or its Subsidiaries that
is, or would reasonably be expected to be, material and adverse
to the Company and its Subsidiaries on a consolidated basis. For
certainty, Material Adverse Change does not include
any change, effect, event or occurrence caused by or arising
from (a) changes in the markets in which the Company and
its Subsidiaries operate (other than changes in reaction to the
announcement of the Arrangement) or (b) macroeconomic
factors, interest rates, general financial market conditions,
war, terrorism or hostilities, except in each case to the extent
that any change, effect, event or occurrence has had a
disproportionate effect on the Company and its Subsidiaries as
compared to other persons in the industry in which the Company
and its Subsidiaries operate.

Material Adverse Effectwhen used in connection with the
Company, means any effect of a Material Adverse Change relating
to the Company.

Merrill Lynchmeans Merrill Lynch, Pierce, Fenner
& Smith Inc., the financial advisors to the Special
Committee.

Merrill Opinionmeans the opinion dated
December 22, 2004 from Merrill Lynch to the Special
Committee of the Board in connection with the Arrangement, a
copy of which is attached to this Circular as Appendix F.

Notice of Dissentmeans a written objection to the
Arrangement Resolution made by a registered Shareholder in
accordance with the Dissent Procedures.

Notice of Special Meetingmeans the notice dated
January 18, 2005 of the special meeting of the Shareholders
to be held to consider and, if deemed advisable, to pass, with
or without variation, the Arrangement Resolution.

OBCAmeans the Business Corporations Act(Ontario), including the regulations made thereunder.

Plan of Arrangementmeans the plan of arrangement proposed
under Section 182 of the OBCA in the form attached as
Schedule 1.1A to the Combination Agreement, as modified or
supplemented from time to time in accordance therewith.

Qualifying Company Shareholdersmeans a Shareholder, but, for greater
certainty, does not include (i) a Dissenting Shareholder or
(ii) Stile or any of its Affiliates.

Replacement Optionsmeans options to acquire shares of
Stile (or one of its Affiliates) granted in exchange for Company
Options pursuant to an Employee Rollover Agreement.

RSUsmeans restricted share units granted to management and certain
key employees of the Company pursuant to the Companys 2002
Restricted Share Bonus Plan dated as of October 21, 2003,
as amended and the Companys 2004 Full Value Incentive Plan
dated as of March 23, 2004, as amended.

Securities Actmeans the Securities Act(Ontario) and the rules, regulations and policies made
thereunder, as they may be amended from time to time prior to
the Effective Date.

Senior Managementmeans the senior officers of Masonite,
including the Executive Signatories, but excluding the
non-executive Chairman of the Board.

Subsidiaryhas the meaning ascribed thereto in
the Securities Act.

Superior Proposalmeans any bona fide written
Acquisition Proposal that, in the good faith determination of
the board of directors of the Company after consultation with
its financial advisors and with outside counsel, (a) is
reasonably likely to be completed, taking into account all
legal, financial, regulatory and other aspects of such proposal
and the person making such proposal, and (b) would, if

-9-



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consummated in accordance with its terms be more
favourable to the Shareholders from a financial point of view
than the Arrangement.


Tax Actmeans the Income Tax Act(Canada).

Termination Paymentmeans the payment in the amount of
C$27.4 million payable by Masonite to Stile in certain
circumstances pursuant to the Combination Agreement.

Transfer Agentmeans Computershare Trust Company of
Canada.

INFORMATION CONTAINED IN THIS
CIRCULAR

All information relating to Stile, Stile Holding,
KKR and any other Affiliates of KKR contained in this Circular
has been provided to Masonite by KKR. The Board has relied upon
this information without having made independent inquiries as to
the accuracy or completeness thereof; however, it has no reason
to believe such information is misleading or inaccurate. Neither
the Board nor Masonite assumes any responsibility for the
accuracy or completeness of such information, nor for any
omission on the part of KKR to disclose facts or events which
may affect the accuracy or completeness of any such information.

The information contained in this Circular is
given as at January 17, 2005, except where otherwise noted.
No person has been authorized to give any information or to make
representations in connection with the Arrangement other than
those contained in this Circular and, if given or made, any such
information or representation should be considered not to have
been authorized by Masonite or Stile. This Circular does not
constitute the solicitation of an offer to acquire any
securities or the solicitation of a proxy, by any person in any
jurisdiction in which such solicitation is not authorized or in
which the person making such solicitation is not qualified to do
so or to any person to whom it is unlawful to make such
solicitation.

NOTICE TO UNITED STATES SHAREHOLDERS

The solicitation of proxies and the transactions
contemplated herein involve securities of a Canadian issuer and
are being effected in accordance with Canadian corporate and
securities laws. The proxy rules under the United States
Securities Exchange Act of 1934, as amended, are not applicable
to the Company or this solicitation and therefore this
solicitation is not being effected in accordance with such
securities laws. Shareholders should be aware that disclosure
requirements under Canadian laws may be different from such
requirements under United States securities laws. In connection
with the Arrangement, the Company, Stile, Stile Holding and the
Executive Signatories will file with the United States
Securities and Exchange Commission (the SEC) a
transaction statement under Section 13(e) of the United
States Securities Exchange Act of 1934, as amended, and
Rule 13e-3 thereunder.

Certain of the financial information included or
incorporated by reference herein has been prepared in accordance
with Canadian generally accepted accounting principles, which
differ from United States generally accepted accounting
principles in certain material respects, and thus may not be
comparable to financial information of United States companies.

Enforcement by Shareholders of civil liabilities
under the United States federal securities laws may be affected
adversely by the fact that Masonite and Stile are organized
under the laws of a jurisdiction other than the United States,
that some of their respective officers and directors are
residents of countries other than the United States, that
experts named in this Circular are residents of countries other
than the United States and that all or a substantial portion of
the assets of Masonite and Stile and such persons may be located
outside the United States.

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INFORMATION CONCERNING THE MEETING AND
VOTING



|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Q: | What am I voting on?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|A: | Shareholders are voting on the Arrangement
    Resolution (the full text of which is set forth on
    Appendix A to the Circular) approving the Arrangement
    which, among other things, will result in the acquisition by
    Stile of all of the outstanding Common Shares.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|Q: | Who is entitled to vote?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|A: | Shareholders as of the close of business on
    January 17, 2005 are entitled to vote. If you acquired your
    Common Shares after January 17, 2005, please refer to the
    answer to the question What if ownership of shares has
    been transferred after January 17, 2005? on page 12
    to determine how you may vote such Common Shares.                                                                                                                                                                                                                                                                                                                                                                  
|  
|Q: | How do I vote?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|A: | There are two ways that you can vote your Common
    Shares if you are a registered Shareholder. You may vote in
    person at the Meeting or you may vote by mail, telephone or the
    internet in accordance with the instructions contained in the
    enclosed form of proxy. The persons named in the proxy or some
    other person you choose, who need not be a Shareholder, may be
    appointed by you to represent you as proxyholder and vote your
    Common Shares at the Meeting. If your Common Shares are held in
    the name of an intermediary, please see the box on page 13 for
    voting instructions and the information under Additional
    Information for Non-Registered Shareholders.
|  
|Q: | What if I plan to attend the Meeting and vote
    in person?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|A: | If you are a registered Shareholder and plan to
    attend the Meeting on February 18, 2005 and wish to vote
    your Common Shares in person at the Meeting, do not vote in
    accordance with the procedures outlined in the form of proxy.
    Your vote will be taken and counted at the Meeting. Please
    register with the Transfer Agent upon arrival at the Meeting. If
    your Common Shares are held in the name of a nominee, please see
    the box on page 13 and the information under Additional
    Information for Non-Registered Shareholders for voting
    instructions.                                                                                                                    
|  
|Q: | Who is soliciting my proxy?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|A: | The enclosed form of proxy is being solicited
    by management of Masoniteand the
    associated costs will be borne by Masonite. The solicitation
    will be made primarily by mail but may also be made by
    telephone, in writing or in person by employees of Masonite
    and/or the Transfer Agent.                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|Q: | What if I sign the form of proxy enclosed with
    this Circular?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|A: | Signing the enclosed form of proxy gives
    authority to Peter Crossgrove or Howard Beck, each of whom is a
    director of Masonite, or to another person you have appointed,
    to vote your Common Shares at the Meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|Q: | Can I appoint someone other than these
    directors to vote my Common Shares?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|A: | Yes. Write the name of this person, who need
    not be a Shareholder, in the blank space provided in the form of
    proxy.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | It is important to ensure that any other person
    you appoint is attending the Meeting and is aware that he or she
    has been appointed to vote your Common Shares. Proxyholders
    should, upon arrival at the Meeting, present themselves to a
    representative of the Transfer Agent.

-11-



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##### 





|   |                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|Q: | What do I do with my completed proxy if I am
    voting by mail?                                                                                                
|  
|A: | Return it to the Transfer Agent so that it
    arrives not later than 5:00 p.m. (Toronto time) on
    February 17, 2005. This will ensure your vote is recorded.



|   |                                                                      
|-- | ---------------------------------------------------------------------
|Q. | When are proxies due if I am voting by
    telephone or the internet?



|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|A: | These proxies are due at the same time as those
    that are sent by fax or by mail, namely by 5:00 p.m. (Toronto
    time) on February 17, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|Q: | If I change my mind, can I take back my proxy
    once I have given it?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|A: | Yes. If you change your mind and wish to revoke
    your proxy, prepare a written statement to this effect. The
    statement must be signed by you or your attorney as authorized
    in writing or, if the Shareholder is a corporation, by an
    officer or attorney of the corporation duly authorized. This
    statement must be delivered either to the head office of
    Masonite no later than 5:00 p.m. (Toronto time) on
    February 17, 2005 or to the Chairman on the day of the
    Meeting, February 18, 2005, or any adjournment of the
    Meeting.
|  
|Q: | How will my Common Shares be voted if I give
    my proxy?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|A: | The persons named on the form of proxy must vote
    your Common Shares for or against the Arrangement Resolution, or
    abstain from voting your Common Shares, in accordance with your
    directions. In the absence of such directions, however, your
    Common Shares will be voted IN FAVOUR OFthe Arrangement
    Resolution.                                                                                                                                                                                                                                 
|  
|Q: | What if amendments are made to these matters
    or if other matters are brought before the Meeting?                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|A: | The person named in the form of proxy will have
    discretionary authority with respect to amendments or variations
    to matters identified in the Notice of Special Meeting of
    Shareholders and with respect to other matters that may properly
    come before the Meeting.                                                                                                                                                                                                                                                                                   



| |                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As at the time of printing this Circular,
    management of Masonite knows of no such amendment, variation or
    other matter expected to come before the Meeting. If any other
    matters properly come before the Meeting, the persons named in
    the form of proxy will vote on them in accordance with their
    best judgment.



|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Q: | How many Common Shares are entitled to
    vote?                                                                                                                                                                                                                                                                                                                                                                                        
|  
|A: | As of January 17, 2005, there were
    outstanding 54,796,531 Common Shares of Masonite. Each
    Shareholder has one vote for each Common Share held at the close
    of business on January 17, 2005. To the knowledge of the
    directors and management of Masonite, no one person owns or
    exercises control or direction over more than 10% of the
    outstanding Common Shares of Masonite.                                 
|  
|Q: | What if ownership of Common Shares has been
    transferred after January 17, 2005?                                                                                                                                                                                                                                                                                                                                                     
|  
|A: | The person who acquired such Common Shares after
    January 17, 2005 must produce properly endorsed share
    certificates or otherwise establish that he or she owns the
    Common Shares and must ask Masonite no later than 5:00 p.m.
    (Toronto time) on February 8, 2005 that their name be
    included in the list of Shareholders before the Meeting in order
    to be entitled to vote these Common Shares at the Meeting.
|  
|Q: | Who counts the votes?                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|A: | The Transfer Agent counts and tabulates the
    proxies. This is done independently of Masonite to preserve the
    confidentiality of individual Shareholder votes. Proxies are
    referred to Masonite only in cases where a Shareholder clearly
    intends to communicate with management or when it is necessary
    to do so to meet the requirements of applicable law.                                                         

-12-



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##### 





|   |                                                                  
|-- | -----------------------------------------------------------------
|Q: | If I need to contact the Transfer Agent, how
    do I reach them?

|   |  |                                                |  |                                                           
|-- |  | ---------------------------------------------- |  | ----------------------------------------------------------
|A: |  | You can contact the Transfer Agent by mail at: |  | or by telephone:                                          
|   |  | Computershare Trust Company of Canada          |  | -within Canada and the United States at
    1-800-564-6253
|   |  | 100 University Avenue                          |  | -all other countries at 1-514-982-7555                    
|   |  | Toronto, Ontario                               |  |                                                           
|   |  | M5J 2Y1                                        |  |                                                           



Q:
    If my Common Shares are not registered in my
    name but are held in the name of an intermediary (a bank, trust
    company, securities broker, trustee or other), how do I vote my
    Common Shares?A.
    Common Shares held through intermediaries by
    Shareholders who have not received the Meeting materials
    directly from the Company or the Transfer Agent can only be
    voted for or against the matters to be considered at the Meeting
    by following instructions received from the intermediary through
    which those Common Shares are held. Without specific
    instructions from the beneficial holder, intermediaries are
    required not to vote the Common Shares held by them. The
    directors and officers of Masonite do not know for whose benefit
    the Common Shares registered in the name of intermediaries are
    held unless the beneficial holder has consented to the
    disclosure of such information to Masonite. See
     Additional Information for Non-Registered
    Shareholders below.  Applicable securities laws require intermediaries
    to forward meeting materials and seek voting instructions from
    beneficial holders of Common Shares in advance of the Meeting.
    Intermediaries typically have their own mailing procedures and
    provide their own return instructions, which should be carefully
    followed by beneficial holders in order to ensure that their
    Common Shares are voted at the Meeting. Typically,
    intermediaries will use service companies to forward the meeting
    materials and voting instructions to beneficial holders.
    Beneficial holders who receive meeting materials from an
    intermediary will generally either be provided with:  (i)
    a form of proxy which has already been signed by
    the intermediary (typically by facsimile stamped signature),
    which is restricted as to the number of securities beneficially
    owned by the beneficial holder, but which is otherwise not
    completed by the intermediary. In this case, the beneficial
    holder who wishes to submit a proxy in respect of beneficially
    owned Common Shares should properly complete the remainder of
    this form of proxy and follow the instructions from the
    intermediary as to delivery; or  (ii)
    more typically, a voting instruction form, which
    must be completed, signed and delivered by the beneficial holder
    (or, if applicable, such other means as set out in the form) in
    accordance with the directions on the voting instruction form.  The purpose of these procedures is to permit
    beneficial holders to direct the voting of the Common Shares
    they beneficially own. If you are a beneficial holder who
    receives either a form of proxy or voting instruction form from
    an intermediary and you wish to attend and vote at the Meeting
    in person (or have another individual attend and vote in person
    on your behalf), you should strike out the names of the
    individuals named in the form of proxy and insert your name (or
    such other persons name) in the blank space provided or,
    in the case of a voting instruction form, contact the
    intermediary. A beneficial holder should carefully follow the
    instructions of his or her intermediary and/or his or her
    intermediarys service company.


-13-



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##### 



Additional Information for Non-Registered
Shareholders

The Circular and accompanying materials are being
sent to both registered and beneficial owners of Common Shares.
There are two kinds of beneficial holders of Common Shares
 those who object to their name being made known to the
Company (called OBOs or Objecting Beneficial Owners) and those
who do not object to the Company knowing who they are (called
NOBOs or Non-Objecting Beneficial Owners). Beginning on
September 1, 2002, provided the Company complied with the
applicable provisions of Canadian securities legislation, the
Company could request and obtain a list of its NOBOs from
intermediaries via the Transfer Agent. However the list of NOBOs
could not be used for the distribution of proxy-related
materials directly to NOBOs prior to September 1, 2004.
Masonite has decided to take advantage of those provisions of
securities legislation that permit it to directly deliver the
Meeting materials to its NOBOs. If you are a non-registered
Shareholder and Masonite or its agent has sent these materials
directly to you, your name and address and information about
your holdings of Common Shares have been obtained in accordance
with applicable securities legislation from the intermediary
holding the Common Shares on your behalf.

By choosing to send these materials to you
directly, Masonite has assumed responsibility for
(i) delivering these materials to you, and
(ii) executing your proper voting instructions. As a
result, if you are a NOBO, you can expect to receive a scannable
Voting Instruction Form (VIF) from the Transfer
Agent, or one of its affiliates. These VIFs are to be completed
and returned to the Transfer Agent in the envelope provided or
by facsimile. In addition, the Transfer Agent provides both
telephone and internet voting as described in the VIF itself
which contains complete instructions. The Transfer Agent will
tabulate the results of the VIFs received from NOBOs and will
provide appropriate instructions at the Meeting with respect to
the Common Shares represented by the VIFs they receive.

-14-



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##### 



BACKGROUND TO AND FAIRNESS OF THE
ARRANGEMENT

History of Discussions Between Masonite and
KKR

In early October 2003 at a meeting between
representatives of KKR and Scotia Capital Inc., representatives
of KKR inquired as to whether Scotia Capital had a relationship
with Masonite and could arrange a meeting with Philip Orsino,
the President and Chief Executive Officer of Masonite. The
representatives also discussed the possibility of a transaction
between KKR, Masonite and another building products company.
Later that month, at a meeting at Scotia Capital held for an
unrelated purpose, a Scotia Capital representative mentioned to
Mr. Orsino the possibility that KKR might be interested in
participating in a transaction involving Masonite and another
building products company. The Scotia Capital
representative asked Mr. Orsino whether he would be willing
to meet with representatives of KKR to explore such an idea.
Mr. Orsino indicated that he would be prepared to meet
with KKR.

In November 2003 Mr. Orsino met with Paul
Raether, Scott Nuttall and Tagar Olson of KKR and presented a
brief description of Masonite, its history and strategy. These
discussions were continued in December 2003, during which time
KKR indicated to senior members of Masonite management
KKRs willingness to pursue a number of possible
transactions, including a transaction involving KKR, the Company
and another building products company. At Masonites
request, KKR executed a confidentiality and standstill agreement
at this time. Also during this period, KKR presented materials
regarding its history and strategy in making leveraged
acquisitions. Over the next several weeks, Mr. Orsino
informally advised certain members of the Masonite Board of his
having met with KKR.

At a meeting of the Masonite Board on
February 10, 2004, Mr. Orsino advised the full Board
of the discussions with KKR, at which time the Board authorized
Mr. Orsino to continue the discussions. In late February 2004
KKR representatives visited Masonites Laurel, Mississippi
facility and met there with a number of senior members of
Masonites management. By this time, the parties were no
longer contemplating a transaction involving the other building
products company. In March 2004 KKR presented to Masonite
management illustrative materials for a transaction solely with
respect to Masonite, as well as a description of customary terms
for management investment in a transaction of this type.

The status of discussions with KKR was reviewed
at Masonite Board meetings on March 16 and March 23,
2004. At the former meeting, Mr. Orsino reported that,
based on these discussions, he had doubts about the feasibility
of a transaction with KKR. The Board authorized Mr. Orsino
to terminate discussions with KKR. Mr. Orsino reported at
the March 23 Board meeting that discussions had been
terminated.

There were no further discussions with KKR until
July 2004, when KKR representatives approached Mr. Orsino
and suggested re-opening discussions regarding a possible
transaction. At this time, KKR communicated a preliminary
valuation indication of C$40.00 to C$42.00 per Common Share
(US$30.26 to US$31.77 based on the average exchange rate for
July 2004 of US$1.00 = C$1.3219).

At a Masonite Board meeting held on
August 30, 2004, Mr. Orsino reported that KKR had made
a renewed request to undertake discussions regarding a potential
acquisition of Masonite and that, based on discussions with KKR,
he now felt that a transaction attractive to Shareholders might
be achievable. At this meeting, the Board authorized management
to make available to KKR certain financial information.

In September 2004, John Ambruz, Executive
Vice-President, Strategic Development of Masonite, explored in
meetings and telephone conversations with representatives of KKR
the structure of a potential leveraged buy out transaction,
including desirable levels of leverage, the amount of equity
that would be required, possible covenants under any debt
facilities that would be used in the acquisition, the potential
for strategic growth of the Company following such a
transaction, the requirement for investment by management and
illustrative terms for such investment.

On October 4, 2004, representatives of
Scotia Capital, members of Masonites senior management and
KKR representatives met at Masonites research facility in
West Chicago, Illinois for discussions of a due
diligence nature. At this time, certain additional
financial information, including five-year financial models,
were reviewed with KKR. The models consisted of two scenarios
designed to show the effects of certain hypothetical assumptions
regarding annual sales growth and cost savings and did not take
into account other relevant factors relating to the
Companys future business and prospects. Accordingly, these
models did not reflect managements view of the most likely
outcomes as to the Companys future financial performance.
The Company does not typically prepare five year financial
projections and these models were prepared and provided to KKR
solely to assist their analysis of the Company. See
 Masonites Financial Models and
Projections.

At a Masonite Board meeting held on
October 20, 2004, management presented to the Board the two
five-year financial models that had been provided to KKR,
together with a third model based on different assumptions.
Following a review of these models, the Board

-15-



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##### 



instructed management to prepare financial
projections to include assumptions relating to future
acquisition scenarios by the Company and other assumptions,
including the effects of the housing cycle, materials costs and
currency fluctuations. Mr. Orsino indicated that KKR
continued to discuss a preliminary valuation indication, subject
to further due diligence, for the Companys shares in the
range of C$40.00 to C$42.00 (US$31.85 to US$33.44 based upon the
prevailing exchange rate of US$1.00 = C$1.2560).
Mr. Orsino and other invited members of management then
left the meeting and the Board continued its deliberations. The
Board invited Mr. Orsino to rejoin the meeting and
authorized him to continue discussions with KKR and to provide
additional due diligence information.


At a Board meeting held on November 24,
2004, Mr. Orsino reported that KKR was still engaged in due
diligence but that, because of a significant decline in the
value of the US dollar as compared with the Canadian dollar
since the summer, KKR was proposing a value of C$39.00
(equivalent to US$32.94 based on the prevailing exchange rate)
per Common Share. Mr. Orsino indicated to the Board that he
had told KKR that he was quite certain that the Board would not
accept a price below C$40.00 per Common Share. When asked by the
Board if in his view KKR would be likely to increase its price,
Mr. Orsino responded that in his view KKR may be willing to
raise its price provided it becomes satisfied with the results
of its due diligence and subject to negotiating an acceptable
combination agreement. Mr. Orsino also reported to the
Board that, as a condition of any possible transaction, KKR
would require management to remain in place and to invest in
approximately 5% of the equity of the acquisition vehicle at the
same price per share as the KKR investment funds would pay.
Mr. Orsino reported on the possible terms for such
management investment that had been outlined by KKR, including
the provision of stock options subject to vesting over five
years and achieving performance milestones. Mr. Orsino
explained that it was his understanding that these terms were
typical in leveraged buyouts generally and for KKR-sponsored
leveraged buyouts in particular.

As the Board believed that there was now a real
possibility of a transaction being entered into that would
include management investment in the resulting company, the
Board appointed the Special Committee, consisting of
Messrs. Peter Crossgrove (Chair), Howard Beck, John
Cassaday and Alan McFarland. The mandate of the Special
Committee was to consider the current proposal from KKR, to
review the alternatives available to the Company, to conduct any
negotiations with respect to a transaction involving KKR or any
similar transaction, to conclude any agreements with respect to
such a transaction, or to supervise management in the carrying
out of any of the foregoing activities, and to consider whether
any transaction would be fair to the Shareholders of Masonite
and in the best interests of Masonite.

The Special Committee met for the first time on
November 24, 2004 to discuss organizational matters,
including retaining independent counsel and a financial advisor,
and their legal obligations. The Special Committee met again on
November 26, 2004, and determined that the Chair would
approach independent counsel and that Mr. Beck would
approach a potential independent financial advisor. The members
of the Special Committee also discussed the information that the
Committee would require and the legal matters that might arise
during the course of considering a potential transaction. The
Chair of the Special Committee retained William K. Orr (then of
Heenan Blaikie LLP and now of Fasken Martineau DuMoulin LLP) to
act as counsel to the Special Committee.

The Special Committee met twice on
November 29, 2004 to discuss terms of engagement of a
financial advisor. On December 1, 2004 the Special
Committee met to review the proposal put forward by Merrill
Lynch and determined to engage Merrill Lynch to be its financial
advisor. The Special Committee met again on December 2,
2004 with representatives of Merrill Lynch to discuss the role
of Merrill Lynch as financial advisor to the Special Committee
and with their counsel to review the Special Committees
legal obligations.

During the course of its meetings, the Special
Committee considered whether it was appropriate to accept a
transaction proposal from KKR without having first solicited
other offers for the Company, or auctioning the
Company as such a procedure is commonly referred to. The Special
Committee considered the risk to both the Company and a possible
transaction with KKR from a pre-announcement auction process.
The Special Committee considered the potentially disruptive
effects on the Companys relationships with its customers
and suppliers, as well as on the Companys employees and
operations, from a publicly disclosed auction process. The
Special Committee also considered that a process of selective
contacts on a confidential basis would also pose risk of leaks
and therefore have similar disruptive effects. At the same time,
the Special Committee believed that there would be very few, if
any, industry buyers for the Company likely to emerge both
because of the large size of any such transaction and because
industry buyers of sufficient size would be likely to encounter
antitrust issues that would be impediments to completing a
transaction. The Special Committee also noted the advice that it
had previously received from the Companys management that
since the merger of Premdor Inc. and Century Wood Door
Limited in 1989 the Company had never been approached with a
proposal to be acquired, notwithstanding the absence of a
controlling shareholder. For all these reasons, instead of
conducting an auction, the Special Committee decided to
negotiate with KKR and focus considerable attention in such
negotiations on ensuring that the terms of any agreement with
KKR would give an opportunity for other potential acquirors and
competing offers to surface post-agreement through the
mechanisms of a fiduciary out and a low termination
payment.

-16-



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##### 



Also during the course of its meetings, the
Special Committee considered that it was unlikely that the
Company could practicably be converted to a Canadian income
trust and therefore did not give substantial weight to Canadian
income trust valuation models.

The Special Committee met on December 7,
2004 to receive an update on the status of discussions with KKR
and to discuss with Merrill Lynch representatives the financial
analysis work that it had undertaken to date. The Special
Committee adjourned while the Board met to discuss the financial
outlook for Masonite and subsequently reconvened to discuss the
financial outlook for Masonite with Merrill Lynch. Certain
members of the Special Committee met with senior management and
representatives of Merrill Lynch following the Special Committee
meeting.

The Board met on December 9, 2004 at the
request of the Special Committee to review the financial models
and projections that management had made available to Merrill
Lynch. These consisted of the three models that had been
reviewed by management with the Board on October 20, 2004
and the two projections that management had prepared following
the Boards instructions in October. The Board at the
December 9, 2004 meeting concurred with managements
view that the projection that was referred to as
Case No. 4 reflected the most realistic
assumptions regarding the future financial performance
of Masonite. See  Masonites
Financial Models and Projections.

On December 14, 2004 the Special Committee
met again with representatives of Merrill Lynch and had
extensive discussions with them about their preliminary analysis
of the transaction. The Special Committee designated
Messrs. Crossgrove and McFarland to meet with
representatives of KKR to ascertain what offer KKR was prepared
to make and report back to the Special Committee.
Messrs. Crossgrove and McFarland met with KKR
representatives in New York City on December 15, 2004. At
that meeting KKR proposed a price per Common Share of US$32.25
and a termination payment of US$1.00 per Common Share
(equivalent to C$39.44 and C$1.2230, respectively, based on the
prevailing exchange rate).

The Board met on December 15, 2004 to hear a
report of the meeting that Messrs. Crossgrove and McFarland had
with KKR, to be updated with respect to the work performed by
Merrill Lynch and to deliberate with respect to the potential
transaction. Following that meeting, Messrs. Crossgrove and
McFarland communicated with KKR representatives by telephone and
indicated to them that their price needed to be improved, the
termination payment was too high and that the price had to be
denominated in Canadian dollars. The Board met on
December 16, 2004 and held lengthy discussions concerning
the negotiations that had taken place with KKR with respect to
the proposed transaction and the price and terms of a
transaction. After this discussion, the Board asked Mr Orsino
and the Companys advisors to leave the meeting, and the
remaining directors met separately with the Special
Committees legal advisors. It was determined that
Messrs. Crossgrove and McFarland should communicate with
KKR and indicate that the Board would entertain a price of
C$43.50. The Board met on December 17, 2004 to receive a
report from Messrs. Crossgrove and McFarland with respect
to their discussions earlier that day with KKR. They reported
that they had advised KKR that the Board would entertain a price
of C$43.50 and a termination payment of not more than C$0.50 per
Common Share. They further reported that KKRs response was
that C$43.50 was unacceptable. The Board instructed
Messrs. Crossgrove and McFarland to ask for KKRs best
and final offer.

Messrs. Crossgrove and McFarland spoke again
late that night with representatives of KKR and on
December 18, 2004 reported back to a group of Board members
that KKR had responded that KKR would pay C$40.00 per Common
Share and no more, but that KKR would accept a termination
payment of C$0.50 per Common Share. Detailed discussions among
the Board members ensued concerning the terms of the proposed
transaction. In these discussions the Board members present
informally reached a consensus that a price per Common Share of
C$40.00 was supportable in principle, based in part on the
discussions that had already taken place with Merrill Lynch
regarding its preliminary analysis and assuming that all other
terms of the transaction were resolved satisfactorily.
Accordingly, it was deemed appropriate for detailed negotiations
with respect to the Combination Agreement to continue. On
December 19, 2004 Messrs. Crossgrove and McFarland met
with the legal and financial advisors to the Special Committee
primarily for an update from Merrill Lynch with respect to its
ongoing analysis of the potential transaction.

On December 20, 2004 the Board met to
receive an update with respect to the revised draft Combination
Agreement that had been received on the weekend and with respect
to the negotiations that had been carried out throughout the day
with respect thereto. The Special Committee met early in the
morning on December 21, 2004 to consider the status of the
documentation of and other legal matters relating to the
proposed transaction and to receive an update from Merrill Lynch
with respect to its financial analysis of the proposed
transaction. The Special Committee met again on
December 21, 2004 to review the status of the proposed
transaction including price, size of the termination payment and
financing. The Special Committee also reviewed all
open issues.

On the morning of December 22, 2004 after
discussions with certain members of the Special Committee,
Messrs. Crossgrove and Orsino approached KKR to seek an
increase in the proposed purchase price. After further
negotiations, KKR increased its offer to C$40.20 per Common
Share and indicated it was their final offer. Later the same
day, the Special Committee met to consider the terms of the
transaction as discussed with KKR. Merrill Lynch provided its
report to the Special Committee and concluded by delivering to
the Special Committee its oral opinion, subsequently confirmed
in writing as of the same date, that, as of that date, and based
upon and

-17-



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##### 



subject to the various factors, assumptions and
limitations set forth in the Merrill Opinion, the consideration
to be received by the Shareholders pursuant to the transaction
is fair, from a financial point of view, to the Shareholders.
Based upon all relevant factors they considered material,
including the opinion of Merrill Lynch, the Special Committee
concluded that the transaction is fair to Shareholders and in
the best interests of Masonite and determined unanimously to
recommend to the Board that the Board approve the transaction
and that the Board recommend that Shareholders vote in favour of
the Arrangement Resolution.


The Board met on December 22, 2004
immediately following the meeting of the Special Committee to
receive a summary of the Combination Agreement, an update on the
price to be offered under the Arrangement and the recommendation
of the Special Committee described above. After careful
consideration of the Special Committees conclusions, the
opinion of Merrill Lynch as to the fairness, from a financial
point of view, of the consideration to be received by the
Shareholders pursuant to the Arrangement, the advice of legal
counsel to the Board and the Special Committee and the other
factors considered by the Special Committee, the members of the
Board present and voting at the Board meeting concurred with the
recommendations of the Special Committee and concluded that the
transaction was fair to the Shareholders and in the best
interests of Masonite and the Shareholders and resolved to
recommend that Shareholders vote in favour of the Arrangement
Resolution. At such meeting, Philip Orsino, the President and
Chief Executive Officer of Masonite, declared his interest with
respect to the Arrangement and abstained from voting. The
Board unanimously recommends that the Shareholders vote in
favour of the Arrangement Resolution.

After the close of markets on December 22,
2004, the Combination Agreement was signed and a press release
was issued.

Position of the Board and the Special
Committee as to Fairness

In reaching its conclusion that the Arrangement
is substantively fair to the Shareholders, and that the
Arrangement is in the best interests of Masonite, the Special
Committee considered and relied upon a number of factors
including the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | their understanding of the Company and its
    industry and their assessment of the future prospects of the
    Company, including the sustainability of historical growth rates
    given the consolidation in the Companys major North
    American and Western European markets, higher input costs, a
    cyclical stabilization or slowdown in the housing industry and
    the higher business and execution risks associated with the
    Companys growth in emerging markets. See Reasons for
    the Arrangement  From Masonites
    Perspective;                                                                                                     
|
| |  | the Merrill Opinion to the effect that, as of the
    date of the Merrill Opinion, and based upon and subject to the
    various factors, assumptions and limitations set forth therein,
    the C$40.20 per Common Share consideration to be received by the
    Shareholders pursuant to the Arrangement is fair, from a
    financial point of view, to the Shareholders;                                                                                                                                                                                                                                                                                         
|
| |  | the consideration payable under the Arrangement
    represents a 21.25% premium over the volume weighted-average
    trading price for the Common Shares on the TSX for the 60
    trading days ended December 21, 2004 and a 15.68% premium
    over the closing price per Common Share on the TSX on
    December 21, 2004, the last trading day before the
    Arrangement was publicly announced. It also exceeds the highest
    price at which the Common Shares traded on the TSX prior to the
    date of the announcement of the transaction and represents a
    premium of 33.81% over the 52 week intraday low price of
    the Common Shares on the TSX;
|
| |  | the consideration payable under the Arrangement
    is 26% higher than the highest purchase price the Company paid
    in purchases of Common Shares, as described under
    Purchases and Sales of Common Shares;                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | the consideration pursuant to the Arrangement
    will be paid entirely in cash which provides certainty of
    value; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | the track record of KKR for success in completing
    similar transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

The Special Committee believes the Arrangement is
procedurally fair to the Shareholders because:



| |   |                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Special Committee settled with KKR the key
    terms of the Combination Agreement and oversaw the negotiation
    of the other terms of the Combination Agreement and the
    Arrangement;                                                                                                                                                                     
|
| |  | the Special Committee retained independent
    financial and legal advisors;                                                                                                                                                                                                                                                                                       
|
| |  | the Arrangement Resolution will be subject to the
    approval of at least (i) two-thirds of the votes cast by
    Shareholders present in person or by proxy at the Meeting and
    (ii) a majority of the votes cast by Shareholders present
    in person or by proxy at the Meeting, excluding votes in respect
    of Common Shares held by Senior Management;
|
| |  | completion of the Arrangement will be subject to
    a determination as to its fairness by the Court;                                                                                                                                                                                                                                                              

-18-



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##### 





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | registered Shareholders who do not vote in favour
    of the Arrangement will have the right to require a judicial
    appraisal of their Common Shares and obtain fair
    value pursuant to the exercise of the Dissent Rights; and                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | the Combination Agreement provides Masonite with
    the ability to consider other Acquisition Proposals and to
    terminate the Combination Agreement in order to recommend,
    approve or accept a Superior Proposal that would result in a
    transaction more favourable to Shareholders than the terms under
    the Arrangement, subject to certain conditions including the
    payment of the Termination Payment (which in the view of the
    members of the Special Committee is low at 1.25% of the equity
    value of the transaction or C$0.50 per Common Share and unlikely
    to deter a serious competing bidder from coming forward).

The Special Committee did not consider the
liquidation value of Masonites assets in evaluating the
fairness of the consideration to be received pursuant to the
Arrangement because the Special Committee considers Masonite to
be a viable going concern and views the trading history of
Masonites Common Shares as an indication of its value as
such. The Special Committee believes that the liquidation value
would be significantly lower than Masonites value as a
viable going concern and that, due to the fact that the Company
is being sold as a going concern, the liquidation value of the
Company is irrelevant to a determination as to whether the
Arrangement is fair to the Shareholders. The Special Committee
considered that the transaction price represented a multiple of
2.2 times Masonites reported book value per Common
Share as at September 30, 2004.

In adopting the Special Committees
recommendations and concluding that the Arrangement is
substantively and procedurally fair to the Shareholders and that
the Arrangement is in the best interests of the Company, the
Board considered and relied upon the same factors and
considerations that the Special Committee relied upon, as
described above.

The foregoing discussion of the information and
factors considered and given weight by the Special Committee and
the Board is not intended to be exhaustive but is believed to
include all material factors considered by the Special Committee
and the Board. In addition, in reaching the determination to
approve and recommend the Arrangement, neither the Special
Committee nor the Board assigned any relative or specific
weights to the foregoing factors which were considered, and
individual directors may have given different weights to
different factors. The Special Committee is, however, unanimous
in its recommendation that the Board approve the Arrangement and
the Board is unanimous in its recommendation that the
Shareholders vote in favour of the Arrangement Resolution.

In their consideration of the fairness of the
consideration to be received pursuant to the Arrangement, each
of the Board, the Special Committee and Merrill Lynch referred
to the fairness of the consideration, from a financial point of
view, to all Shareholders of the Company, which includes, in
addition to unaffiliated Shareholders, the Executive
Signatories, and did not find it necessary to remove the
Executive Signatories from the subject of their consideration.

To the knowledge of Masonite, after reasonable
inquiry, there are no prior valuations (within the
meaning of that term under applicable securities laws) of
Masonite or any of its material assets or securities which were
prepared by or for Masonite within the 24 months preceding
the date hereof.

Opinion of Merrill Lynch

The Special Committee retained Merrill Lynch to
act as its financial advisor with respect to the Arrangement. As
part of the engagement, the Special Committee requested that
Merrill Lynch evaluate the fairness, from a financial point of
view, of the consideration to be received by the Shareholders
pursuant to the Arrangement. On December 22, 2004, Merrill
Lynch delivered its oral opinion to the Special Committee,
subsequently confirmed in writing as of the same date, that, as
of that date, and based upon and subject to the various factors,
assumptions and limitations set forth in the Merrill Opinion,
the consideration to be received by the Shareholders pursuant to
the Arrangement is fair, from a financial point of view, to the
Shareholders.

The full text of the Merrill Opinion, which sets
forth the assumptions made, procedures followed, matters
considered and qualifications and limitations on the scope of
the review undertaken by Merrill Lynch in rendering its opinion,
is attached as Appendix F to the Circular and is
incorporated herein by reference. The following summary of the
Merrill Opinion does not purport to be a complete description of
the analyses performed or the analyses underlying the Merrill
Opinion and is qualified in its entirety by reference to the
full text of the opinion. The Shareholders are urged to read the
Merrill Opinion in its entirety. The Merrill Opinion was
provided for the use and benefit of the Special Committee and
the Board and was directed only to the fairness, from a
financial point of view, of the consideration to be received by
the Shareholders pursuant to the Arrangement. The Merrill
Opinion does not address the merits of the underlying decision
by Masonite to enter into the Combination Agreement or the
Arrangement and does not constitute, nor should it be construed
as, a recommendation to any Shareholder as to how such
Shareholder should vote on the Arrangement Resolution or any
related matter. The consideration to be received by the
Shareholders pursuant to the Arrangement was determined through
negotiations between Masonite and KKR and was approved by the
Board.

-19-



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##### 



In arriving at its opinion, Merrill Lynch, among
other things:



| |   |                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reviewed certain publicly available business and
    financial information relating to Masonite that Merrill Lynch
    deemed to be relevant;                                                                                       
|
| |  | reviewed certain information, including financial
    projections, relating to the business, earnings, cash flow,
    assets, liabilities and prospects of Masonite furnished to
    Merrill Lynch by Masonite;                     
|
| |  | conducted discussions with members of senior
    management and representatives of Masonite concerning the
    matters described in the preceding two clauses;                                                                      
|
| |  | reviewed the market prices and valuation
    multiples for the Common Shares and compared them with those of
    certain publicly traded companies that Merrill Lynch deemed to
    be relevant;                                    
|
| |  | reviewed the results of operations of Masonite
    and compared them with those of certain publicly traded
    companies that Merrill Lynch deemed to be relevant;                                                                  
|
| |  | compared the proposed financial terms of the
    Arrangement with the financial terms of certain other
    transactions that Merrill Lynch deemed to be relevant;                                                                   
|
| |  | participated in certain discussions with
    representatives of the Special Committee with regard to the
    Arrangement;                                                                                                           
|
| |  | reviewed a draft dated December 22, 2004 of
    the Combination Agreement; and                                                                                                                                                      
|
| |  | reviewed such other financial studies and
    analyses and took into account such other matters as Merrill
    Lynch deemed necessary, including Merrill Lynchs
    assessment of general economic, market and monetary conditions.

In preparing its opinion, Merrill Lynch assumed
and relied on the accuracy and completeness of all information
supplied or otherwise made available to it, discussed with or
reviewed by or for it, or publicly available, and Merrill Lynch
did not assume any responsibility for independently verifying
that information or undertake an independent evaluation or
appraisal of any of the assets or liabilities of Masonite, was
not furnished with any such evaluation or appraisal, nor did it
evaluate the solvency or fair value of Masonite under any state
or federal laws relating to bankruptcy, insolvency or similar
matters. In addition, Merrill Lynch did not assume any
obligation to conduct, nor did it conduct, any physical
inspection of Masonites properties or facilities. With
respect to the financial forecast information furnished to or
discussed with Merrill Lynch by Masonite, Merrill Lynch assumed
that it had been reasonably prepared and reflected the best then
available estimates and judgment of Masonites management
as to the expected future financial performance of Masonite.
Merrill Lynch also assumed that the final form of the
Combination Agreement would be substantially similar to the last
draft reviewed by Merrill Lynch.

The Merrill Opinion was necessarily based upon
market, economic and other conditions as they existed and could
be evaluated on, and on the information made available to
Merrill Lynch as of, the date of the Merrill Opinion.

In connection with the preparation of its
opinion, Merrill Lynch did not solicit third-party indications
of interest for the acquisition of all or any part of Masonite.

The following is a summary of the material
financial and comparative analyses performed by Merrill Lynch in
arriving at its opinion. Some of the summaries of financial
analyses include information presented in tables. In order to
fully understand the financial analyses performed by Merrill
Lynch, the tables must be read together with the accompanying
text of each summary. The tables alone do not constitute a
complete description of the financial analyses, including the
methodologies and assumptions underlying the analyses, and
viewed in isolation could create a misleading or incomplete view
of the financial analyses performed by Merrill Lynch.

Historical Stock Price
Analysis.Merrill Lynch analyzed the
intraday high and intraday low stock prices of Masonite on the
TSX for the 52 weeks ending December 21, 2004, which
were C$38.49 and C$29.37, respectively.

Comparable Public Companies
Analysis.Using publicly available
information, Merrill Lynch reviewed and compared certain
financial and stock market information for Masonite with the
following North American building products companies:



| |   |                                  
| | - | ---------------------------------
| |  | American Standard Companies, Inc.
|
| |  | American Woodmark Corporation    
|
| |  | The Black & Decker Corporation   
|
| |  | ElkCorp                          
|
| |  | Fortune Brands, Inc.             

-20-



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##### 





| |   |                                 
| | - | --------------------------------
| |  | Jacuzzi Brands, Inc.            
|
| |  | Masco Corporation               
|
| |  | Mohawk Industries, Inc.         
|
| |  | Royal Group Technologies Limited
|
| |  | The Sherwin-Williams Company    
|
| |  | The Stanley Works               

These comparable companies were chosen because
they are publicly traded companies with operations that for
purposes of this analysis may be considered reasonably similar
to Masonite. For each of these comparable companies, Merrill
Lynch calculated enterprise value as a multiple of earnings
before interest, taxes, depreciation and amortization, or
EBITDA, for the latest 12-month period, referred to in this
section as the LTM EBITDA multiples. Merrill Lynch also
calculated the market price per share of common stock for each
comparable company as a multiple of estimated 2005 earnings per
share, referred to in this section as the 2005 P/ E multiples.

For purposes of calculating the LTM EBITDA
multiples, Merrill Lynch calculated the enterprise value for
each of the comparable companies as the sum of the market value
of equity, the short and long term debt, any preferred equity
and minority interest, less cash and marketable securities. For
purposes of calculating the 2005 P/ E multiples, Merrill Lynch
utilized the closing stock price for each comparable company on
December 21, 2004 and its calendar year 2005 consensus
earnings per share estimates as reported by First Call
Corporation as of December 21, 2004 or, if consensus
estimates were unavailable, from street research.

Merrill Lynch calculated implied equity values
per Common Share by applying LTM EBITDA multiples to
Masonites latest 12-month EBITDA and by applying 2005 P/ E
multiples to Masonites 2005 earnings per share, as
reported by First Call Corporation as of December 21, 2004.
In this analysis, Merrill Lynch applied LTM EBITDA multiples
ranging from 7.5x to 8.5x and 2005 P/ E multiples ranging from
9.5x to 11.5x. These multiples reflect a discount to the
multiples for the comparable companies in light of the fact that
Masonite has historically traded at a discount to its U.S. peers
due, among other things, to Masonites size, liquidity and
limited U.S. research coverage. The following table presents the
ranges of equity values per Common Share implied by this
analysis, as compared with the consideration of C$40.20 per
Common Share payable pursuant to the Arrangement:

|                               |  |                                       |         |  |  |  |         |  |  |  |         | 
|------------------------------ |  | ------------------------------------- | ------- |  |  |  | ------- |  |  |  | ------- | 
|                               |  |                                      
|                               |  | Implied Equity Value per Common Share |        
|                               |  |                                      
|                               |  |                                       |        
|                               |  | Low                                   |         |  |  |  | High    | 
|                               |  |                                      
|                               |  |                                       |        
|LTM EBITDA                     |  |                                       | C$28.98 |  |  |  |         |  |  |  | C$31.65 | 
|2005 P/ E                      |  |                                       | C$31.65 |  |  |  |         |  |  |  | C$38.31 | 
|Consideration per Common Share |  |                                       |         |  |  |  | C$40.20 |  |  |  |         | 

None of the selected comparable companies listed
above and used in the foregoing analysis is identical to
Masonite. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating
characteristics of the selected companies and other factors that
could affect the public trading value of Masonite and the
comparable companies.

Comparable Transactions
Analysis.Using publicly available
information, Merrill Lynch reviewed information relating to the
following 25 transactions in the North American building
products industry that it deemed relevant:

|               |  |                                |  |                              
|-------------- |  | ------------------------------ |  | -----------------------------
|Date Announced |  | Acquiror(s):                   |  | Target:                      
|               |  |                                |  |                              
|November 2004  |  | Apollo Management LP           |  | Goodman Global Holdings Inc. 
|September 2004 |  | Headwaters Incorporated        |  | Tapco Holdings, Inc.         
|August 2004    |  | Techtronic Industries Co. Ltd. |  | Milwaukee Electric Tool Corp.
|August 2004    |  | Consorcio Comex SA de CV       |  | Professional Paint Inc.      
|July 2004      |  | Ply-Gem Industries, Inc.       |  | MW Manufacturers, Inc.       
|July 2004      |  | The Black & Decker Corporation |  | Tools Group of Pentair Inc.  
|July 2004      |  | Thomas H. Lee Partners, L.P.   |  | Nortek Holdings, Inc.        
|March 2004     |  | J.W. Childs Associates, L.P.   |  | MAAX                         

-21-



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##### 



|               |  |                                                                                               |  |                                                                     
|-------------- |  | --------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------
|Date Announced |  | Acquiror(s):                                                                                  |  | Target:                                                             
|               |  |                                                                                               |  |                                                                     
|February 2004  |  | Code Hennessy & Simmons LLC                                                                   |  | The Hillman Companies, Inc.                                         
|December 2003  |  | Nobia                                                                                         |  | Gower Group                                                         
|December 2003  |  | Kenner & Company, Inc.;
    UBS Capital Americas; and
    Merrill Lynch Global Private Equity |  | Atrium Companies, Inc.                                              
|December 2003  |  | Masonite International Corporation                                                            |  | Residential Entry Door Business of
    The Stanley Works            
|December 2003  |  | Caxton-Iseman Capital, Inc.                                                                   |  | Ply-Gem Industries, Inc.                                            
|November 2003  |  | Fortune Brands, Inc.                                                                          |  | Therma-Tru Corp.                                                    
|September 2003 |  | Saunders Karp & Megrue; and
    Trimaran Capital Partners                                     |  | Norcraft Companies, L.L.C.                                          
|July 2003      |  | The Black & Decker Corporation                                                                |  | Baldwin Hardware and Weiser Lock
    Businesses of Masco Corporation
|April 2002     |  | Kelso & Company, L.P.                                                                         |  | Nortek, Inc.                                                        
|April 2002     |  | Fortune Brands, Inc.                                                                          |  | The Omega Group                                                     
|April 2002     |  | Harvest Partners                                                                              |  | Associated Materials Inc.                                           
|March 2002     |  | Door Holding A/ S                                                                             |  | Vest-Wood A/ S                                                      
|November 2001  |  | Mohawk Industries, Inc.                                                                       |  | Dal-Tile International Inc.                                         
|July 2001      |  | Kohler Co.                                                                                    |  | Caradon Mira                                                        
|June 2001      |  | Masco Corporation                                                                             |  | Milgard Manufacturing Inc.                                          
|April 2001     |  | BC Partners                                                                                   |  | Sanitec Corporation                                                 
|March 2001     |  | SPX Corp.                                                                                     |  | United Dominion Industries Ltd.                                     

For the selected comparable transactions, Merrill
Lynch calculated multiples of total transaction value to EBITDA
of the acquired businesses for the latest 12-month periods
preceding the acquisition announcements, referred to in this
section as the LTM EBITDA multiples. Merrill Lynch also
calculated multiples of equity values for the acquired
businesses to one-year forward earnings for the relevant
transaction, referred to in this section as the forward P/ E
multiples.

Merrill Lynch calculated implied equity values
per Common Share by applying LTM EBITDA multiples ranging from
7.0x to 9.0x and forward P/ E multiples ranging from 11.0x to
13.0x to Masonites latest 12-month EBITDA and estimated
2005 earnings per Common Share, as reported by First Call
Corporation as of December 21, 2004, respectively. The following
table presents the ranges of equity values per Common Share
implied by this analysis as compared with the consideration of
C$40.20 per Common Share:

|                               |  |                                       |         |  |  |  |         |  |  |  |         | 
|------------------------------ |  | ------------------------------------- | ------- |  |  |  | ------- |  |  |  | ------- | 
|                               |  |                                      
|                               |  | Implied Equity Value per Common Share |        
|                               |  |                                      
|                               |  |                                       |        
|                               |  | Low                                   |         |  |  |  | High    | 
|                               |  |                                      
|                               |  |                                       |        
|LTM EBITDA                     |  |                                       | C$26.00 |  |  |  |         |  |  |  | C$37.93 | 
|Forward P/ E                   |  |                                       | C$36.65 |  |  |  |         |  |  |  | C$43.31 | 
|Consideration per Common Share |  |                                       |         |  |  |  | C$40.20 |  |  |  |         | 

Discounted Cash Flow
Analysis.Merrill Lynch performed a
discounted cash flow analysis of the projected after-tax,
unlevered free cash flows of Masonite. For purposes of Merrill
Lynchs analysis, after-tax unlevered free cash flow is
defined as operating cash flow after changes in working capital,
capital spending and taxes are taken into account. This analysis
was based on projections for the fiscal years 2005 through 2009
prepared by Masonites management and approved by the Board
on December 9, 2004.

Merrill Lynch calculated implied equity values
per Common Share by utilizing discount rates ranging from 9% to
11% and terminal value multiples of estimated 2009 EBITDA
ranging from 7.0x to 8.0x. Using the same discount rates,
Merrill Lynch also calculated implied equity values per Common
Share utilizing perpetual growth rates ranging from 1.5% to 2.5%
to estimate the terminal value. The following table presents the
ranges of implied equity values per Common Share implied by
these analyses as compared with the consideration of C$40.20 per
Common Share:

-22-



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##### 



|                               |  |                                       |         |  |  |  |         |  |  |  |         | 
|------------------------------ |  | ------------------------------------- | ------- |  |  |  | ------- |  |  |  | ------- | 
|                               |  |                                      
|                               |  | Implied Equity Value per Common Share |        
|                               |  |                                      
|                               |  |                                       |        
|                               |  | Low                                   |         |  |  |  | High    | 
|                               |  |                                      
|                               |  |                                       |        
|EBITDA multiple method         |  |                                       | C$37.56 |  |  |  |         |  |  |  | C$49.99 | 
|Perpetuity growth rate method  |  |                                       | C$30.91 |  |  |  |         |  |  |  | C$55.77 | 
|Consideration per Common Share |  |                                       |         |  |  |  | C$40.20 |  |  |  |         | 

Leveraged Buyout
Analysis.Using financial projections
provided by Masonites management for the years 2005 to
2009 and approved by the Board on December 9, 2004, Merrill
Lynch conducted an analysis of the range of values that a
financial sponsor could pay for Masonite while realizing a
targeted internal rate of return on its equity investment of
approximately 20% to 25%. To determine the financial sponsor
internal rate of return, Merrill Lynch calculated the rate of
return on an equity investment made to purchase Masonite on
January 1, 2005 compared to the projected equity values of
Masonite on December 31, 2007, December 31, 2008 and
December 31, 2009. These projected equity values were
estimated based on multiples of enterprise value to EBITDA for
the latest 12-month period of 7.0x to 9.0x and on multiples of
price to one-year forward earnings of 11.0x to 15.0x. Based upon
the foregoing analysis, Merrill Lynch determined an implied
value per Common Share of C$37.00 to C$46.00.

Canadian Income Trust Conversion
Analysis.Merrill Lynch has been
advised by Masonite management of managements belief that
there are structural and tax impediments with respect to a
conversion of Masonite to a Canadian income trust. Merrill
Lynchs performance of the analysis summarized in this
section does not purport to indicate that such a conversion
would be possible. In particular, Merrill Lynch did not consider
whether a conversion of Masonite to a Canadian income trust
would be feasible in light of any potential tax or structuring
impediments or any potential adverse tax implications to the
Shareholders as a result of such conversion. Using financial
projections provided by Masonites management for the
fiscal year ended 2004 and approved by the Board on
December 9, 2004, Merrill Lynch calculated the implied
equity value per Common Share assuming a conversion of Masonite
to a Canadian income trust. In this analysis, Merrill Lynch
divided distributable free cash flow by the estimated free cash
flow yield. Merrill Lynch calculated distributable free cash
flow as EBITDA, less capital expenditures, cash interest, cash
taxes and an annual holdback, which was assumed to be 10%.
Merrill Lynch assumed distributable free cash flow yields of
approximately 8% to 10%, based on 2004 yields for selected
publicly traded diversified business and industrial income
funds. Based upon the foregoing analysis, Merrill Lynch
determined an implied value per Common Share of C$36.79 to
C$46.42. In performing this analysis, Merrill Lynch did not
consider any possible adverse impact that a conversion of
Masonite to a Canadian income trust might have on
Masonites trading range over the short term.

The preparation of a fairness opinion is a
complex and analytic process involving various determinations as
to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular
circumstances. Merrill Lynch used the methodologies summarized
above because it deemed those valuation methodologies to be the
most relevant and appropriate in connection with the preparation
of its opinion. In arriving at its opinion, Merrill Lynch
considered the results of all analyses and did not attribute any
particular weight to any analysis or factor considered by it.
Merrill Lynch made its determination as to fairness on the basis
of its experience and professional judgment after considering
the results of all such analyses. While each factor set forth
above is separate, Merrill Lynch believes that its analyses must
be considered as a whole and that selecting portions of its
analyses or of the summary set forth above, without considering
all analyses, would create an incomplete view of the process
underlying its opinion.

In performing its analyses, Merrill Lynch made
numerous assumptions with respect to industry performance,
general business, economic, market and financial conditions and
other matters, many of which are beyond the control of Merrill
Lynch or Masonite. Any estimates contained in the analyses
performed by Merrill Lynch are not necessarily indicative of
actual values or future results, which may be significantly more
or less favourable than suggested by such analyses.
Additionally, estimates of the value of businesses or securities
do not purport to be appraisals or to reflect the prices at
which such businesses or securities might actually be sold.
Accordingly, such analyses and estimates are inherently subject
to substantial uncertainty. In addition, as described above, the
Merrill Opinion was among several factors taken into
consideration by the Special Committee and the Board in making
their determination to approve the Combination Agreement.
Consequently, the analyses performed by Merrill Lynch described
above should not be viewed as determinative of the decision of
the Special Committee or the Board with respect to its
recommendation of the Arrangement or the fairness of the
consideration to be received by the Shareholders pursuant to the
Arrangement.

Merrill Lynch is an internationally recognized
investment banking and advisory firm. As part of its investment
banking business, Merrill Lynch is continuously engaged in the
valuation of businesses and securities in connection with
mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and
other purposes. The Special Committee retained Merrill Lynch
based on Merrill Lynchs qualifications, expertise and
reputation.

-23-



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##### 



Merrill Lynch has, in the past, provided
financial advisory and financing services to Masonite and/or its
affiliates and may continue to do so, and Merrill Lynch has
received, and may receive, fees for the rendering of such
services. Merrill Lynch in the past has also provided financial
advisory and financing services to KKR and/or its affiliates and
has received fees for the rendering of such services. In
addition, in the ordinary course of business, Merrill Lynch may
actively trade the Common Shares of Masonite and other
securities of Masonite for its own account and for the accounts
of customers and, accordingly, may at any time hold a long or
short position in such securities.

Pursuant to an engagement letter dated
December 6, 2004, between Masonite and Merrill Lynch,
Masonite paid Merrill Lynch an engagement fee of C$100,000 upon
execution of the engagement letter and an additional fee of
C$900,000 upon Merrill Lynchs confirmation to the Special
Committee that it was prepared to deliver its opinion. Merrill
Lynch is entitled to receive additional transaction fees of up
to 5% of any additional value above C$40.20 per Common Share,
based on fully diluted equity value, to be received pursuant to
any alternative transaction. Merrill Lynch may also receive an
additional fee of up to C$1,000,000, to be paid at the sole
discretion of the Board. Masonite has agreed to reimburse
Merrill Lynch for its reasonable out-of-pocket expenses incurred
in connection with its engagement, including fees and
disbursements of its legal counsel, and to indemnify Merrill
Lynch and its affiliates against certain losses, claims,
damages, liabilities and expenses related to or arising out of
the performance by Merrill Lynch of services under its
engagement.

Masonites Financial Models and
Projections

Contemporaneously with KKRs consideration
of a possible transaction, management of Masonite prepared a
number of cases modelling or projecting future operating
performance of the Company over the next five years.
Masonite does not typically prepare five year financial
projections. Moreover, Masonite does not, as a matter of course,
make public any projections as to future financial performance
or earnings. The financial models and projections set forth
below are included in this Circular solely because the
information was provided to the Board, Merrill Lynch and, in
some cases, KKR and was considered by the Board in connection
with its recommendation to the Shareholders regarding the
Arrangement. See  History of Discussions
Between Masonite and KKR above. The information presented
below was prepared without specific reference to the Arrangement
and, as such, the information below does not give effect to the
Arrangement or the financing thereof.

The models and projections described below were
not prepared for public disclosure or in compliance with the
Ontario Securities Commission policies or the guidelines
regarding projections of the Canadian Institute of Chartered
Accountants, the SEC or the American Institute of Certified
Public Accountants. The information below is subjective in many
respects and is thus susceptible to various interpretations.
Because the earnings estimate information is subject to
significant economic and competitive uncertainties and
contingencies beyond Masonites control, such as levels of
interest rates, currency exchange, housing starts, consumer
spending and raw materials prices, to name a few, it is also
subject to periodic revision based on actual experience and
business developments. Therefore, actual earnings results may
ultimately be either significantly higher or lower than those
set forth below. Neither Masonites auditors nor any other
independent public accountants have compiled, examined or
performed any procedures with respect to the financial
information contained below in this section. In addition, they
have not expressed any opinion or any other form of assurance
with respect to this information or its achievability, and
assume no responsibility for, and disclaim any association with,
this information. The inclusion of this information should not
be regarded as an indication that the Board, KKR or Stile or
anyone who received this information considered it, or now
considers it, to be a reliable prediction of future events, and
this information should not be relied upon as such. Masonite
disclaims any duty to update this information, except as
required by applicable securities laws.

After presentations by and discussions with
management, the Board and the Special Committee concurred with
managements view that Case No. 4 contained the most
realistic assumptions in respect of the future financial
performance of Masonite.

In preparing Case No. 4, management made the
following assumptions:



| |   |                                              
| | - | ---------------------------------------------
| |  | unit and sales growth assumptions, including:



| |       |                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | an anticipated cyclical stabilization or slowdown
    in the housing industry;                                                                                                                                                                                                                                                                                                                                     
|
| | (ii)  | a negative effect from a weak U.S. dollar on the
    competitive position of certain of Masonites non-U.S.
    operations;                                                                                                                                                                                                                                                                                        
|
| | (iii) | a negative impact from recent increases in energy
    prices and other input prices;                                                                                                                                                                                                                                                                                                                               
|
| | (iv)  | a reduction in revenue growth rates for the
    Company compared to recent historical results caused by the
    consolidation in the Companys major North American and
    Western European markets, the Companys existing large
    revenue base compared with historical revenues and by the
    expectation that future growth will come from emerging markets
    in Central and Eastern Europe and Asia; and

-24-



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##### 





| |     |                                                                                                
| | --- | -----------------------------------------------------------------------------------------------
| | (v) | declining relative influence of future
    acquisitions given the Companys current large size;



| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |  | operating cost savings and margin expansion
    through continuous improvements of processes and operating
    efficiencies;
|
| |  | a gradual increase in tax rates due to increasing
    revenues from higher tax jurisdictions; and                           
|
| |  | all excess cash flow being used to effect
    acquisitions and reduce debt.                                                 

The chart below is excerpted from Case No. 4
provided to the Board, Merrill Lynch and KKR.

|                     |  |               |         |  |      |     |         |      |  |     |         |  |  |      |         |  |  |     |         | 
|-------------------- |  | ------------- | ------- |  | ---- | --- | ------- | ---- |  | --- | ------- |  |  | ---- | ------- |  |  | --- | ------- | 
|                     |  | 2005          |         |  | 2006 |     |         | 2007 |  |     | 2008    |  |  | 2009 |        
|                     |  |               |         |  |      |     |         |      |  |     |         |  |  |      |        
|                     |  |              
|                     |  | (in millions) |        
|Sales                |  | US$           | 2,446.9 |  |      | US$ | 2,546.9 |      |  | US$ | 2,711.6 |  |  | US$  | 2,905.1 |  |  | US$ | 3,122.7 | 
|EBITDA               |  | US$           | 332.4   |  |      | US$ | 359.8   |      |  | US$ | 396.6   |  |  | US$  | 437.3   |  |  | US$ | 488.3   | 
|Net Income           |  | US$           | 151.7   |  |      | US$ | 162.0   |      |  | US$ | 185.5   |  |  | US$  | 209.9   |  |  | US$ | 243.3   | 
|Capital Expenditures |  | US$           | 70.0    |  |      | US$ | 80.0    |      |  | US$ | 90.0    |  |  | US$  | 100.0   |  |  | US$ | 110.0   | 
|Acquisitions         |  | US$           | 100.0   |  |      | US$ | 100.0   |      |  | US$ | 100.0   |  |  | US$  | 100.0   |  |  | US$ | 100.0   | 

Management prepared two models (Case Nos. 1
and 2) which were provided to KKR in October 2004. These models
were designed to show the effects of certain hypothetical
assumptions regarding annual sales growth and cost savings and
did not take into account other relevant factors relating to the
Companys future business and prospects such as
(i) the difficulty of achieving cost savings in light of
increasing input costs, (ii) a cyclical stabilization or
slowdown in the housing industry and (iii) the effect of
future acquisitions. These models, together with a third model
(Case No. 3) based on different assumptions, were provided
to the Board on October 20, 2004. Case Nos. 1, 2
and 3 did not contemplate any future acquisitions.
Subsequently, management prepared two financial
projections  Case Nos. 4 and 5. Case
No. 4 was provided to KKR. Case Nos. 4 and 5
contemplated future acquisitions and contained estimates as to
future growth in sales and cost savings.

Case No. 1 assumes no stabilization or
slowdown in the housing industry throughout the five-year period
and sales growth of 11% in 2005 and 6% per annum from 2006 to
2009. Case No. 1 indicated 2005 sales of
US$2,445.9 million and EBITDA of US$345.8 million and
indicated 2009 sales of US$3,087.9 million and EBITDA of
US$579.2 million. Case No. 2 illustrates stabilization
or slowdown in the housing industry, sales growth of 11% in
2005, no sales growth in 2006 and sales growth of 4%, 5% and 6%,
respectively, in the following three years. Case No. 2
indicated 2005 sales of US$2,445.9 million and EBITDA of
US$345.8 million and indicated 2009 sales of
US$2,831.5 million and EBITDA of US$490.6 million.
Case No. 3 assumes sales growth at one half of that in Case
No. 2. Case No. 3 indicated sales in 2005 of
US$2,325.2 million and EBITDA of US$296.8 million and
indicated sales in 2009 of US$2,504 million and EBITDA of
US$345.5 million. Case No. 5 is similar to Case
No. 4, including stabilization or slowdown in the housing
industry, with slight downward revisions to assumed sales growth
in each of the last three years and to assumed cost savings in
all years. Case No. 5 has projected 2005 sales of
US$2,446.9 million and EBITDA of US$329.3 million and
projected 2009 sales of US$3,102.1 million and EBITDA of
US$465.0 million.

Position of the Executive Signatories as to
Fairness

Each of the Executive Signatories believes the
Arrangement is fair to the Shareholders other than the Executive
Signatories for many of the same reasons as the Special
Committee and the Board. The Executive Signatories did not
undertake a formal evaluation of the fairness of the Arrangement
or engage a financial advisor for such purposes. Although the
Merrill Opinion was specifically not prepared for the Executive
Signatories and they are not entitled to rely on it, the
Executive Signatories determined that the fact that Merrill
Lynch concluded that, as of the date of the Merrill Opinion, and
based upon and subject to the various factors, assumptions and
limitations set forth therein, the consideration to be received
by Shareholders pursuant to the Arrangement is fair, from a
financial point of view, to the Shareholders, provides support
for the view of the Executive Signatories that the C$40.20 cash
consideration is a fair price for the Common Shares.
Furthermore, as described under  Position of
the Board and the Special Committee as to Fairness and
Position of Stile and Stile Holding as to Fairness,
the consideration offered to Shareholders represents a
significant premium over the closing price of the Common Shares
on the TSX on the day prior to the announcement of the
Arrangement and in the 60 trading days leading up to such
announcement.

-25-



---



##### 



In addition, the Executive Signatories consider
the Arrangement to be fair to the Shareholders other than the
Executive Signatories for the following reasons:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Special Committee settled with KKR the key
    terms of the Combination Agreement and oversaw the negotiation
    of the other terms of the Combination Agreement and the
    Arrangement and concluded that the Arrangement is fair to the
    Shareholders and in the best interests of Masonite;                                                                                                                                                                                                                      
|
| |  | the Arrangement must be approved by at least
    two-thirds of the votes cast by Shareholders at the Meeting and
    by at least a majority of the votes cast by Shareholders
    excluding votes in respect of Common Shares held by Senior
    Management;                                                                                                                                                                                                                                                                 
|
| |  | completion of the Arrangement will be subject to
    a determination as to its fairness by the Court;                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | registered Shareholders have the ability to
    exercise the Dissent Rights if they do not vote in favour of the
    Arrangement; and                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | the Combination Agreement provides Masonite with
    the ability to terminate the agreement in order to recommend,
    approve or accept a Superior Proposal that would, if completed,
    result in a transaction more favourable to Masonites
    Shareholders from a financial point of view than the
    Arrangement, subject to certain conditions, including the
    payment of the Termination Payment, which the Executive
    Signatories believe is at the low end of the range for
    transactions of this type.

The foregoing discussion of the information and
factors considered and given weight by the Executive Signatories
in connection with the fairness of the Arrangement is not
intended to be exhaustive but is believed to include all
material factors considered by the Executive Signatories. The
Executive Signatories did not assign any relative or specific
weights to the foregoing factors which were considered, and
individuals may have given different weights to different
factors.

Position of Stile and Stile Holding as to
Fairness

While Stile and Stile Holding believe that the
Arrangement is fair to the unaffiliated Shareholders of
Masonite, Stile attempted to negotiate the terms of a
transaction that would be most favourable to it, and not to the
Shareholders of Masonite, and, accordingly, did not negotiate
the Combination Agreement with a goal of obtaining terms that
were fair to such Shareholders. The Shareholders of Masonite
were, as described elsewhere in this Circular, represented by
the Special Committee that negotiated with KKR on their behalf,
with the assistance of independent legal and financial advisors.

Stile and Stile Holding believe that the
Arrangement is both substantively and procedurally fair to the
unaffiliated Shareholders of Masonite. However, neither Stile
nor Stile Holding has undertaken any formal evaluation of the
fairness of the Arrangement to such Shareholders or engaged a
financial advisor for such purpose. Moreover, neither Stile nor
Stile Holding participated in the deliberations of the Special
Committee or received advice from the Special Committees
financial advisor.

The belief of Stile and Stile Holding that the
Arrangement is substantively fair to the unaffiliated
Shareholders of Masonite is based on the following factors:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the historical results of operations, financial
    condition, assets, liabilities, business strategy and prospects
    of Masonite and the nature of the industry in which Masonite
    competes;                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | the conclusions and recommendations of the
    Special Committee that the Arrangement is fair to the
    Shareholders and in the best interests of the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | notwithstanding that the Merrill Opinion was
    provided solely for the information and assistance of the
    Special Committee and that neither Stile nor Stile Holding is
    entitled to rely on such opinion, the fact that the Special
    Committee received an opinion from Merrill Lynch stating that,
    based upon and subject to the various factors, assumptions and
    limitations set forth in the opinion, as of the date of such
    opinion, the C$40.20 per share consideration payable pursuant to
    the Arrangement is fair, from a financial point of view, to
    the Shareholders;
|
| |  | the C$40.20 per share consideration payable in
    the Arrangement represents a 21.25% premium over the volume
    weighted-average trading price for the Common Shares on the TSX
    for the 60 trading days ended December 21, 2004 and a
    15.68% premium over the closing price per Common Share on the
    TSX on December 21, 2004, the last trading day before the
    proposed Arrangement was publicly announced. It also exceeds the
    highest price at which the Common Shares traded on the TSX prior
    to the date of announcement of the transaction;                                    

-26-



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##### 





| |   |                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Arrangement will provide consideration to
    Masonites Shareholders entirely in cash which provides
    certainty of value;                                                                                                                                                
|
| |  | the consideration per Common Share payable under
    the Arrangement represents a multiple of 9.6 (including
    transaction fees and expenses) and 9.2 (excluding transaction
    fees and expenses) times Masonites EBITDA for the twelve
    months ended September 30, 2004;
|
| |  | the consideration per Common Share payable under
    the Arrangement represents a multiple of 14.3 times
    Masonites reported fully-diluted earnings per Common Share
    for the twelve months ended September 30, 2004; and                                                 
|
| |  | the fact that Masonites repurchases of its
    Common Shares during the last two years have been at prices
    substantially below C$40.20 per Common Share.                                                                                                                    

The belief of Stile and Stile Holding that the
Arrangement is procedurally fair to the unaffiliated
Shareholders of Masonite is based on the following factors:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Special Committee settled with KKR the key
    terms of the Combination Agreement and oversaw the negotiation
    of the other terms of the Combination Agreement and the
    Arrangement;                                                                                                                                                                                                                             
|
| |  | the Arrangement is conditioned upon the approval
    of the Arrangement Resolution by at least two-thirds of the
    votes cast by Shareholders at the Meeting and by at least a
    majority of the votes cast by Shareholders at the Meeting
    excluding votes in respect of Common Shares held by Senior
    Management;                                                                                              
|
| |  | the Special Committee retained and was advised by
    independent legal counsel and an independent financial advisor,
    Merrill Lynch;                                                                                                                                                                                                                                                                                   
|
| |  | the Special Committee unanimously concluded that
    the Arrangement is fair to the Masonite Shareholders and the
    Board of Masonite unanimously recommends that Masonite
    Shareholders vote in favour of the proposed Arrangement
    Resolution;                                                                                                                                                                   
|
| |  | completion of the Arrangement will be subject to
    a determination as to its fairness by the Court;                                                                                                                                                                                                                                                                                                                      
|
| |  | the registered holders of Common Shares who do
    not vote in favour of the Arrangement will have the right to
    demand a judicial appraisal of their Common Shares and obtain
    fair value if they exercise and perfect their
    Dissent Rights; and                                                                                                                                                              
|
| |  | the Combination Agreement provides Masonite with
    the ability to terminate the Combination Agreement in order to
    recommend, approve or accept a Superior Proposal that would, if
    completed, result in a transaction more favourable to
    Masonites Shareholders from a financial point of view than
    the Arrangement, subject to certain conditions, including the
    payment of the Termination Payment.

Stile and Stile Holding considered each of the
foregoing factors to support its determination as to the
fairness of the Arrangement to the unaffiliated Shareholders of
Masonite. It did not find it practicable to assign, nor did it
assign, relative weights to the individual factors considered in
reaching its conclusion as to the fairness of the Arrangement to
such Shareholders.

The liquidation value of Masonites assets
was not considered in evaluating the substantive fairness of the
proposed Arrangement to the unaffiliated Shareholders. Stile and
Stile Holding consider Masonite to be a viable going concern and
view the trading value of Masonites Common Shares as an
indication of its value as a going concern. Stile and Stile
Holding believe that, as a viable going concern, Masonites
liquidation value would be significantly lower than its
valuation as a going concern and would therefore not provide a
useful valuation methodology in determining the substantive
fairness of the proposed Arrangement to the unaffiliated
Shareholders. Stile also considered that the consideration per
Common Share payable under the Arrangement represents a multiple
of 2.2 times Masonites reported book value per Common
Share as at September 30, 2004.

The view of Stile and Stile Holding as to the
fairness of the Arrangement to the unaffiliated Shareholders of
Masonite is not a recommendation to any Shareholder as to how
such Shareholder should vote on the Arrangement Resolution. The
foregoing discussion of the information and factors considered
and weight given by Stile and Stile Holding is not intended to
be exhaustive but is believed to include all material factors
considered by Stile and Stile Holding.

-27-



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##### 



REASONS FOR THE ARRANGEMENT

From Masonites Perspective

KKRs proposal that resulted ultimately in
the Combination Agreement was initiated by KKR and was not the
product of any initiative by Masonite or its Board to sell the
Company. At the same time, however, the Board believed that an
offer at a fair price from a credible buyer, such as KKR, should
be presented to Shareholders for their consideration given the
Companys future prospects and its current stage of
development. While the Company has experienced favourable growth
in EBITDA, net income and share price over the past several
years, there is no guarantee that the rate of growth will
continue. Factors that affect the Companys future rate of
growth include the Companys current size, the
consolidation in the Companys major North American and
Western European markets, higher input costs, a cyclical
stabilization or slowdown in the housing industry and the higher
business and execution risks associated with the Companys
growth in emerging markets. Current expectations in the market
that interest rates will rise in the near to medium term may
indicate that spending on housing will decline, thereby
negatively impacting the Companys sales. Certain raw
materials, such as lumber, steel and petroleum, that Masonite
uses to manufacture many of its products or that form an
important component of its materials have been increasing in
price. Masonite faces uncertainty in its ability to pass on to
customers these price increases and thus maintain margins.
Finally, it is anticipated that Masonites future growth
will come to a large extent from the emerging growth markets of
Central and Eastern Europe and Asia, principally China, where
management believes business and execution risks are greater
than in the markets in which the Company presently operates.

Masonite expects to enjoy some cost savings as a
result of no longer having publicly-held equity. In addition,
Masonite believes that the structure of the transaction as a
statutory arrangement under the OBCA is preferable over other
structures for a number of reasons. These include (i) the
fact that the Arrangement will allow all Common Shares to be
acquired by Stile at the same time, (ii) the fact that it
will allow for the completion of the financing of the
Arrangement on the Effective Date of the Arrangement instead of
prior to the completion of the Arrangement, and (iii) the
fact that it will allow the Company to deal with any outstanding
Company Options and effect the payment in respect of outstanding
RSUs and DSUs pursuant to the Arrangement. The other transaction
types considered by the Company, such as structuring the
transaction as a take-over bid, did not provide for the same
benefits.

In addition, Masonite will benefit from Stile and
Stile Holdings access to capital sources in order to
pursue the ongoing business objectives of the Company. The
primary possible detriment to Masonite as a result of the
Arrangement is the fact that the Company will be more highly
levered following the completion of the Arrangement.

When considered as a whole, the factors described
above led the Board to conclude that it was appropriate to
consider a sale of the Company in response to a serious approach
from a well-financed buyer, provided the price was fair to
Shareholders. As discussed under Background to and
Fairness of the Arrangement above, the Board, based on
various factors, including the Merrill Opinion and the views of
the Special Committee, determined that the price of C$40.20 per
Common Share was fair to the Shareholders.

From the Perspective of the Executive
Signatories

Each of the Executive Signatories shares the
perspective of Masonite, indicated above, concerning certain
risk factors for Masonite in the future and the cost savings and
benefits of access to capital expected to accrue to Masonite
from the Arrangement.

As for the benefits to the Executive Signatories
from the Arrangement, see Particulars of the
Arrangement  Interests of Directors and Senior
Officers below.

From the Perspective of Stile and Stile
Holding

Stile entered into the Combination Agreement with
Masonite in order to acquire all of the outstanding Common
Shares. Stile and Stile Holding believe that it is best for
Masonite to operate as a privately held entity. As a privately
held entity, Masonite will have the flexibility to focus on
continuing improvements to its business without the constraints
and distractions caused by the public equity markets
valuation of Masonite. In particular, Stile and Stile Holding
believe that Masonite will have a greater ability to invest and
grow its business, both organically and through acquisitions, as
a private company because it will be able to do so without
having to be concerned about earnings in the short term.
Moreover, Stile and Stile Holding believe that Masonites
future business prospects can be improved through their active
participation in the strategic direction and operations of
Masonite, and that their access to capital sources will provide
Masonite with development opportunities of the sort not
currently available to it. As a private entity, Masonite will
also have a more efficient capital structure in terms of the
cost of capital that could not be easily accommodated by public
equity markets. In addition, after the completion of the
Arrangement, Masonite will no longer be subject to Ontario
Securities Commission or SEC reporting requirements with respect
to its equity securities, which will allow Masonite to eliminate
the time and resources devoted to matters relating exclusively
to having equity securities publicly traded. Masonite, however,
will likely be required to file, or resume filing, reports with
the SEC as a result of the issuance of debt securities
registered under the securities laws of the United States. Stile

-28-



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##### 



and Stile Holding believe that structuring the
transaction as an arrangement under the OBCA is preferable to
other transaction structures because (i) it will enable
Stile to acquire all of the outstanding Common Shares at the
same time; (ii) it will enable Stile and Stile Holding to
advance funds to Masonite to be applied to pay off the Company
Credit Facility and to fund payment in respect of Cashed-out
Options, RSUs and DSUs as one of the steps in the Arrangement,
rather than as a pre-Arrangement step; and (iii) it will
provide a mechanism to enable any remaining Company Options to
be dealt with as part of the Arrangement. Stile and Stile
Holding also considered structuring the transaction as a
take-over bid or an amalgamation but neither of those
alternatives achieved the benefits described in the preceding
sentence.


These assessments are based upon publicly
available information regarding Masonite and Stiles due
diligence, investigation and knowledge of Masonite and the
experience of Stiles affiliates in investing in public
companies generally. While Stile and Stile Holding believe that
there will be significant opportunities associated with their
investment in Masonite, and that the value of such an equity
investment could be greater than the original cost thereof, they
realize that there also are substantial and significant risks
that such opportunities may not ever be fully realized.

The primary benefits of the Arrangement to Stile
and Stile Holding are that it will enable Stile to own all of
the outstanding equity of Masonite after the completion of the
Arrangement and the exchange of Employee Rollover Shares for
shares of Stile Holding and thereby enable Stile Holding and its
stockholders to receive all of the benefit, if any, of any
increase in the future earnings, growth and value of Masonite,
in addition to the ongoing benefits of investing in partnership
with an experienced and successful management team. The primary
detriments of the Arrangement to Stile and Stile Holding are
that all of the risk of any decrease in the future earnings,
growth and value of Masonite following the completion of the
Arrangement will be borne by Stile Holding and its stockholders,
the risk that Masonites substantial increase in
indebtedness will adversely affect the equity value of Stile
Holding, including the increased risk to equity holders of
losing the entire value of their investment, and the fact that,
following the completion of the Arrangement, there will be no
public trading market for Stile Holdings equity.

PARTICULARS OF THE ARRANGEMENT

Vote Required to Approve the
Arrangement

Subject to any further order of the Court, the
Interim Order provides that the Arrangement Resolution must be
approved by the affirmative vote of at least 66 2/3% of the
votes cast thereon at the Meeting by the Shareholders present in
person or represented by proxy and entitled to vote at the
Meeting. In addition, because of the interest of Senior
Management in the transaction, the Arrangement Resolution must
be approved by at least a simple majority of the votes cast by
Shareholders present in person or represented by proxy and
entitled to vote at the Meeting excluding votes cast in respect
of Common Shares held by Senior Management. As of
January 17, 2005, Senior Management beneficially owned a
total of 532,570 Common Shares representing less than 1% of
the outstanding Common Shares. Each of the Executive Signatories
has indicated to the Company his intention to vote the Common
Shares he beneficially owns in favour of the Arrangement
Resolution. As of December 22, 2004, each of the directors
had advised the Company that he intended to vote the Common
Shares beneficially owned by him in favour of the Arrangement
Resolution.

Summary of the Arrangement

The Arrangement effects a series of transactions
as a result of which Stile will effectively acquire all of the
Common Shares (other than Employee Rollover Shares) at a price
of C$40.20 cash per Common Share by way of the Plan of
Arrangement. Immediately following the effectiveness of the
Arrangement, Stile Holding will acquire each Employee Rollover
Share in exchange for C$40.20 worth of common shares of Stile
Holding (except cash may be paid in lieu of issuing fractional
shares). Assuming that the Arrangement has been approved by the
Shareholders at the Meeting and all of the conditions set out in
the Combination Agreement have been satisfied or waived by the
parties, upon obtaining the Final Order, Masonite will file
Articles of Arrangement with the Director as soon as practicable
thereafter, at which time the Arrangement will become effective.
Pursuant to the terms of the Plan of Arrangement, commencing at
the Effective Time, the following events will occur and be
deemed to occur in the order set forth below:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Stile or one of its Affiliates will provide
    (i) the Company Credit Facility Payoff Loans to Masonite
    (and/or one of its Subsidiaries) in an aggregate amount equal to
    the aggregate of all amounts owing under the Company Credit
    Facility, (ii) a loan to Masonite in an amount equal to the
    total amount payable to holders of Company Options pursuant to
    the Plan of Arrangement and (iii) a loan to Masonite equal
    to the total amount payable to cancel and pay out the
    outstanding RSUs and DSUs granted by the Company.
|
| |  | Masonite and its Subsidiaries will, immediately
    upon receipt of the Company Credit Facility Payoff Loans, repay
    in full all amounts owing under the Company Credit Facility.                                                                                                                                                                                                                                                                                                                                                                           

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##### 





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Each Cashed-out Option will be cancelled by
    Masonite in exchange for a cash payment by Masonite in an amount
    equal to the total In-the-Money Amount of such Cashed-out Option
    (less any required withholding taxes).                                                                                                                                                                                                                                                                                                                        
|
| |  | Each Company Option issued and outstanding
    immediately prior to the Effective Time, other than a Cashed-out
    Option or an Employee Rollover Option, will cease to represent a
    right to receive any Common Shares. Instead, beginning
    immediately after the Effective Time, the sole entitlement of a
    holder of such a Company Option will be to receive, upon
    exercise of the Company Option, a cash payment from Masonite
    equal to the In-the-Money Amount of such Company Option (less
    any required withholding taxes).
|
| |  | Each RSU and DSU will be cancelled by the Company
    in exchange for a cash payment by the Company in the amount of
    C$40.20 per RSU or DSU, as applicable (less any required
    withholding taxes).                                                                                                                                                                                                                                                                                                                                               
|
| |  | Two minutes after the completion of the
    immediately preceding step, the outstanding Common Shares
    (excluding Employee Rollover Shares) held by Qualifying Company
    Shareholders will be transferred by the holders thereof to Stile
    without any further act or formality, in exchange for cash in
    the amount of C$40.20 per Common Share and Stile will be deemed
    to be the legal and beneficial owner thereof, free and clear of
    all liens, charges, claims and encumbrances.                                               
|
| |  | The transactions in respect of the exchange of
    Employee Rollover Options for Replacement Options contemplated
    by the Employee Rollover Agreements will be deemed to occur
    contemporaneously with the transfers in the immediately
    preceding step.                                                                                                                                                                                                                                                                                       

Interests of Directors and Senior Officers in
the Arrangement

Mr. Orsino and certain other senior officers
of Masonite have interests in the Arrangement that are different
from or in addition to the interests of other Shareholders.
These interests include those described below.

Following the implementation of the Plan of
Arrangement, the Senior Management of Masonite will continue as
senior management of the Company.

Each of the Executive Signatories and certain
members of Senior Management of Masonite have existing severance
agreements with Masonite that provide for payments to be made in
the event that their employment is terminated following a
change in control. It is a condition to Stiles
obligation to complete the Arrangement that each of the
Executive Signatories waive the right to receive any such change
in control payments that are triggered by the completion of the
Arrangement. In addition, Masonite has agreed to use its
commercially reasonable efforts to cause all employees who are
entitled to any change in control payments arising as a result
of the Arrangement to waive such entitlements. Furthermore, the
Executive Signatories and certain members of Senior Management
of Masonite have been granted RSUs and DSUs under
Masonites 2002 Restricted Share Bonus Plan, 2002 Deferred
Share Plan and Full Value Incentive Plan. Currently, payment in
respect of outstanding DSUs may only be made when the
executives employment with Masonite is terminated
regardless of the occurrence of a change in control of Masonite;
however, the incentive plans under which DSUs have been granted
will be amended if Shareholder approval of the Arrangement is
obtained to provide that payments in respect of outstanding DSUs
will be accelerated upon a change in control of Masonite.
Currently, the only consequence of a change in control is that
any DSUs which have not yet vested when the change in control
occurs will vest immediately. Under Masonites 2002
Restricted Share Bonus Plan and Full Value Incentive Plan, all
outstanding RSUs vest and are paid out within five Business Days
following a change in control. The transactions contemplated by
the Plan of Arrangement would be considered a change in
control under the agreements and incentive plans described
above. See Information Concerning Masonite 
Executive Compensation and Information Concerning
Masonite  Report of the Human Resources and
Compensation Committee and Executive Compensation.

In addition, Stile has agreed to continue
indemnification arrangements and directors and
officers liability insurance for the present and former
directors and officers of Masonite with respect to matters
occurring prior to the Effective Time, which insurance will
remain in place for a period of six years from the Effective
Time. It is also expected that Mr. Orsino will become a
member of the board of directors of Stile Holding following
completion of the Arrangement.

The Board and the Special Committee were aware of
these interests and considered them, among other matters, when
recommending approval of the Arrangement. In light of the
interest of Senior Management in the transaction, the
Arrangement Resolution must be approved by at least a simple
majority of the votes cast by Shareholders present in person or
represented by proxy and entitled to vote at the meeting
excluding votes in respect of Common Shares held by Senior
Management. See  Vote Required to Approve the
Transaction.

Each of the Executive Signatories signed a letter
of undertaking to KKR on December 22, 2004 pursuant to
which they have agreed (i) to invest at least
US$19.5 million in Stile Holding on the Effective Date at
the same price per share that the KKR investment funds

-30-



---



##### 



pay for shares of Stile Holding and (ii) to
waive the change in control payments under the severance
agreements described above, each contingent on reaching
satisfactory investment terms with Stile Holding. Each of the
Executive Signatories has also agreed not to exercise any
Company Options held by him prior to the completion of the
Arrangement. It is a condition to Stiles obligation to
complete the Arrangement that the Executive Signatories and
certain other officers and employees of Masonite (expected to be
approximately 40 individuals worldwide) invest at least
US$25 million in Stile Holding and, as such, it is expected
that other officers and employees of Masonite will also invest
in Stile Holding on the Effective Date (such officers and
employees, together with the Executive Signatories, the
Investing Employees). Investing Employees may be
able to satisfy some or all of their investment commitment by
exchanging Common Shares and/ or Company Options pursuant to an
Employee Rollover Agreement. Investing Employees will receive
cash for their Common Shares pursuant to the Arrangement unless
they enter into an Employee Rollover Agreement to receive shares
of Stile Holding in exchange for their Common Shares immediately
following the effectiveness of the Arrangement. In addition,
Investing Employees who elect to receive a cash payment under
the Company Stock Option Plan in respect of their Company
Options will receive a cash payment in an amount equal to the
total In-the-Money Amount of their Company Options pursuant to
the Arrangement unless they enter into an Employee Rollover
Agreement to dispose of their Employee Rollover Options in
exchange for Replacement Options. The total In-the-Money Amount
in respect of the Replacement Options will, at the time of
granting such Replacement Options, equal (subject to rounding
down to take into account fractional shares) the total
In-the-Money Amount of the Employee Rollover Options exchanged
for such Replacement Options.


Stile has provided a term sheet to Masonite
management setting out Stiles proposal with respect to a
stock option plan to be established for the Investing Employees.
Under that term sheet, following completion of the Arrangement,
for each share purchased by an Investing Employee in Stile
Holding, the employee will receive an option (different from the
Replacement Options that may be exchanged for Employee Rollover
Options) to buy additional shares in Stile Holding at an
exercise price equal to the fair market value on the date of the
option grant of a share in Stile Holding. Approximately half of
these options will vest and become exercisable over a five-year
period. The remainder of these options will be exercisable upon
the achievement of certain performance targets. If the
performance targets are achieved, these options will also vest
over a five-year period following the date of grant. These
options will expire ten years after the date of grant but
generally terminate earlier upon the termination of the
employment of the Investing Employee. These options will also be
subject to accelerated vesting in certain circumstances upon a
change in control of the Company. It is expected that this stock
option plan will entitle the Investing Employees to acquire up
to approximately an additional 7 to 13% of the equity of Stile
Holding on a fully-diluted basis.

Under the term sheet provided by Stile, each
Investing Employee would also enter into a shareholders
agreement containing restrictions on the transfer of any shares
and options held by him in Stile Holding (including shares
received on the exercise of options) for five years after
completion of the Arrangement. The shareholders agreement
would also provide for (i) a right of first refusal in
favour of Stile Holding, (ii) the repurchase of the equity
of the Investing Employee in the event that his or her
employment is terminated in certain circumstances and
(iii) standard confidentiality, non-competition and
non-solicitation covenants in favour of Stile Holding. Each
Investing Employee would also enter into a sale participation
agreement which would grant to the Investing Employee the right
to participate within five years of the completion of the
Arrangement in a sale of common shares of Stile Holding by
certain investment funds affiliated with KKR that are
shareholders of Stile Holding. In addition, the Investing
Employees will be permitted to participate in registrations by
Stile Holding of its equity securities if certain investment
funds affiliated with KKR that are shareholders of Stile Holding
are also selling their shares.

Stile Holding is also expected to enter into
severance agreements with each of the Executive Signatories.

Company Options

Pursuant to the Combination Agreement, at the
Effective Time, each Cashed-out Option, other than an Employee
Rollover Option, will be cancelled by the Company in exchange
for a cash payment by the Company in an amount equal to the
In-the-Money Amount of such settled Cashed-out Option, less any
required withholding taxes. In addition, each Company Option
issued and outstanding immediately prior to the Effective Time,
other than a Cashed-out Option or an Employee Rollover Option,
will cease to represent a right to receive any Common Shares.
Instead, beginning immediately after the Effective Time, the
sole entitlement of a holder of such a Company Option will be to
receive a cash payment from Masonite equal to the total
In-the-Money Amount of such Company Option, less any required
withholding taxes. Employee Rollover Options will be exchanged
for Replacement Options. The total In-the-Money Amount in
respect of the Replacement Options will, at the time of granting
such Replacement Options, equal (subject to rounding down to
take into account fractional shares) the total In-the-Money
Amount of the Employee Rollover Options exchanged for such
Replacement Options.

-31-



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##### 



Sources of Funds for the Arrangement

Under the Arrangement and related transactions,
Stile is expected to pay an aggregate amount of approximately
C$2.275 billion to (i) acquire all of the outstanding
Common Shares of Masonite, assuming no Shareholders exercise and
perfect their Dissent Rights, (ii) cancel all outstanding
Company Options and (iii) cancel all outstanding RSUs and
DSUs. Stiles cash payment will be reduced to the extent
Investing Employees enter into Employee Rollover Agreements in
respect of some or all of the Common Shares and Company Options
held by them. In addition, Stile expects the Company Credit
Facility, which had a balance of US$576 million on
December 31, 2004 (plus accrued interest thereon and
excluding breakage fees under such debt and hedging arrangements
related thereto which would have been US$26 million, net of
tax, as at December 31, 2004), to be repaid. Moreover,
Stile and Masonite will incur approximately US$120 million
in fees and expenses in connection with the Arrangement and
related transactions. The following arrangements are intended to
provide the necessary financing for the Arrangement. In
addition, it is expected that a portion of the Companys
cash and cash equivalents, which on December 31, 2004
totalled approximately US$80 million, will be used to repay
a portion of the Company Credit Facility on or before the
Effective Date.

Debt
Financing

Stile has received a commitment letter from The
Bank of Nova Scotia dated December 21, 2004 for Stile and
Stile U.S. Acquisition Corp. (Stile U.S.), a newly
formed and wholly-owned Subsidiary of Stile Holding, to obtain,
subject to the conditions described below, (1) senior
secured credit facilities in an aggregate amount of up to
US$1.5 billion and (2) either (a) up to US$850
million in aggregate principal amount of senior subordinated
notes in a public offering or private placement or (b) up
to US$850 million of senior subordinated increasing rate
loans under a senior subordinated bridge facility.

The proceeds of this financing will be used
(1) to repay Masonites outstanding debt under the
Company Credit Facility, (2) to pay a portion of the
purchase price for the acquisition of the Common Shares and the
payment in respect of outstanding Company Options, RSUs and
DSUs, (3) to provide financing for Masonites ongoing
working capital and general corporate needs, and (4) to pay
fees and expenses. This commitment will terminate on the earlier
of April 30, 2005 and the termination of the commitment by
Stile. The obligation of The Bank of Nova Scotia to provide the
financing contemplated by the commitment letter is subject to
customary conditions, including but not limited to the following:



| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | there not having occurred a Material Adverse
    Change with respect to Masonite;                               
|
| |  | the consummation of the Arrangement as
    contemplated by the Combination Agreement;                           
|
| |  | an affiliate of KKR having made the capital
    contribution described under  Equity
    Financing below; and
|
| |  | the execution of definitive loan documentation.                                                                 

It is a condition to the completion of the
Arrangement that Stile has received the funds in the amount
contemplated by the commitment letter to be delivered as of the
Effective Date of the Arrangement on the terms and conditions
set forth in the commitment letter.

(i) Senior Credit Facilities

It is expected that the senior credit facilities
contemplated by the debt commitment letter will be comprised of
(1) a senior secured term loan facility of up to
US$1.15 billion, the proceeds of which will be used solely
to pay the consideration for the acquisition of the Common
Shares and related costs and expenses, and (2) a senior
secured multi-currency revolving credit facility of up to
US$350 million, the proceeds of which are to be used solely
for general corporate purposes and of which an amount to be
agreed will be available in the form of letters of credit. The
term facility is expected to have a term of eight years and the
revolving facility is expected to have a term of six years. The
term facility is expected to bear interest, at the option of the
borrowers, at a per annum rate equal to LIBOR plus 2.5% or the
alternate base rate plus 1.5%. Borrowings under the revolving
facility are expected to initially bear interest, at the option
of the borrowers, at a per annum rate equal to an adjusted LIBOR
rate plus 2.5% or the alternate base rate plus 1.5%, subject to
adjustment based on the financial performance of the borrowers.
In addition, Stile and Stile U.S. expect to pay certain fees in
connection with the senior credit facilities, including a letter
of credit fee and an unused facility fee that will accrue at a
per annum rate of 0.50% on the undrawn portion of the
commitments under the revolving facility.

It is expected that the borrowers under the
senior credit facilities will be Stile and Stile U.S., and that
the senior credit facilities will be guaranteed by Stile Holding
or a direct wholly-owned subsidiary of Stile Holding owning all
of the capital stock of Stile and Stile U.S., and by Stile
U.S. (as to the obligations of Stile), Stile (as to the
obligations of Stile U.S.) and each Canadian and U.S.
subsidiary, and certain other material subsidiaries of Stile and
Stile U.S. (but excluding any non-U.S. subsidiaries of
Stile U.S. and their subsidiaries). It is further expected
that borrowings under the senior credit facilities will be
secured by substantially all the assets of the borrowers and
each guarantor, including but not limited to:

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a perfected first-priority pledge of all the
    capital stock held by either borrower or any guarantor (which
    will be limited in the case of any non-U.S. subsidiary of a U.S.
    entity to 65% of the voting stock of such non-U.S. subsidiary,
    and, in the case of other subsidiaries other than U.S. and
    Canadian subsidiaries, as the borrowers and The Bank of Nova
    Scotia agree); and
|
| |  | a perfected first-priority security interest in,
    and mortgages on, substantially all tangible and intangible
    assets of the borrowers and each guarantor.                                                                                                                                                                                                                                             

The senior credit facilities are expected to
contain customary affirmative and negative covenants, including
(1) a maximum leverage ratio, (2) a minimum interest
coverage ratio and (3) other covenants restricting
indebtedness, sales of assets, liens and dividends and other
distributions. The senior credit facilities are also expected to
contain customary representations and warranties and event of
default provisions.

(ii) Senior Subordinated Notes

It is expected that Stile and Stile U.S. will
issue up to US$850 million of new unsecured senior
subordinated notes pursuant to an offering exempt from
registration under the United States Securities Act of 1933. The
interest rate and other terms of the senior subordinated notes
will depend upon interest rate and market conditions at the time
of their issuance. However, it is anticipated that the senior
subordinated notes will:



| |   |                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | have a maturity of 10 years from the issue
    date;                                                                                                                                                                                                                                                                                                   
|
| |  | bear interest that must be paid in cash
    semi-annually;                                                                                                                                                                                                                                                                                             
|
| |  | be guaranteed by Stile Holding or a direct
    wholly-owned subsidiary of Stile Holding owning all of the
    capital stock of Stile and Stile U.S., by Stile (as to the
    obligations of Stile U.S.), Stile U.S. (as to the
    obligations of Stile) and by all subsidiaries of Stile and Stile
    U.S. that guarantee the senior credit facility;
|
| |  | be subordinated to any senior indebtedness of
    Stile, Stile U.S. and each guarantor; and                                                                                                                                                                                                                                                            
|
| |  | be unsecured obligations and rank equally with
    all senior subordinated indebtedness of Stile, Stile U.S.
    and each guarantor.                                                                                                                                                                                                                   

It is expected that the senior subordinated notes
will also contain covenants that are customary for this type of
financing, including, without limitation, restrictions on
dividends, stock repurchases, liens, indebtedness, affiliate
transactions, asset sales and mergers. It is expected that the
senior subordinated notes will be issued in an offering to be
consummated prior to or concurrently with the completion of the
Arrangement.

(iii) Bridge Facility

Pursuant to the debt commitment letter, The Bank
of Nova Scotia has committed to provide Stile and Stile U.S. an
unsecured senior bridge facility of up to US$850 million in
the event that Stile and Stile U.S. cannot complete the intended
issuance of US$850 million of senior subordinated notes
described above. The proceeds of this financing would be used to
provide a portion of the funds required to complete the
Arrangement and related transactions and to pay related fees and
expenses.

The loans under the bridge facility are expected
to have a term of eighteen months and to be convertible (subject
to certain conditions) at maturity (if not repaid) into senior
subordinated term loans that mature on the tenth anniversary of
the Effective Date. The bridge facility is expected to bear
interest during the first six months at the higher of
(1) 8.5% and (2) LIBOR plus 600 basis points, to
increase by 100 basis point for the subsequent three-month
period, and to increase by 50 basis points for each subsequent
three-month period thereafter. It is expected that the bridge
facility would be guaranteed by each guarantor of the senior
facility on a senior subordinated basis.

Equity
Financing

An affiliate of KKR has committed to provide
Stile or its assignee with an equity infusion of up to
US$575 million (less amounts invested by Senior Management
and employees and officers of the Company) on the Effective Date.

Effects of the Arrangement - Plans
and Proposals

It is presently expected that, shortly after the
completion of the Arrangement, the Employee Rollover Shares will
be acquired by Stile Holding and transferred to Stile, Masonite
will be amalgamated with Stile and the separate corporate
existence of Masonite will cease. Following such amalgamation,
it is presently expected that Stile will transfer the capital
stock of Masonite Holdings, Inc., a wholly

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owned Subsidiary of Masonite and the parent
company of Masonites United States subsidiaries, to Stile
U.S., in satisfaction of certain loans from Stile U.S. to Stile.
It is also possible that other internal reorganization
transactions may occur.


It is presently expected that, following the
completion of the Arrangement, the operations and business of
Masonite will be conducted substantially as they are currently
conducted. Except as described in the preceding paragraph,
neither Stile nor Stile Holding has any present plans or
proposals that relate to or would result in an extraordinary
corporate transaction involving Masonites corporate
structure, business or management, such as a merger,
reorganization, liquidation, relocation of any material
operations or sale or transfer of a material amount of assets.
However, Stile and Stile Holding will continue to evaluate
Masonites business, operations and assets after the
completion of the Arrangement from time to time, and may propose
or develop new plans and proposals which they consider to be in
the best interests of Masonite and its shareholders, including
the consideration of material changes in Masonites present
dividend rate or policy and level of indebtedness or
capitalization.

It is a condition to Stiles obligation to
complete the Arrangement that all of the current members of the
Board resign as of the Effective Date. At such time, Stile will
appoint individuals who are affiliated with it to fill the
vacancies created by such resignations. Stile may also consider
and propose changes in the number or term of the members of the
Board after the completion of the Arrangement from time to time.
It is presently anticipated that the current officers of
Masonite will continue to be the officers of the Company
following the completion of the Arrangement.

Stock Exchange Listings and Status as a
Reporting Issuer

As soon as possible after the Effective Date,
Stile will apply to have the Common Shares delisted from the TSX
and NYSE.

Following the Effective Date, it is also intended
that an application be made to the applicable securities
regulatory authorities in Canada for an order deeming Masonite
to no longer be a reporting issuer for the purposes
of applicable securities legislation. In addition, the
registration of Common Shares under the Securities Exchange Act
of 1934, as amended, will be terminated. As a result, Masonite
will no longer be subject to the ongoing disclosure and other
obligations currently imposed upon it under such legislation.
Masonite, however, will likely be required to file, or resume
filing, reports with the SEC as a result of the issuance of debt
securities registered under the securities laws of the United
States.

Expenses

The estimated fees, costs and expenses of
Masonite in connection with the Arrangement contemplated herein
including, without limitation, financial advisors fees,
filing fees, Special Committee fees, legal and accounting fees
and printing and mailing costs, excluding taxes, are anticipated
to be approximately US$5.0 million.

THE COMBINATION AGREEMENT

The following is only a summary of the material
terms of the Combination Agreement. Shareholders are urged to
read the Combination Agreement in its entirety. A copy is
attached as Appendix B to this Circular.

Effective Date of the Arrangement

After obtaining the Final Order and subject to
the satisfaction or waiver of the conditions set forth in the
Combination Agreement, including the receipt of certain of the
regulatory approvals referred to under Principal Legal
Matters  Principal Regulatory Approvals, Masonite
will send to the Director, for endorsement and filing by the
Director, the Articles of Arrangement and such other documents
as may be required under the OBCA to give effect to the
Arrangement. The Arrangement will become effective upon such
delivery.

Covenants of Masonite

Masonite has given, in favour of Stile, usual and
customary covenants for an agreement of this nature (including a
covenant to carry on business in the ordinary course, a covenant
not to undertake certain actions outside of the ordinary course
of business without Stiles consent and a covenant to use
commercially reasonable efforts to obtain the approvals
necessary for the Arrangement). In addition, Masonite has
provided certain non-solicitation covenants in favour of Stile.
Masonite has agreed, except as otherwise provided in the
Combination Agreement, that it will not, directly or indirectly
through any officer, director, employee, representative or agent
of Masonite or any of its Subsidiaries or otherwise,
(i) solicit, initiate, knowingly encourage or otherwise
facilitate the initiation of any inquiries or proposals
regarding an Acquisition Proposal, (ii) participate in any
discussions or negotiations regarding, or provide any
confidential information with respect to, any Acquisition
Proposal, (iii) approve or recommend, or publicly propose to
approve or

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recommend, any Acquisition Proposal,
(iv) accept or enter into or publicly propose to accept or
enter into, any letter of intent, agreement, arrangement or
understanding related to any Acquisition Proposal, or
(v) withdraw or modify or publicly propose to withdraw or
modify, in a manner adverse to Stile, the approval or
recommendation of the Board or the Special Committee of the
Arrangement.


Notwithstanding the foregoing, the Board is
permitted under the Combination Agreement to comply with the
Companys disclosure obligations under applicable laws with
regard to an Acquisition Proposal and take any other action to
the extent ordered by a court of competent jurisdiction. In
addition, Masonite is permitted to respond to a bona fide
request for information that could reasonably be expected to
lead to an Acquisition Proposal, solely by advising that no
information can be given unless a bona fide written Acquisition
Proposal is made, and then only in compliance with
Masonites non-solicitation covenants. Prior to the
Meeting, provided that Masonite has complied with its
non-solicitation covenants, if the Board concludes in good
faith, after consultation with its outside legal and financial
advisors, that it would be necessary to do so in order to
fulfill its fiduciary duties, the Board is permitted to
consider, participate in any discussions or negotiations, or
enter into a confidentiality agreement and provide information
in connection with, an unsolicited, bona fide written
Acquisition Proposal that the Board concludes in good faith,
after consultation with its outside legal and financial
advisors, is or is reasonably likely to be a Superior Proposal.
The Board may, upon terminating the Combination Agreement and
paying to Stile the Termination Payment, withdraw or change, in
a manner adverse to Stile, its approval or recommendation in
favour of the Arrangement and instead recommend a Superior
Proposal to the Shareholders, but only after extending to Stile
a right to match the Superior Proposal. Upon the termination of
the Combination Agreement as a result of Masonites breach
of its non-solicitation covenants, Masonite must pay to Stile
the Termination Payment.

Masonite has also covenanted under the
Combination Agreement to use commercially reasonable efforts to
cause its officers, employees and advisors to provide all
cooperation reasonably requested by Stile in connection with the
financing of the Arrangement by Stile. This includes using
commercially reasonable efforts to cause officers and employees
of the Company to be available to meet with prospective lenders
and investors and to assist in the preparation of necessary
disclosure documents regarding Stiles financing of the
Arrangement. Furthermore, Masonite has covenanted to use
commercially reasonable efforts to cause all employees who are
entitled to any change in control payments arising as a result
of the Arrangement to waive such entitlements.

Covenants of Stile

Stile has given, in favour of Masonite, usual and
customary covenants for an agreement of this nature, including
using commercially reasonable efforts to obtain the required
regulatory approvals relating to Stile and to carry out the
terms of the Interim Order and Final Order applicable to it.
Stile has also covenanted to use all commercially reasonable
efforts to obtain and effectuate the financing described under
Particulars of the Arrangement  Sources of Funds for
the Arrangement.

Representations and Warranties

Each of the parties to the Combination Agreement
made certain customary representations and warranties related to
their due organization, good standing, and authorization to
enter into the Combination Agreement, consents of governmental
entities required as a result of the transactions contemplated
by the Combination Agreement and the absence of any violation of
or conflict with such partys organizational documents,
applicable law or material contracts as a result of entering
into the Combination Agreement, among others. In addition, each
party made certain representations and warranties particular to
such party. These representations and warranties are, in some
cases, subject to specified exceptions and qualifications.

Conditions of Closing

Mutual
Conditions

The Combination Agreement provides that the
respective obligations of each party to complete the Arrangement
are subject to the satisfaction or waiver, by mutual consent of
Masonite and Stile, of the following conditions on or before the
Effective Time:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | the Arrangement Resolution shall have been
    approved (i) by the Shareholders by 66 2/3% of the votes
    cast by Shareholders who are present in person or by proxy at
    the Meeting, (ii) by a simple majority of the votes cast on
    the Arrangement Resolution by the Shareholders present in person
    or by proxy at the Meeting excluding votes in respect of Common
    Shares held by Senior Management, and (iii) in accordance
    with any other conditions contained in the Interim Order;
|
| | (b) | the Interim Order and the Final Order shall have
    each been obtained on terms consistent with the Combination
    Agreement and in a form satisfactory to Masonite and Stile,
    acting reasonably, and shall not have been set aside or modified
    in a manner unacceptable to such parties, acting reasonably, on
    appeal or otherwise;                                                                                                                                                            

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| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) | the Articles of Arrangement shall be in content
    consistent with the Combination Agreement and in form
    satisfactory to Masonite and Stile, acting reasonably;                                                                                                                                                                                                                                                                                                       
|
| | (d) | there shall not be in force any Law (as defined
    in the Combination Agreement), final and non-appealable
    injunction, order or decree prohibiting, restraining or
    enjoining the consummation of the Arrangement;                                                                                                                                                                                                                                                 
|
| | (e) | the regulatory approvals relating to the
    Competition Act, the Investment Canada Act, the HSR Act, the
    Merger Regulation (European Community), the Competition Act 89
    (South Africa) and the New Jersey Industrial Site Recovery Act,
    all as described under Principal Legal Matters 
    Principal Regulatory Approvals shall have been obtained or
    satisfied on terms and conditions satisfactory to Masonite and
    Stile, acting reasonably; and
|
| | (f) | the Combination Agreement shall not have been
    terminated pursuant to its terms. See
     Termination of Combination Agreement.                                                                                                                                                                                                                                                                                                                                      

Additional
Conditions in Favour of Stile

The Combination Agreement provides that the
obligation of Stile to complete the Arrangement is also subject
to the fulfillment of a number of additional conditions, each of
which is for the exclusive benefit of Stile and may be waived by
it. These additional conditions include:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | the covenants of Masonite contained in the
    Combination Agreement shall have been performed in all material
    respects on or before the Effective Date;                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (b) | Masonites representations and warranties
    shall have been true and correct at December 22, 2004 and
    at the Effective Time;                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (c) | Masonite shall have taken the necessary corporate
    action to permit the consummation of the Arrangement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (d) | no Material Adverse Change shall have occurred
    from December 22, 2004 to the Effective Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (e) | there shall not be pending or threatened in
    writing any actions or proceedings by any government entity
    seeking to prohibit the Arrangement, limit the ownership or
    operation by Stile of the business of Masonite, limit the
    ability of Stile to acquire or hold any Common Shares or from
    controlling in any material respect the business or operations
    of Masonite or which in the judgement of Stile, is reasonably
    likely to have a Material Adverse Effect on Masonite or Stile;                                                                                    
|
| | (f) | Dissent Rights shall not have been exercised by
    Shareholders holding more than 15% of the outstanding Common
    Shares;                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (g) | none of the Executive Signatories shall have
    resigned, they shall have each waived any change in control
    payments to which they would otherwise be entitled to receive as
    a result of the Arrangement, they shall have each invested in
    Stile (or its direct or indirect parent) as described under
    Particulars of the Arrangement  Interests of
    Directors and Senior Officers in the Arrangement and the
    aggregate equity investment of employees and officers of the
    Company in Stile (or its direct or indirect parent) shall not be
    less than US$25 million;
|
| | (h) | Stile shall have received the funds described
    under Particulars of the Arrangement  Sources of
    Funds for the Arrangement on the terms and conditions set
    forth in the commitment letters relating thereto;                                                                                                                                                                                                                                                                                                                                                                              
|
| | (i) | certain specific consents as well as all
    necessary third party consents, waivers, approvals or
    authorizations to the completion of the Arrangement shall have
    been obtained on terms satisfactory to Stile, acting reasonably,
    except where the failure to so obtain said consents, waivers,
    approvals or authorizations would not reasonably be expected to
    have a Material Adverse Effect, individually or in the
    aggregate, on Masonite;                                                                                                                                
|
| | (j) | the Board shall not have approved or recommended
    any Acquisition Proposal;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (k) | all of the directors on the Board shall have
    resigned as of the Effective Time;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (l) | there shall not have occurred any actual change
    or amendment to (or any proposal to amend or change) the Tax Act
    or Code, as applicable, or other Tax legislation which
    individually or in the aggregate, directly or indirectly, has or
    could reasonably be expected to have any material adverse effect
    with respect to the Arrangement or Stiles ownership of the
    Company, and which was not publicly announced or proposed on or
    prior to December 22, 2004;                                                                                                          

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| |     |                                                                                                                                                                      
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (m) | no person other than Stile shall have entered
    into a definitive agreement or an agreement in principle with
    Masonite with respect to an Acquisition Proposal;
|
| | (n) | Stile shall have been provided with
    payoff letters from the providers of the Company
    Credit Facility in form and content satisfactory to
    Stile; and    
|
| | (o) | no more than 350,000 Common Shares shall have
    been issued under the Company Stock Option Plan between
    December 22, 2004 and the Effective Date.              

Additional
Conditions in Favour of Masonite

The Combination Agreement provides that the
obligation of Masonite to complete the Arrangement is also
subject to the following conditions, each of which is for the
exclusive benefit of Masonite and may be waived by it:



| |     |                                                                                                                                                          
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | the covenants of Stile contained in the
    Combination Agreement shall have been performed in all material
    respects on or before the Effective Date;
|
| | (b) | the representations and warranties of Stile shall
    have been true and correct at December 22, 2004 and at the
    Effective Date;                     
|
| | (c) | Stile shall have taken all necessary corporate
    actions to permit the consummation of the Arrangement; and                                            
|
| | (d) | Stile shall have deposited the total cash
    purchase price payable for the Common Shares and Company Options
    with the Depositary.                  

Termination of Combination Agreement

The Combination Agreement may be terminated at or
before the Effective Time as follows:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | by Stile if any of the closing conditions in its
    favour (including the mutual conditions) has not been satisfied
    by the Effective Time;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (b) | by Masonite if any of the conditions in its
    favour (including the mutual conditions) has not been satisfied
    by the Effective Time;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (c) | by mutual agreement of Masonite and Stile before
    or after the Meeting;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (d) | by either party if any law is passed that makes
    the Arrangement illegal or otherwise prohibited;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (e) | by Stile if (i) the Board fails to recommend
    or withdraws, modifies or changes in a manner adverse to Stile
    its approval or recommendation of the Combination Agreement, the
    Arrangement or the Arrangement Resolution, (ii) the Board
    approves or recommends any Acquisition Proposal,
    (iii) Masonite breaches its non-solicitation covenants
    contained in the Combination Agreement, or (iv) an
    Acquisition Proposal shall have been publicly made, announced or
    otherwise disclosed before the Meeting and the Board shall not
    have sent to Shareholders a statement re-affirming the
    recommendation for the Arrangement within ten days (in the case
    of a take-over bid) or issued a press release within ten days
    disclosing that the Board reaffirms its recommendation of the
    Arrangement (in the case of an Acquisition Proposal that is not
    a take-over bid);
|
| | (f) | by Masonite in order to enter into a definitive
    agreement with respect to a Superior Proposal, provided Masonite
    is not in breach of its non-solicitation covenants and pays the
    fee described under  Termination Payment
    below;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (g) | by either party if the Shareholders do not
    approve the Arrangement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (h) | by Stile if the conditions described under
    paragraphs (a) and (b) above under
     Additional Conditions in Favour of Stile
    are not satisfied; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (i) | by Stile if the Meeting has not occurred on or
    before March 1, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

If the Arrangement is not completed by
March 31, 2005, then, unless otherwise agreed in writing by
Stile and Masonite, the Combination Agreement shall terminate
provided that if the required regulatory approvals have not been
obtained by the date that is five Business Days before
March 31, 2005, either party may unilaterally extend the
termination of the Combination Agreement by an additional
30 days by providing notice in writing to the other party.

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Termination Payment

The Combination Agreement specifies that Masonite
must pay the Termination Payment if:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | Stile terminates the Combination Agreement due to
    a failure of the Board to recommend or the Board withdrawing,
    modifying or changing, in a manner adverse to Stile, its
    approval or recommendation of the Combination Agreement, the
    Arrangement or the Arrangement Resolution; the Board approving
    or recommending any Acquisition Proposal other than the
    Arrangement; Masonite breaching its non-solicitation covenants;
    or the Board failing to re-affirm its recommendation of the
    Arrangement within ten days of an Acquisition Proposal
    having been publicly made, announced or otherwise disclosed
    before the Meeting; or
|
| | (b) | Masonite terminates the Combination Agreement in
    order to enter into a definitive agreement with respect to a
    Superior Proposal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Furthermore, in the event that Masonite or Stile
terminates the Combination Agreement:



| |     |                                                                                                                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | because the Shareholders do not approve the
    Arrangement;                                                                                                                                                                          
|
| | (b) | because any of Masonites representations
    and warranties is wilfully or intentionally breached causing the
    condition to closing relating to the accuracy of Masonites
    representations and warranties to not be satisfied;
|
| | (c) | because Masonite breaches a covenant under the
    Combination Agreement causing the condition relating to the
    satisfaction of Masonites covenants to not be satisfied; or                                                       
|
| | (d) | because the Meeting has not occurred by
    March 1, 2005,                                                                                                                                                                            

and concurrently with such termination or within
12 months thereof, Masonite enters into, or submits to the
Shareholders for approval, an agreement with respect to an
Acquisition Proposal or an Acquisition Proposal is consummated,
then Masonite must pay the Termination Payment.

Amendment

The Combination Agreement and Plan of Arrangement
may be modified before or after the Meeting, but before the
Effective Date, by agreement in writing of Masonite and Stile,
and any such amendment may, without further Shareholder
approvals, subject to applicable Laws and any applicable order
of the Court, without limitation:



| |     |                                                                                         
| | --- | ----------------------------------------------------------------------------------------
| | (a) | change the time for performance of any
    obligations of the parties;                  
|
| | (b) | waive any inaccuracies or modify any
    representations and warranties;                
|
| | (c) | waive compliance with or modify any covenants or
    obligations to be performed; and/or
|
| | (d) | waive compliance with or modify any conditions to
    closing.                          

PRINCIPAL LEGAL MATTERS

Court Approval and Completion of the
Arrangement

An arrangement of a corporation under the OBCA
requires Court approval. Prior to the mailing of this Circular,
Masonite obtained the Interim Order authorizing and directing
Masonite to call, hold and conduct the Meeting in accordance
with the Notice of Special Meeting, the OBCA and the Interim
Order and, in that connection, to submit the Arrangement to the
Meeting and to seek approval thereof from the Shareholders in
the manner set forth in the Interim Order. A copy of the Interim
Order is attached as Appendix C to this Circular.

Subject to the requisite approval of the
Arrangement Resolution by Shareholders at the Meeting, the
hearing in respect of the Final Order is scheduled to take place
on February 21, 2005 at 10:00 a.m. (Toronto time) in
the Court at 393 University Avenue, Toronto, Ontario, or as soon
thereafter as is reasonably practicable. At the hearing, any
Shareholder or other interested party who wishes to participate
or to be represented or to present evidence or argument may do
so, subject to filing with the Court a notice of appearance in
accordance with the Ontario Rules of Civil Procedure, serving
such notice of appearance upon the solicitors of Masonite and
Stile and upon all other parties who have filed a notice of
appearance and satisfying any other requirements as provided in
the Interim Order. At the hearing for the Final Order, the Court
will consider, among other things, the fairness and
reasonableness of the Arrangement. The Court may approve the
Arrangement either as proposed or as amended in any manner the
Court may direct, subject to compliance with

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##### 



such terms and conditions, if any, as the Court
deems fit. The Notice of Application for the Final Order is
attached as Appendix D to this Circular.


Assuming that the Final Order is granted, and
that the other conditions set forth in the Combination Agreement
are satisfied or waived by the party or parties for whose
benefit they exist, then the Articles of Arrangement will be
filed with the Director to give effect to the Arrangement and
all other arrangements and documents necessary to complete the
Arrangement will be delivered as soon as reasonably practicable
thereafter.

Principal Regulatory Approvals

Competition
Act (Canada)

Under the Competition Act(Canada) (the
Competition Act), a transaction that exceeds certain
financial thresholds requires prior notification (a
Notifiable Transaction) to the Commissioner under
the Competition Act (the Commissioner) unless the
Commissioner issues an advance ruling certificate under section
102 of the Competition Act (an ARC) or waives the
filing obligation in respect of the transaction. If a
transaction is a Notifiable Transaction, it may not be completed
until the applicable statutory waiting period has expired, or
the Commissioner has either issued an ARC or, in lieu of an ARC,
waived the filing obligation. However, the Commissioners
review of a transaction may take longer than the statutory
waiting period.

The Arrangement is a Notifiable Transaction.
Stile filed a request for an ARC with the Commissioner on
January 6, 2005, and received an ARC on January 10,
2005.

Investment
Canada Act

Under the Investment Canada Act, transactions
exceeding certain financial thresholds, and which involve the
acquisition of control of a Canadian business by a non-Canadian,
are subject to review and cannot be implemented unless the
Minister responsible for the Investment Canada Act (the
Minister) is satisfied that the transaction is
likely to be of net benefit to Canada. If a
transaction is subject to the review requirement (a
Reviewable Transaction), an application for review
must be filed with the Investment Review Division of Industry
Canada prior to the implementation of the Reviewable
Transaction. The Minister is then required to determine whether
the Reviewable Transaction is likely to be of net benefit to
Canada taking into account, among other things, certain factors
specified in the Investment Canada Act and any written
undertakings that may have been given by the applicant. The
Investment Canada Act contemplates an initial review period of
up to 45 days after filing; however, if the Minister has
not completed the review by that date, the Minister may
unilaterally extend the review period by up to 30 days (or
such longer period as may be agreed to by the applicant and the
Minister) to permit completion of the review.

The prescribed factors of assessment to be
considered by the Minister include, among other things, the
effect of the investment on the level and nature of economic
activity in Canada (including the effect on employment, resource
processing, utilization of Canadian products and services and
exports), the degree and significance of participation by
Canadians in the acquired business, the effect of the investment
on productivity, industrial efficiency, technological
development, product innovation and product variety in Canada,
the effect of industrial, economic and cultural policies (taking
into consideration corresponding provincial policies), and the
contribution of the investment to Canadas ability to
compete in world markets. If the Minister is not satisfied that
the Reviewable Transaction is likely to be of net benefit to
Canada, the Reviewable Transaction may not be implemented.

The Arrangement is a Reviewable Transaction.
Stile filed an application for review with the Investment Review
Division of Industry Canada on January 6, 2005.

Hart-Scott-Rodino
Act

Under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976(the HSR Act), the
Arrangement may not be completed until notifications have been
given, required information and materials have been furnished to
and reviewed by the Antitrust Division of the U.S. Department of
Justice and the U.S. Federal Trade Commission, and the required
waiting period has expired or been earlier terminated. Under the
HSR Act, the transaction may not be completed until 30 days
after the initial filing (unless early termination of this
waiting period is granted) or, if the Antitrust Division of the
Department of Justice or the Federal Trade Commission issues a
request for additional information, 30 days after Masonite
and Stile have complied with that request for additional
information (unless this period is shortened by a grant of early
termination).

Masonite and Stile each filed a Notification and
Report Form under the HSR Act with the U.S. Department of
Justice and the Federal Trade Commission on January 7, 2005.

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After the statutory waiting periods, and even
after the completion of the Arrangement, U.S. federal or state
governmental authorities could seek to challenge the Arrangement
as they deem necessary or desirable in the public interest.

Merger
Regulation (European Community)

Under the European Community Merger Regulation
(ECMR), merging parties that exceed certain
financial thresholds must notify their transaction to the
European Commission. A transaction may not be completed until a
notification has been made to and reviewed by the European
Commission, and the European Commission has authorized the
transaction.

If none of the parties to the concentration are
engaged in business activities in the same relevant product and
geographic market (i.e., no horizontal competitive overlap), or
in a market which is upstream or downstream of a market in which
another party to the concentration is engaged (i.e., no vertical
relationship) or, if any such horizontal overlap or vertical
relationship is below certain threshold limits, the parties may
use a Short Notification Form for notifying their transaction to
the European Commission. However, the European Commission may
exceptionally require a full form notification where the
conditions for using the Short Notification Form are met but
where the European Commission determines that a notification
under a full form notification is necessary for an adequate
investigation of possible competition concerns.

Under the ECMR, during the first phase of its
analysis of the transaction (Phase I), the European
Commission must, within 25 working days of the date a
complete Form is received, either authorize the transaction or
open a full investigation. Phase I is increased to
35 working days where the parties offer commitments with a
view to rendering the concentration compatible with the common
market. The European Commission may, as of the close of Phase I,
initiate a full investigation (Phase II) which
period may last 90 working days (or 105 working days where
the undertakings concerned offer commitments with a view to
rendering the concentration compatible with the common market)
from the date on which Phase II proceedings are initiated.
The Phase II period may also be extended by the European
Commission with the agreement of the notifying parties for up to
20 Business Days.

Stile filed a Short Notification Form under the
ECMR with the European Commission on January 14, 2005.

Competition
Act 89 (South Africa)

Under the South African Competition Act 89
(SACA), transactions involving assets or turnovers
in, into or from South Africa meeting certain financial
thresholds must be notified to the Competition Commission. A
transaction may not be completed until a notification has been
made to and reviewed by the Competition Commission and the South
African Commissioner and Deputy Commissioners have authorized
the transaction.

The South African Commissioner and Deputy
Commissioners must either approve the transaction (conditionally
or unconditionally) or prohibit the transaction within
20 business days which can unilaterally be extended by the
South African Competition Commissioner by an additional
40 business days. A faster procedure may be granted
provided that certain conditions are met, including that the
transaction does not raise any horizontal or vertical
competition concerns.

Stile filed a notification under the SACA with
the Competition Commission on January 12, 2005.

Law
8884 (Brazil)

Under the Brazilian Law 8884 (the Brazilian
antitrust law), transactions which exceed certain financial or
market share thresholds require notification to the CADE (the
Brazilian antitrust commission). Such notifiable transactions
may be completed before the SEAE (an office of the Ministry of
Finance, in charge of economic investigations) and the SDE (an
office of the Ministry of Justice) issue their opinions on the
transaction and the CADE authorizes the transaction.
Authorization by the CADE is not a condition to the completion
of the Arrangement.

Stile filed a notification with the CADE on
January 11, 2005.

Federal
Law of Economic Competition (Mexico)

Under the Mexican Federal Law of Economic
Competition (the MLC), transactions that exceed
certain financial thresholds, or which result in one company
holding certain minimum levels of assets or shares of another
company in Mexico, or which result in an additional accumulation
in Mexico of assets and capital stock of in excess of certain
thresholds, must be notified to the Mexican Federal Competition
Commission (the Mexican Commission).

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Under the MLC, the Mexican Commission must issue
a resolution within 45 calendar days, either authorizing the
transaction, clearing the transaction subject to conditions, or
blocking the transaction. Authorization by the Mexican
Commission is not a condition to the completion of the
Arrangement.

Stile expects to file a notification with the
Mexican Commission by January 21, 2005.

New
Jersey Industrial Site Recovery Act

A New Jersey environmental statute, the
Industrial Site Recovery Act, requires an environmental
assessment of statutorily defined industrial properties be
performed in the event of a change in control or corporate
reorganization and that, if any investigation and/or remediation
is necessary, appropriate financial guarantees be provided. On
December 30, 2004, the Company submitted a request to the
New Jersey Department of Environmental Protection seeking its
view as to the applicability of the Industrial Site Recovery Act
to the Companys New Jersey facility. On January 10,
2005, the Department informed the Company that it concurred with
the Companys view that such Act does not apply to the
Companys New Jersey facility.

CERTAIN CANADIAN FEDERAL INCOME TAX
CONSIDERATIONS

In the opinion of Davies Ward Phillips &
Vineberg LLP, counsel to Masonite, the following summary
describes the principal Canadian federal income tax
considerations in respect of the Arrangement generally
applicable to a holder of Common Shares who, for purposes of the
Tax Act and at all relevant times, holds such Common Shares as
capital property, deals at arms length and is not
affiliated with each of Masonite and Stile (a
Holder), and disposes of Common Shares to Stile
under the Arrangement. Employee Rollover Shares will not be
disposed of under the Arrangement.

Common Shares will generally be considered to be
capital property to a Holder unless the Holder holds such Common
Shares in the course of carrying on a business or acquired such
Common Shares in a transaction or transactions considered to be
an adventure or concern in the nature of trade. Certain Canadian
resident Holders whose Common Shares might not otherwise be
considered capital property may, in certain circumstances, make
an irrevocable election in accordance with subsection 39(4) of
the Tax Act to have the Common Shares and all other
Canadian securities as defined in the Tax Act owned
by such Holder in the taxation year in which the election is
made and in all subsequent taxation years deemed to be capital
property.

This summary is based upon the current provisions
of the Tax Act and the regulations thereunder in force as of the
date hereof, and counsels understanding, based on publicly
available materials published in writing prior to the date
hereof, of the current administrative practices of the Canada
Revenue Agency (CRA). This summary also takes into
account all specific proposals to amend the Tax Act and the
regulations thereunder publicly announced by or on behalf of the
Minister of Finance (Canada) prior to the date hereof (the
Tax Proposals) and assumes that all Tax Proposals
will be enacted in the form proposed. However, there can be no
assurance that the Tax Proposals will be enacted in their
current form, or at all. This summary is not exhaustive of all
possible Canadian federal income tax considerations and, except
for the Tax Proposals, does not take into account or anticipate
any changes in law or administrative practice, whether by
legislative, regulatory, administrative or judicial decision or
action, nor does it take into account or consider other federal
or any provincial, territorial or foreign tax considerations,
which may differ significantly from the Canadian federal income
tax considerations described herein.

This summary is not applicable to a Holder that
is a financial institution as defined in the Tax Act
for the purposes of the mark-to-market rules, to a
Holder that is a specified financial institution as
defined in the Tax Act, or to a Holder an interest in which
would be a tax shelter investment within the meaning
of the Tax Act. Such Holders should consult their own tax
advisors.

This summary does not describe the tax
consequences to holders of Company Options in respect of the
exercise or cancellation of such Company Options prior to or
pursuant to the Arrangement. Holders of Company Options should
consult their own tax advisors with respect to their particular
circumstances.

This summary is of a general nature only and
is not intended to be, nor should it be construed to be, legal
or tax advice to any particular Holder. This summary is not
exhaustive of all federal income tax considerations.
Consequently, Holders are urged to consult their own tax
advisors for advice regarding the income tax consequences to
them of disposing of their Common Shares pursuant to the
Arrangement, having regard to their own particular
circumstances, and any other consequences to them of such
transactions under Canadian federal, provincial, local and
foreign tax laws.

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Holders Resident in Canada

The following portion of the summary is generally
applicable to a Holder who, for purposes of the Tax Act and any
applicable income tax treaty, and at all relevant times, is
resident or deemed to be resident in Canada (a Resident
Holder).

Disposition
of Common Shares under the Arrangement

A Resident Holder who disposes of Common Shares
to Stile under the Arrangement will realize a capital gain (or
capital loss) to the extent that the cash paid to the Resident
Holder for such Common Shares under the Arrangement, net of any
reasonable costs of disposition, exceeds (or is less than) the
adjusted cost base to the Resident Holder of such Common Shares
immediately before the disposition.

The amount of any capital loss realized by a
Resident Holder that is a corporation on the disposition of a
Common Share may be reduced by the amount of any dividends
received or deemed to be received on the Common Share, subject
to and in accordance with the provisions of the Tax Act. Similar
rules may apply to a partnership or trust of which a
corporation, trust or partnership is a member or beneficiary.

Capital
Gains and Losses

Generally, a Resident Holder is required to
include in computing its income for a taxation year one-half of
the amount of any capital gain (a taxable capital
gain) realized in such taxation year. Subject to and in
accordance with the provisions of the Tax Act, a Resident Holder
is required to deduct one-half of the amount of any capital loss
(an allowable capital loss) realized in a taxation
year from taxable capital gains realized by the Resident Holder
in the year. Allowable capital losses in excess of taxable
capital gains may be carried back and deducted in any of the
three preceding taxation years or carried forward and deducted
in any subsequent taxation year against net taxable capital
gains realized in such years in the circumstances described in
the Tax Act.

Capital gains realized by individuals and certain
trusts may give rise to a liability for alternative minimum tax
under the Tax Act.

Additional
Refundable Tax

A Resident Holder that is throughout the year a
Canadian controlled private corporation as defined
in the Tax Act may be liable to pay an additional refundable tax
of 6 2/3% on certain investment income, including taxable
capital gains, interest and dividends that are not deductible in
computing taxable income.

Dissenting
Resident Holders

A Resident Holder who dissents from the
Arrangement will be considered to have disposed of such
Holders Common Shares to Stile and will be entitled to
receive a payment from Stile of an amount equal to the fair
value of the Common Shares held by such Resident Holder. A
dissenting Resident Holder will realize a capital gain (or
capital loss) to the extent that the payment received from Stile
on the disposition of the Common Shares, less any interest
awarded by the Court, exceeds (or is less than) the adjusted
cost base to the Resident Holder of such Common Shares
immediately before the disposition. The taxation of capital
gains and losses is described above.

Any interest awarded by a Court must be included
in the dissenting Resident Holders income for the purposes
of the Tax Act.

Holders Not Resident in Canada

The following portion of the summary is generally
applicable to a Holder who, for the purposes of the Tax Act and
any applicable income tax convention, and at all relevant times,
is not and has not been a resident or deemed to be a resident of
Canada and does not use or hold, and is not deemed to use or
hold, the Common Shares in connection with carrying on a
business in Canada (a Non-Resident Holder). Special
rules, which are not discussed in this summary, may apply to a
non-resident that is an insurer carrying on business in Canada
and elsewhere.

Disposition
of Common Shares under the Arrangement

A Non-Resident Holder will not be subject to tax
under the Tax Act on any capital gain, or entitled to deduct any
capital loss, realized on the disposition of Common Shares to
Stile under the Arrangement unless such Common Shares constitute
taxable Canadian property to the Non-Resident Holder
and do not constitute treaty-protected property.

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##### 



Generally, a Common Share will not be taxable
Canadian property to a Non-Resident Holder at the time of
disposition provided that (i) such Common Share is listed
on a prescribed stock exchange (which currently includes the TSX
and the NYSE) at that time, (ii) the Non-Resident Holder,
persons with whom the Non-Resident Holder does not deal at
arms length, or the Non-Resident Holder together with such
persons, did not own 25% or more of the issued shares of any
class or series in the capital of Masonite at any time during
the 60-month period immediately preceding that time, and
(iii) such Common Share is not deemed to be taxable
Canadian property for purposes of the Tax Act.

Even if the Common Shares are taxable Canadian
property to a Non-Resident Holder, a taxable capital gain
resulting from the disposition of the Common Shares will not be
included in computing the Non-Resident Holders income for
the purposes of the Tax Act if the Common Shares constitute
treaty-protected property. Common Shares owned by a
Non-Resident Holder will generally be treaty-protected property
if the gain from the disposition of such property would, because
of an applicable income tax treaty to which Canada is a
signatory, be exempt from tax under the Tax Act. In the event
that Common Shares constitute taxable Canadian property but not
treaty-protected property to a particular Non-Resident Holder,
the tax consequences as described above under
 Holders Resident in Canada  Disposition
of Common Shares Under the Arrangement will generally
apply.

Dissenting
Non-Resident Holders

A Non-Resident Holder who dissents from the
Arrangement will be considered to have disposed of such
Holders Common Shares to Stile and will be entitled to
receive a payment from Stile of an amount equal to the fair
value of the Non-Resident Holders Common Shares. A
dissenting Non-Resident Holder will realize a capital gain (or
capital loss) to the extent that the payment received from Stile
on the disposition of the Common Shares, less any interest
awarded by the Court, exceeds (or is less than) the adjusted
cost base to the Non-Resident Holder of such Common Shares
immediately before the disposition. The taxation of capital
gains and losses is described above under
 Holders Not Resident in Canada 
Disposition of Common Shares Under the Arrangement.

Any interest awarded by a Court and paid or
credited to a dissenting Non-Resident Holder will be subject to
Canadian withholding tax at the rate of 25%, subject to
reduction pursuant to the provisions of an applicable income tax
treaty.

CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES

The following is a discussion of the material
United States federal income tax consequences of the Arrangement
to holders of Common Shares and is based upon the Code, United
States Treasury regulations, Internal Revenue Service
(IRS) rulings and judicial and administrative
decisions in effect as of the date of this Circular. This
discussion is limited to the material United States federal
income tax consequences of the Arrangement to Shareholders who
are U.S. Holders (as defined below) and who, on the date on
which the Arrangement is completed, hold Common Shares as a
capital asset. The general tax principles discussed below are
subject to retroactive changes that may result from amendments
to the Code after the date of this Circular. This discussion
does not address taxpayers subject to special treatment under
the U.S. federal income tax laws, such as insurance
companies, financial institutions, dealers in securities, tax
exempt organizations, S corporations and taxpayers subject to
the alternative minimum tax. This discussion may not apply to
Shareholders who acquired their Common Shares upon the exercise
of employee stock options or otherwise as compensation or who
hold their shares as part of a hedge, straddle or conversion
transaction. This discussion does not address potential foreign,
state, local or other tax consequences of the Arrangement.
All Shareholders are urged to consult their own tax advisors
regarding the U.S. federal income tax consequences, as well
as the foreign, state and local tax consequences of the
disposition of their Common Shares in the Arrangement.

If a partnership holds Common Shares, the tax
treatment of a partner will generally depend upon the status of
the partner and the activities of the partnership. If a
U.S. Holder is a partner of a partnership holding such
Common Shares, the holder is urged to consult its tax advisors
regarding the tax consequences of the Arrangement.

As used in this section Certain United
States Federal Income Tax Consequences, the term
U.S. Holder means a beneficial holder of Common
Shares that is (i) an individual citizen or resident of the
United States, (ii) a corporation, or other entity taxable
as a corporation, created or organized in or under the laws of
the United States, any state thereof or the District of
Columbia, (iii) an estate the income of which is subject to
U.S. federal income taxation regardless of its source, or
(iv) a trust (A) that is subject to the supervision of
a court within the United States and the control of one or more
United States persons as described in Section 7701(a)(30)
of the Code or (B) that has a valid election in effect
under applicable U.S. Treasury regulations to be treated as
a United States person.

For United States federal income tax purposes,
the Arrangement will be treated as a taxable sale or exchange of
Common Shares for cash by each U.S. Holder (including any
U.S. Holder who properly exercises Dissent Rights).
Accordingly, a U.S. Holder will recognize capital gain or
loss by reason of the disposition of its Common Shares pursuant
to the Arrangement in an amount equal to

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##### 



the difference between the amount of cash
received by the U.S. Holder (either in connection with the
Arrangement or in connection with the exercise of Dissent
Rights) and the U.S. Holders tax basis in its Common
Shares. Such capital gain or loss will be long term with respect
to Common Shares the U.S. Holder has held for a period of
more than one year as of the effective time of the Arrangement.
Long-term capital gain of a non-corporate U.S. Holder is
generally subject to tax at a maximum rate of 15%. The
deductibility of capital losses is subject to limitations.


The amount of any cash paid in Canadian dollars
will equal the U.S. dollar value of the Canadian dollars
received, calculated by reference to the exchange rate in effect
on the date the cash is received by the U.S. Holder,
regardless of whether the Canadian dollars are converted into
U.S. dollars. If the Canadian dollars received are not
converted into U.S. dollars on the date of receipt, a
U.S. Holder will have a basis in the Canadian dollars equal
to its U.S. dollar value on the date of receipt. Any gain
or loss realized on a subsequent conversion or other disposition
of the Canadian dollars will be treated as ordinary income
or loss.

A U.S. Holder may be subject to information
reporting and backup withholding if it is a non-corporate
U.S. Holder and (i) fails to provide an accurate
taxpayer identification number; (ii) is notified by the IRS
that it failed to report all interest or dividends required to
be shown on its U.S. federal income tax returns; or
(iii) in certain circumstances, fails to comply with
applicable certification requirements. The amount of any backup
withholding from a payment to a U.S. Holder will be allowed
as a refund or a credit against the U.S. Holders
U.S. federal income tax liability provided the required
information is provided to the IRS.

INFORMATION CONCERNING MASONITE

General

Masonite was formed by articles of amalgamation
under the OBCA on January 1, 2002 upon the amalgamation of
Premdor Inc. and its wholly-owned subsidiaries, Masonite
International Corporation and Les Portes Centenaires Ltée.
As a result of this amalgamation, the company changed its name
from Premdor Inc. to Masonite International Corporation. The
registered and principal office of Masonite is located at
1600 Britannia Road East, Mississauga, Ontario L4W 1J2
(registered office phone number: (905) 670-6500).

The principal business of Masonite is the
manufacturing of doors, door components and door entry systems
for new residential construction, home repair, renovation and
remodelling and commercial use. Masonite manufactures a broad
line of interior doors and also manufactures exterior doors and
door components which are sold to large distributors, jobbers,
home centre chains and wholesale and retail buildings supply
dealers across North America, South America, France, the United
Kingdom, Europe and other countries in the Middle East and Asia.

Documents Incorporated by Reference

The following documents filed with the Canadian
and United States securities regulatory authorities are
specifically incorporated by reference in and form an integral
part of this Circular: (i) Masonites Annual
Information Form dated May 3, 2004 for the year ended
December 31, 2003; (ii) the audited consolidated
financial statements of Masonite for the year ended
December 31, 2003 together with managements
discussion and analysis thereon; and (iii) Masonites
unaudited consolidated financial statements for the nine months
ended September 30, 2004 together with managements
discussion and analysis thereon. These documents and other
documents Masonite is required to make public are available on
SEDAR at www.sedar.com and on EDGAR at www.sec.gov and will be
provided promptly and free of charge, upon request, to any
Shareholder.

Any statement contained in a document
incorporated by reference herein shall be deemed to be modified
or superceded for the purposes of this Circular to the extent
that a statement contained herein, or in any other subsequently
filed document which also is incorporated by reference herein,
modifies or supercedes that statement. Any statement so modified
or superceded shall not be deemed, except as so modified or
superceded, to constitute a part of this Circular. The making of
a modifying or superceding statement shall not be deemed an
admission for any purposes that the modified or superceded
statement, when made, constitutes a misrepresentation, an untrue
statement of a material fact or an omission to state a material
facts that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in
which it was made.

Recent Developments

Since the date of Masonites last annual
information form, the Company completed a number of acquisitions
using cash on hand. In June 2004, the Company completed the
acquisition of a 75% interest in an Eastern European door
manufacturer for net cash consideration of approximately
US$22.2 million.

-44-



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##### 



In July 2004, the Company completed the
acquisition of a 50% equity interest in a molded door facing
manufacturing facility located in Malaysia.

In September 2004, the Company acquired a 100%
interest in a door and door component manufacturing company
located in the United States for consideration of approximately
US$33 million.

The Company also completed a small investment in
a door component facility in the second quarter of 2004.

Selected Financial Information

The following table presents selected financial
information for the Company for each of the years in the five
year period ended December 31, 2003 and for the nine-month
periods ended September 30, 2004 and 2003. The selected
financial information for each of the five years ended
December 31, 2003, 2002, 2001, 2000 and 1999 has been
derived from Masonites audited consolidated financial
statements. The selected financial information for the
nine-month periods ended September 30, 2004 and 2003 has
been derived from Masonites unaudited consolidated
financial statements for the nine-month period ended
September 30, 2004. This information is only a summary and
you should read it together with Masonites financial
statements and related notes contained in information that
Masonite has filed on SEDAR and with the SEC, and which are
incorporated by reference herein. See
 Documents Incorporated by Reference.

|                                     |                                                    |                                                    |  |           |                                  |  |  |           |           |  |      |           |           |      |  |           |           |   |  |           |           |   |  |           |         |   |  |           |         |  
|------------------------------------ | -------------------------------------------------- | -------------------------------------------------- |  | --------- | -------------------------------- |  |  | --------- | --------- |  | ---- | --------- | --------- | ---- |  | --------- | --------- | - |  | --------- | --------- | - |  | --------- | ------- | - |  | --------- | ------- | -
|                                     |                                                    |                                                    |  |           |                                  |  |  |           |           |  |      |          
|                                     |                                                    | For the Nine Months                                |  |           |                                 
|                                     |                                                    | Ended September 30,                                |  |           | For the Years Ended December 31, | 
|                                     |                                                    | (Unaudited)                                        |  |           | (Audited)                        | 
|Statement of Operations              |                                                    |                                                    |  |           |                                  | 
|Data                                 |                                                    | 2004                                               |  |           | 2003                             |  |  | 2003      |           |  | 2002 |           |           | 2001 |  |           | 2000      |   |  | 1999      |          
|                                     |                                                    |                                                    |  |           |                                  |  |  |           |           |  |      |           |           |     
|                                     |                                                    |                                                   
|                                     |                                                    | (US$000s except for per share numbers and ratios) | 
|                                     | Net sales                                          |                                                    |  | 1,629,703 |                                  |  |  | 1,321,341 |           |  |      | 1,777,238 |           |      |  | 1,619,516 |           |   |  | 1,421,602 |           |   |  | 1,291,775 |         |   |  | 1,139,804 |        
|                                     | Operating profit                                   |                                                    |  | 169,399   |                                  |  |  | 137,834   |           |  |      | 187,206   |           |      |  | 166,527   |           |   |  | 113,544   |           |   |  | 86,574    |         |   |  | 88,792    |        
|                                     | Net income                                         |                                                    |  | 100,610   |                                  |  |  | 78,472    |           |  |      | 107,671   |           |      |  | 89,544    |           |   |  | 39,460    |           |   |  | 37,571    |         |   |  | 43,783    |        
|                                     | Earnings attributable to common stock              |                                                    |  | 100,610   |                                  |  |  | 78,472    |           |  |      | 107,671   |           |      |  | 89,544    |           |   |  | 39,460    |           |   |  | 37,571    |         |   |  | 43,783    |        
|                                     | Earnings per share                                 |                                                    |  |           |                                  |  |  |           |           |  |      |           |           |      |  |           |           |   |  |           |           |   |  |           |         |   |  |           |        
|                                     |                                                    | Basic                                              |  |           | 1.84                             |  |  |           | 1.46      |  |      |           | 2.00      |      |  |           | 1.70      |   |  |           | 0.84      |   |  |           | 0.86    |   |  |           | 1.02    |  
|                                     |                                                    | Diluted                                            |  |           | 1.80                             |  |  |           | 1.42      |  |      |           | 1.95      |      |  |           | 1.65      |   |  |           | 0.84      |   |  |           | 0.85    |   |  |           | 0.98    |  
|                                     | Dividends declared per share                       |                                                    |  |          |                                  |  |  |          |           |  |      |          |           |      |  |          |           |   |  |          |           |   |  |          |         |   |  |          |        
|Reconciliation to United States GAAP |                                                    |                                                    |  |           |                                  |  |  |           |           |  |      |           |           |      |  |           |           |   |  |           |           |   |  |           |         |   |  |          
|                                     | Basic earnings per share under Canadian GAAP       |                                                    |  | 1.84      |                                  |  |  | 1.46      |           |  |      | 2.00      |           |      |  | 1.70      |           |   |  | 0.84      |           |   |  | 0.86      |         |   |  | 1.02      |        
|                                     |                                                    | SFAS 133, net of tax (1)                           |  |           | 0.06                             |  |  |           |          |  |      |           | 0.04      |      |  |           | (0.26     | ) |  |           | (0.02     | ) |  |           |        |   |  |           |        |  
|                                     |                                                    | SFAS 109, net of tax (2)                           |  |           |                                 |  |  |           |          |  |      |           |          |      |  |           |          |   |  |           | (0.02     | ) |  |           | (0.02   | ) |  |           | (0.02   | )
|                                     | Basic earnings per share under US GAAP             |                                                    |  | 1.90      |                                  |  |  | 1.46      |           |  |      | 2.04      |           |      |  | 1.44      |           |   |  | 0.80      |           |   |  | 0.84      |         |   |  | 1.00      |        
|                                     | Diluted earnings per share under
    Canadian GAAP |                                                    |  | 1.80      |                                  |  |  | 1.42      |           |  |      | 1.95      |           |      |  | 1.65      |           |   |  | 0.84      |           |   |  | 0.85      |         |   |  | 0.98      |        
|                                     |                                                    | SFAS 133, net of tax (1)                           |  |           | 0.06                             |  |  |           |          |  |      |           | 0.04      |      |  |           | (0.26     | ) |  |           | (0.02     | ) |  |           |        |   |  |           |        |  
|                                     |                                                    | SFAS 109, net of tax (2)                           |  |           |                                 |  |  |           |          |  |      |           |          |      |  |           |          |   |  |           | (0.02     | ) |  |           | (0.02   | ) |  |           | (0.02   | )
|                                     | Diluted earnings per share under US GAAP           |                                                    |  | 1.86      |                                  |  |  | 1.42      |           |  |      | 1.99      |           |      |  | 1.39      |           |   |  | 0.80      |           |   |  | 0.83      |         |   |  | 0.96      |        
|Balance Sheet Data                   |                                                    |                                                    |  |           |                                  |  |  |           |           |  |      |           |           |      |  |           |           |   |  |           |           |   |  |           |         |   |  |          
|                                     | Current Assets/ Current Liabilities                |                                                    |  | 390,908   |                                  |  |  | 360,373   |           |  |      | 384,985   |           |      |  | 298,131   |           |   |  | 311,910   |           |   |  | 251,261   |         |   |  | 167,026   |        
|                                     |                                                    | Total assets                                       |  |           | 2,095,354                        |  |  |           | 1,624,933 |  |      |           | 1,693,151 |      |  |           | 1,462,793 |   |  |           | 1,442,288 |   |  |           | 828,424 |   |  |           | 713,547 |  
|                                     |                                                    | Long-term debt                                     |  |           | 621,293                          |  |  |           | 454,999   |  |      |           | 447,260   |      |  |           | 498,000   |   |  |           | 591,419   |   |  |           | 291,787 |   |  |           | 194,114 |  
|                                     |                                                    | Total equity                                       |  |           | 844,525                          |  |  |           | 676,404   |  |      |           | 732,641   |      |  |           | 552,442   |   |  |           | 405,223   |   |  |           | 319,829 |   |  |           | 305,224 |  
|Other Data                           |                                                    |                                                    |  |           |                                  |  |  |           |           |  |      |           |           |      |  |           |           |   |  |           |           |   |  |           |         |   |  |          
|                                     | Tangible book value per common share(3)            |                                                    |  | 9.93      |                                  |  |  | 10.15     |           |  |      | 11.18     |           |      |  | 8.14      |           |   |  | 6.15      |           |   |  | 6.31      |         |   |  | 6.50      |        
|                                     | Reported book value per common share(4)            |                                                    |  | 15.42     |                                  |  |  | 12.58     |           |  |      | 13.60     |           |      |  | 10.50     |           |   |  | 8.66      |           |   |  | 7.29      |         |   |  | 7.08      |        
|                                     | Ratio of earnings to fixed charges(5)              |                                                    |  | 3.7       |                                  |  |  | 3.4       |           |  |      | 3.5       |           |      |  | 2.8       |           |   |  | 2.5       |           |   |  | 2.6       |         |   |  | 3.4       |        

Notes



|    |                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------
|(1) | SFAS 133: Financial Accounting Standards
    Board Statement No. 133, Accounting for Derivative
    Instruments and Hedging Activities.
|   
|(2) | SFAS 109: Financial Accounting Standards
    Board Statement No. 109, Accounting for Income
    Taxes.                                 

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|    |                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Tangible book value per common share is
    calculated as: (total assets - intangible assets - total
    liabilities) / average number of outstanding common shares year
    to date.                   
|   
|(4) | Reported book value per common share is
    calculated as: (total shareholders equity / average number
    of outstanding common shares year to date).                                                 
|   
|(5) | Earnings to fixed charges ratio calculated as
    (pre-tax income before equity income or loss + fixed charges) /
    Fixed charges: (interest + amortization of deferred financing +
    rent expense).

Market for Securities

Masonites Common Shares are listed on the
TSX and on the NYSE under the symbol MHM. As of
January 17, 2005, Masonite had outstanding a total of
54,796,531 Common Shares. The price ranges and trading
volume of Masonites Common Shares for the last
two full years on the TSX and the NYSE were as follows:

|                        |                     |                        |       |  |  |  |          |       |  |  |       |        |  |  |  |       |  |  |            |  |  |  |  |            | 
|----------------------- | ------------------- | ---------------------- | ----- |  |  |  | -------- | ----- |  |  | ----- | ------ |  |  |  | ----- |  |  | ---------- |  |  |  |  | ---------- | 
|                        |                     |                        |       | 
|Period                  |                     | Toronto Stock Exchange |       |  | 
|                        |                     |                        |       |  | 
|                        |                     |                        |       |  |  | 
|                        |                     | High (C$)              |       |  |  |  | Low (C$) |       |  |  |       | Volume |  |  | 
|2003                    |                     |                        |       |  |  |  |          |       |  |  |       |        |  |  |  |       |  |  |            |  |  |  |  |           
|January                 |                     |                        | 29.39 |  |  |  |          |       |  |  | 26.00 |        |  |  |  |       |  |  | 2,731,399  |  |  |  |  |           
|February                |                     |                        | 29.09 |  |  |  |          |       |  |  | 24.32 |        |  |  |  |       |  |  | 4,161,827  |  |  |  |  |           
|March                   |                     |                        | 24.70 |  |  |  |          |       |  |  | 20.15 |        |  |  |  |       |  |  | 3,736,536  |  |  |  |  |           
|                        | First Quarter 2003  |                        |       |  |  |  |          | 29.39 |  |  |       |        |  |  |  | 20.15 |  |  |            |  |  |  |  | 10,629,762 | 
|April                   |                     |                        | 24.60 |  |  |  |          |       |  |  | 20.35 |        |  |  |  |       |  |  | 4,346,768  |  |  |  |  |           
|May                     |                     |                        | 27.65 |  |  |  |          |       |  |  | 24.25 |        |  |  |  |       |  |  | 4,526,741  |  |  |  |  |           
|June                    |                     |                        | 28.95 |  |  |  |          |       |  |  | 26.78 |        |  |  |  |       |  |  | 3,074,057  |  |  |  |  |           
|                        | Second Quarter 2003 |                        |       |  |  |  |          | 28.95 |  |  |       |        |  |  |  | 20.35 |  |  |            |  |  |  |  | 11,947,566 | 
|July                    |                     |                        | 28.85 |  |  |  |          |       |  |  | 25.80 |        |  |  |  |       |  |  | 2,255,638  |  |  |  |  |           
|August                  |                     |                        | 29.20 |  |  |  |          |       |  |  | 27.40 |        |  |  |  |       |  |  | 3,117,349  |  |  |  |  |           
|September               |                     |                        | 32.00 |  |  |  |          |       |  |  | 29.00 |        |  |  |  |       |  |  | 3,062,059  |  |  |  |  |           
|                        | Third Quarter 2003  |                        |       |  |  |  |          | 32.00 |  |  |       |        |  |  |  | 25.80 |  |  |            |  |  |  |  | 8,435,046  | 
|October                 |                     |                        | 32.81 |  |  |  |          |       |  |  | 29.00 |        |  |  |  |       |  |  | 4,241,179  |  |  |  |  |           
|November                |                     |                        | 32.05 |  |  |  |          |       |  |  | 29.10 |        |  |  |  |       |  |  | 2,420,514  |  |  |  |  |           
|December                |                     |                        | 34.80 |  |  |  |          |       |  |  | 31.02 |        |  |  |  |       |  |  | 4,183,150  |  |  |  |  |           
|                        | Fourth Quarter 2003 |                        |       |  |  |  |          | 34.80 |  |  |       |        |  |  |  | 29.00 |  |  |            |  |  |  |  | 10,844,843 | 
|2004                    |                     |                        |       |  |  |  |          |       |  |  |       |        |  |  |  |       |  |  |            |  |  |  |  |           
|January                 |                     |                        | 35.43 |  |  |  |          |       |  |  | 32.60 |        |  |  |  |       |  |  | 3,328,965  |  |  |  |  |           
|February                |                     |                        | 36.97 |  |  |  |          |       |  |  | 33.50 |        |  |  |  |       |  |  | 5,104,115  |  |  |  |  |           
|March                   |                     |                        | 37.30 |  |  |  |          |       |  |  | 34.55 |        |  |  |  |       |  |  | 4,552,264  |  |  |  |  |           
|                        | First Quarter 2004  |                        |       |  |  |  |          | 37.30 |  |  |       |        |  |  |  | 32.60 |  |  |            |  |  |  |  | 12,985,344 | 
|April                   |                     |                        | 38.49 |  |  |  |          |       |  |  | 35.42 |        |  |  |  |       |  |  | 3,783,420  |  |  |  |  |           
|May                     |                     |                        | 36.20 |  |  |  |          |       |  |  | 32.05 |        |  |  |  |       |  |  | 3,419,446  |  |  |  |  |           
|June                    |                     |                        | 34.62 |  |  |  |          |       |  |  | 32.00 |        |  |  |  |       |  |  | 3,736,288  |  |  |  |  |           
|                        | Second Quarter 2004 |                        |       |  |  |  |          | 38.49 |  |  |       |        |  |  |  | 32.00 |  |  |            |  |  |  |  | 10,939,154 | 
|July                    |                     |                        | 34.11 |  |  |  |          |       |  |  | 30.27 |        |  |  |  |       |  |  | 2,625,746  |  |  |  |  |           
|August                  |                     |                        | 33.09 |  |  |  |          |       |  |  | 29.37 |        |  |  |  |       |  |  | 2,156,973  |  |  |  |  |           
|September               |                     |                        | 33.69 |  |  |  |          |       |  |  | 31.80 |        |  |  |  |       |  |  | 3,218,134  |  |  |  |  |           
|                        | Third Quarter 2004  |                        |       |  |  |  |          | 34.11 |  |  |       |        |  |  |  | 29.37 |  |  |            |  |  |  |  | 8,000,853  | 
|October                 |                     |                        | 34.10 |  |  |  |          |       |  |  | 29.54 |        |  |  |  |       |  |  | 4,000,794  |  |  |  |  |           
|November                |                     |                        | 35.25 |  |  |  |          |       |  |  | 33.44 |        |  |  |  |       |  |  | 2,120,301  |  |  |  |  |           
|December                |                     |                        | 41.77 |  |  |  |          |       |  |  | 32.51 |        |  |  |  |       |  |  | 10,404,572 |  |  |  |  |           
|                        | Fourth Quarter 2004 |                        |       |  |  |  |          | 41.77 |  |  |       |        |  |  |  | 29.54 |  |  |            |  |  |  |  | 16,525,667 | 
|2005                    |                     |                        |       |  |  |  |          |       |  |  |       |        |  |  |  |       |  |  |            |  |  |  |  |           
|January 1 to January 17 |                     |                        | 41.48 |  |  |  |          |       |  |  | 40.33 |        |  |  |  |       |  |  | 5,391,753  |  |  |  |  |           

-46-



---



##### 



|                        |                     |                         |       |  |  |  |           |       |  |  |       |        |  |  |  |       |  |  |           |  |  |  |  |           | 
|----------------------- | ------------------- | ----------------------- | ----- |  |  |  | --------- | ----- |  |  | ----- | ------ |  |  |  | ----- |  |  | --------- |  |  |  |  | --------- | 
|                        |                     |                         |       | 
|Period                  |                     | New York Stock Exchange |       |  | 
|                        |                     |                         |       |  | 
|                        |                     |                         |       |  |  | 
|                        |                     | High (US$)              |       |  |  |  | Low (US$) |       |  |  |       | Volume |  |  | 
|2003                    |                     |                         |       |  |  |  |           |       |  |  |       |        |  |  |  |       |  |  |           |  |  |  |  |          
|January                 |                     |                         | 18.62 |  |  |  |           |       |  |  | 16.64 |        |  |  |  |       |  |  | 88,700    |  |  |  |  |          
|February                |                     |                         | 19.07 |  |  |  |           |       |  |  | 16.50 |        |  |  |  |       |  |  | 140,300   |  |  |  |  |          
|March                   |                     |                         | 16.53 |  |  |  |           |       |  |  | 13.80 |        |  |  |  |       |  |  | 126,100   |  |  |  |  |          
|                        | First Quarter 2003  |                         |       |  |  |  |           | 19.07 |  |  |       |        |  |  |  | 13.80 |  |  |           |  |  |  |  | 355,100   | 
|April                   |                     |                         | 16.94 |  |  |  |           |       |  |  | 13.87 |        |  |  |  |       |  |  | 132,800   |  |  |  |  |          
|May                     |                     |                         | 20.12 |  |  |  |           |       |  |  | 17.03 |        |  |  |  |       |  |  | 142,400   |  |  |  |  |          
|June                    |                     |                         | 21.60 |  |  |  |           |       |  |  | 19.65 |        |  |  |  |       |  |  | 112,800   |  |  |  |  |          
|                        | Second Quarter 2003 |                         |       |  |  |  |           | 21.60 |  |  |       |        |  |  |  | 13.87 |  |  |           |  |  |  |  | 388,000   | 
|July                    |                     |                         | 21.05 |  |  |  |           |       |  |  | 18.48 |        |  |  |  |       |  |  | 151,300   |  |  |  |  |          
|August                  |                     |                         | 20.94 |  |  |  |           |       |  |  | 19.50 |        |  |  |  |       |  |  | 76,300    |  |  |  |  |          
|September               |                     |                         | 23.69 |  |  |  |           |       |  |  | 20.87 |        |  |  |  |       |  |  | 206,700   |  |  |  |  |          
|                        | Third Quarter 2003  |                         |       |  |  |  |           | 23.69 |  |  |       |        |  |  |  | 18.48 |  |  |           |  |  |  |  | 434,300   | 
|October                 |                     |                         | 24.26 |  |  |  |           |       |  |  | 22.00 |        |  |  |  |       |  |  | 227,100   |  |  |  |  |          
|November                |                     |                         | 24.66 |  |  |  |           |       |  |  | 22.18 |        |  |  |  |       |  |  | 298,900   |  |  |  |  |          
|December                |                     |                         | 26.90 |  |  |  |           |       |  |  | 23.73 |        |  |  |  |       |  |  | 324,700   |  |  |  |  |          
|                        | Fourth Quarter 2003 |                         |       |  |  |  |           | 26.90 |  |  |       |        |  |  |  | 22.00 |  |  |           |  |  |  |  | 850,700   | 
|2004                    |                     |                         |       |  |  |  |           |       |  |  |       |        |  |  |  |       |  |  |           |  |  |  |  |          
|January                 |                     |                         | 27.67 |  |  |  |           |       |  |  | 25.43 |        |  |  |  |       |  |  | 467,600   |  |  |  |  |          
|February                |                     |                         | 27.65 |  |  |  |           |       |  |  | 25.09 |        |  |  |  |       |  |  | 357,400   |  |  |  |  |          
|March                   |                     |                         | 28.60 |  |  |  |           |       |  |  | 26.02 |        |  |  |  |       |  |  | 397,200   |  |  |  |  |          
|                        | First Quarter 2004  |                         |       |  |  |  |           | 28.60 |  |  |       |        |  |  |  | 25.09 |  |  |           |  |  |  |  | 1,222,200 | 
|April                   |                     |                         | 29.00 |  |  |  |           |       |  |  | 25.90 |        |  |  |  |       |  |  | 433,400   |  |  |  |  |          
|May                     |                     |                         | 26.47 |  |  |  |           |       |  |  | 23.64 |        |  |  |  |       |  |  | 545,500   |  |  |  |  |          
|June                    |                     |                         | 25.90 |  |  |  |           |       |  |  | 23.65 |        |  |  |  |       |  |  | 253,900   |  |  |  |  |          
|                        | Second Quarter 2004 |                         |       |  |  |  |           | 29.00 |  |  |       |        |  |  |  | 23.64 |  |  |           |  |  |  |  | 1,232,800 | 
|July                    |                     |                         | 25.93 |  |  |  |           |       |  |  | 22.81 |        |  |  |  |       |  |  | 351,800   |  |  |  |  |          
|August                  |                     |                         | 25.06 |  |  |  |           |       |  |  | 22.16 |        |  |  |  |       |  |  | 330,400   |  |  |  |  |          
|September               |                     |                         | 25.77 |  |  |  |           |       |  |  | 24.90 |        |  |  |  |       |  |  | 855,100   |  |  |  |  |          
|                        | Third Quarter 2004  |                         |       |  |  |  |           | 25.93 |  |  |       |        |  |  |  | 22.16 |  |  |           |  |  |  |  | 1,537,300 | 
|October                 |                     |                         | 27.92 |  |  |  |           |       |  |  | 23.58 |        |  |  |  |       |  |  | 786,000   |  |  |  |  |          
|November                |                     |                         | 29.59 |  |  |  |           |       |  |  | 27.50 |        |  |  |  |       |  |  | 482,300   |  |  |  |  |          
|December                |                     |                         | 34.70 |  |  |  |           |       |  |  | 27.30 |        |  |  |  |       |  |  | 1,846,600 |  |  |  |  |          
|                        | Fourth Quarter 2004 |                         |       |  |  |  |           | 34.70 |  |  |       |        |  |  |  | 23.58 |  |  |           |  |  |  |  | 3,114,900 | 
|2005                    |                     |                         |       |  |  |  |           |       |  |  |       |        |  |  |  |       |  |  |           |  |  |  |  |          
|January 1 to January 14 |                     |                         | 34.30 |  |  |  |           |       |  |  | 32.85 |        |  |  |  |       |  |  | 715,500   |  |  |  |  |          

On December 21, 2004, the date before the
proposed Arrangement was announced, the closing price for the
Common Shares on the TSX was C$34.75 and on the NYSE
was US$28.23.

-47-



---



##### 



Exchange Rate Information

The following tables present certain exchange
rate information in respect of the periods indicated. All
exchange rates are based on the noon rate of exchange for
US$1.00 as reported by the Bank of Canada.

|                                        |  |              |        |  |                 |  |        | 
|--------------------------------------- |  | ------------ | ------ |  | --------------- |  | ------ | 
|Quarters Ended                          |  | Average (C$) |        |  | Period End (C$) | 
|                                        |  |              |        |  |                 | 
|First Quarter 2003                      |  |              | 1.5102 |  |                 |  | 1.4693 | 
|Second Quarter 2003                     |  |              | 1.3984 |  |                 |  | 1.3553 | 
|Third Quarter 2003                      |  |              | 1.3799 |  |                 |  | 1.3504 | 
|Fourth Quarter 2003                     |  |              | 1.3160 |  |                 |  | 1.2924 | 
|First Quarter 2004                      |  |              | 1.3179 |  |                 |  | 1.3105 | 
|Second Quarter 2004                     |  |              | 1.3592 |  |                 |  | 1.3404 | 
|Third Quarter 2004                      |  |              | 1.3072 |  |                 |  | 1.2639 | 
|Fourth Quarter 2004                     |  |              | 1.2203 |  |                 |  | 1.2036 | 
|First Quarter 2005 (through January 17) |  |              | 1.2191 |  |                 |  | 1.2165 | 

|                        |  |              |        |  |                 |  |        | 
|----------------------- |  | ------------ | ------ |  | --------------- |  | ------ | 
|Month End               |  | Average (C$) |        |  | Period End (C$) | 
|                        |  |              |        |  |                 | 
|2003                    |  |              |        |  |                 |  |        | 
|January                 |  |              | 1.5410 |  |                 |  | 1.5290 | 
|February                |  |              | 1.5124 |  |                 |  | 1.4871 | 
|March                   |  |              | 1.4759 |  |                 |  | 1.4693 | 
|April                   |  |              | 1.4585 |  |                 |  | 1.4335 | 
|May                     |  |              | 1.3845 |  |                 |  | 1.3708 | 
|June                    |  |              | 1.3523 |  |                 |  | 1.3553 | 
|July                    |  |              | 1.3815 |  |                 |  | 1.4073 | 
|August                  |  |              | 1.3957 |  |                 |  | 1.3851 | 
|September               |  |              | 1.3632 |  |                 |  | 1.3504 | 
|October                 |  |              | 1.3218 |  |                 |  | 1.3197 | 
|November                |  |              | 1.3126 |  |                 |  | 1.2973 | 
|December                |  |              | 1.3128 |  |                 |  | 1.2924 | 
|2004                    |  |              |        |  |                 |  |        | 
|January                 |  |              | 1.2960 |  |                 |  | 1.3264 | 
|February                |  |              | 1.3290 |  |                 |  | 1.3401 | 
|March                   |  |              | 1.3284 |  |                 |  | 1.3105 | 
|April                   |  |              | 1.3425 |  |                 |  | 1.3707 | 
|May                     |  |              | 1.3783 |  |                 |  | 1.3634 | 
|June                    |  |              | 1.3577 |  |                 |  | 1.3404 | 
|July                    |  |              | 1.3219 |  |                 |  | 1.3292 | 
|August                  |  |              | 1.3118 |  |                 |  | 1.3167 | 
|September               |  |              | 1.2878 |  |                 |  | 1.2639 | 
|October                 |  |              | 1.2469 |  |                 |  | 1.2207 | 
|November                |  |              | 1.1961 |  |                 |  | 1.1904 | 
|December                |  |              | 1.2191 |  |                 |  | 1.2036 | 
|2005                    |  |              |        |  |                 |  |        | 
|January 1 to January 17 |  |              | 1.2191 |  |                 |  | 1.2165 | 

The noon rate of exchange, as reported by the
Bank of Canada on January 17, 2004 was US$1.00 = C$1.2165.
The noon rate of exchange, as reported by the Bank of Canada, on
December 21, 2004, the day before the Arrangement was
announced, was US$1.00 = C$1.2271.

Dividend Policy

Masonite has not declared any dividends on its
Common Shares in each of the three most recently completed
financial years. The payment of dividends is at the discretion
of the Board which considers earnings, capital requirements, the
financial condition of Masonite and other relevant factors
including restrictions in Masonites credit facilities.

-48-



---



##### 



Share Ownership of Directors and Senior
Officers

As at January 17, 2005, none of the
directors or senior officers of Masonite, or their associates,
beneficially owned or exercised control or direction over any
Common Shares, except as set forth below:

|                        |  |               |         |               |               |  |                  |                   |  |  |         | 
|----------------------- |  | ------------- | ------- | ------------- | ------------- |  | ---------------- | ----------------- |  |  | ------- | 
|                        |  |               |         | Percentage of |               |  | Number of Common |                  
|                        |  | Number of     |         |               | Outstanding   |  |                  | Shares Subject to | 
|Name                    |  | Common Shares |         |               | Common Shares |  |                  | Company Options   | 
|                        |  |               |         |               |               |  |                  |                   | 
|John F. Ambruz          |  |               | 26,900  |               |               |  | <1%              |                   |  |  | 315,000 | 
|Howard Beck             |  |               | 197,390 |               |               |  | <1%              |                   |  |  | 10,000  | 
|Paul Bernards           |  |               | 25,000  |               |               |  | <1%              |                   |  |  | 26,000  | 
|John J. Berton          |  |               | 14,500  |               |               |  | <1%              |                   |  |  | 10,000  | 
|John M. Cassaday (1)    |  |               | 31,000  |               |               |  | <1%              |                   |  |  | 10,000  | 
|Henry Coghlan           |  |               | Nil     |               |               |  | 0%               |                   |  |  | 7,500   | 
|Peter A. Crossgrove (2) |  |               | 333,401 |               |               |  | <1%              |                   |  |  | 15,000  | 
|Wilfred Curtis          |  |               | 4,950   |               |               |  | <1%              |                   |  |  | 7,000   | 
|Fredrik S. Eaton (3)    |  |               | 400,000 |               |               |  | <1%              |                   |  |  | 10,000  | 
|Phil Kohner             |  |               | Nil     |               |               |  | 0%               |                   |  |  | 7,000   | 
|Alan P. McFarland       |  |               | 14,600  |               |               |  | <1%              |                   |  |  | 10,000  | 
|James U. Morrison       |  |               | 19,500  |               |               |  | <1%              |                   |  |  | 210,000 | 
|Philip S. Orsino        |  |               | 328,699 |               |               |  | <1%              |                   |  |  | 947,500 | 
|James Rabe              |  |               | Nil     |               |               |  | 0%               |                   |  |  | 7,000   | 
|Lawrence Repar          |  |               | 45,000  |               |               |  | <1%              |                   |  |  | 170,000 | 
|Joseph L. Rotman        |  |               | 150,000 |               |               |  | <1%              |                   |  |  | 10,000  | 
|Saul M. Spears(4)       |  |               | 423,676 |               |               |  | <1%              |                   |  |  | 10,000  | 
|Robert V. Tubbesing     |  |               | 10,000  |               |               |  | <1%              |                   |  |  | 25,000  | 
|Harley Ulster           |  |               | 72,521  |               |               |  | <1%              |                   |  |  | 150,000 | 

Notes:



|    |                                                                                         
|--- | ----------------------------------------------------------------------------------------
|(1) | Held indirectly through Sundance Investments Inc.                                       
|   
|(2) | 328,201 of these Common Shares are held
    indirectly through Brush Creek Corp.        
|   
|(3) | 350,000 of these Common Shares are held
    indirectly through White Raven Capital Corp.



|    |                                                                                 
|--- | --------------------------------------------------------------------------------
|(4) | 2,870 of these Common Shares are held indirectly
    through 727446 Ontario Inc.

Equity Compensation Plan Information

The following table indicates the number of
Common Shares issuable pursuant to Company Stock Option Plan, as
of December 31, 2004.

|                          |  |               |           |  |                   |    |       |                         |  |  |     | 
|------------------------- |  | ------------- | --------- |  | ----------------- | -- | ----- | ----------------------- |  |  | --- | 
|                          |  | Number of     |           |  | Weighted-Average  |    |       | Number of Common Shares | 
|                          |  | Common Shares |           |  | Exercise Price of |    |       | Remaining Available     | 
|                          |  | To Be Issued  |           |  | Masonite Options  |    |       | For Future Issuance     | 
|                          |  |               |           |  |                   |    |       |                         | 
|Company Stock Option Plan |  |               | 2,281,018 |  |                   | C$ | 16.58 |                         |  |  | Nil | 

-49-



---



##### 



Executive Compensation

Summary
Compensation Table for Named Executive Officers

Compensation for the Chief Executive Officer, the
Chief Financial Officer and the next four most highly
compensated executive officers (the Named Executive
Officers) for the three years ended December 31,
2004, is summarized in the table below.

|                                                 |  |      |      |                     |              |              |                               |                |               |  |           |                |  |                |        |  |                  |  |         |  |  |  |           | 
|------------------------------------------------ |  | ---- | ---- | ------------------- | ------------ | ------------ | ----------------------------- | -------------- | ------------- |  | --------- | -------------- |  | -------------- | ------ |  | ---------------- |  | ------- |  |  |  | --------- | 
|                                                 |  |      |      |                     |              |             
|                                                 |  |      |      | Annual Compensation |              |              | Long Term Compensation Awards |               
|                                                 |  |      |      |                     |              |              |                               |               
|                                                 |  |      |      |                     |              | Other annual |                               |                | Securities    |  |           | Restricted and | 
|Name and                                         |  |      |      |                     |              | compensation |                               |                | under options |  |           | Deferred Share | 
|principal position                               |  | Year |      |                     | Salary (US$) |              |                               | Bonus (US$)(a) |               |  | (US$)(c)  |                |  | granted (#)(d) |        |  | Units (C$)(e)(f) | 
|                                                 |  |      |      |                     |              |              |                               |                |               |  |           |                |  |                |        |  |                  | 
|Philip S. Orsino                                 |  |      | 2004 |                     |              |              | 1,250,000                     |                |               |  | (b)       |                |  |                | Nil    |  |                  |  | Nil     |  |  |  | 5,147,189 | 
|President and                                    |  |      | 2003 |                     |              |              | 1,250,000                     |                |               |  | 2,750,000 |                |  |                | 1,800  |  |                  |  | Nil     |  |  |  | 4,931,315 | 
|Chief Executive Officer                          |  |      | 2002 |                     |              |              | 1,250,000                     |                |               |  | 1,850,000 |                |  |                | 8,800  |  |                  |  | 350,000 |  |  |  | Nil       | 
|                                                
|Paul Bernards (g)                                |  |      | 2004 |                     |              |              | 317,700                       |                |               |  | (b)       |                |  |                | Nil    |  |                  |  | Nil     |  |  |  | 371,521   | 
|Executive Vice- President and                    |  |      | 2003 |                     |              |              | 257,100                       |                |               |  | 142,600   |                |  |                | 700    |  |                  |  | Nil     |  |  |  | 705,824   | 
|Chief Financial Officer                          |  |      | 2002 |                     |              |              | 210,300                       |                |               |  | 68,800    |                |  |                | 3,700  |  |                  |  | 10,000  |  |  |  | Nil       | 
|                                                
|Lawrence P. Repar                                |  |      | 2004 |                     |              |              | 457,200                       |                |               |  | (b)       |                |  |                | 60,600 |  |                  |  | Nil     |  |  |  | 1,100,135 | 
|Executive Vice- President                        |  |      | 2003 |                     |              |              | 393,400                       |                |               |  | 428,000   |                |  |                | 1,100  |  |                  |  | Nil     |  |  |  | 425,385   | 
|and Group Chief Operating                        |  |      | 2002 |                     |              |              | 385,000                       |                |               |  | 138,600   |                |  |                | 5,700  |  |                  |  | 70,000  |  |  |  | Nil       | 
|Officer                                          |  |      |      |                     |              |              |                               |                |               |  |           |                |  |                |        |  |                  |  |         |  |  |  |           | 
|                                                
|Harley Ulster                                    |  |      | 2004 |                     |              |              | 400,000                       |                |               |  | (b)       |                |  |                | Nil    |  |                  |  | Nil     |  |  |  | 1,100,135 | 
|Executive Vice- President,                       |  |      | 2003 |                     |              |              | 400,000                       |                |               |  | 428,000   |                |  |                | 1,000  |  |                  |  | Nil     |  |  |  | 280,439   | 
|General Counsel and
    Corporate Secretary      |  |      | 2002 |                     |              |              | 400,000                       |                |               |  | 168,000   |                |  |                | 5,100  |  |                  |  | 10,000  |  |  |  | Nil       | 
|                                                
|James U. Morrison                                |  |      | 2004 |                     |              |              | 400,000                       |                |               |  | (b)       |                |  |                | Nil    |  |                  |  | Nil     |  |  |  | 1,100,135 | 
|Executive Vice- President and                    |  |      | 2003 |                     |              |              | 385,000                       |                |               |  | 438,000   |                |  |                | Nil    |  |                  |  | Nil     |  |  |  | 425,385   | 
|Group Chief Operating Officer                    |  |      | 2002 |                     |              |              | 370,000                       |                |               |  | 133,200   |                |  |                | Nil    |  |                  |  | 10,000  |  |  |  | Nil       | 
|                                                
|Robert V. Tubbesing (g)                          |  |      | 2004 |                     |              |              | 350,000                       |                |               |  | (b)       |                |  |                | Nil    |  |                  |  | Nil     |  |  |  | Nil       | 
|Executive Vice- President,                       |  |      | 2003 |                     |              |              | 350,000                       |                |               |  | 211,000   |                |  |                | 1,000  |  |                  |  | Nil     |  |  |  | 280,439   | 
|Finance                                          |  |      | 2002 |                     |              |              | 350,000                       |                |               |  | 126,000   |                |  |                | 5,200  |  |                  |  | 10,000  |  |  |  | Nil       | 
|                                                
|John Ambruz (h)                                  |  |      | 2004 |                     |              |              | 300,000                       |                |               |  | (b)       |                |  |                | Nil    |  |                  |  | Nil     |  |  |  | 1,100,135 | 
|Executive Vice- President, Strategic Development |  |      |      |                     |              |              |                               |                |               |  |           |                |  |                |        |  |                  |  |         |  |  |  |           | 
|                                                

Notes



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In February 2003, the Named Executive Officers
    were given a discretionary cash bonus in the following amounts:
    Philip Orsino  US$1,250,000; Paul Bernards
     US$50,000; Lawrence Repar  US$140,000;
    Harley Ulster  US$140,000; James Morrison 
    US$150,000; and Robert Tubbesing  US$85,000. This
    discretionary bonus is included in the total bonus amounts
    reported for 2003.                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(b) | Bonuses in respect of 2004 are not determinable
    at the date of this Circular. Bonus entitlements are tied to the
    satisfaction of Masonites objectives set out in its
    business plan for the year as approved by the Board. Until
    Masonite has completed its audited financial statements for the
    year ended December 31, 2004, the Board and the Human
    Resources and Compensation Committee will not be able to
    determine whether the objectives set out in the business plan
    have been achieved and, therefore, what the 2004 bonus
    entitlements should be. See the Report of the Human Resources
    and Compensation Committee for a description of the range of
    bonuses that could be payable, as a percentage of base salary.                                                                
|   
|(c) | For 2002 and 2003, represents imputed interest
    benefits on the interest-free loans provided by Masonite under
    its Senior Executive Share Purchase Plan, which were repaid in
    full in February, 2003. During the year ended December 31,
    2004, Mr. Repar was granted a moving allowance of
    US$40,000, a car allowance of US$17,000 and other miscellaneous
    perquisites.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(d) | Options granted in 2002 were for the Named
    Executive Officers performances in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(e) | In October 2003, Masonite adopted the 2002
    Restricted Share Bonus Plan, providing for the grant of RSUs and
    the 2002 Deferred Share Plan, providing for the grant of DSUs,
    each described within the Report of the Human Resources and
    Compensation Committee on Executive Compensation. The RSUs and
    DSUs, respectively, awarded to each Named Executive Officer
    were: Mr. Orsino  117,400 and 39,100;
    Mr. Bernards  16,800 and 5,600; Mr. Repar 
    10,100 and 3,400; Mr. Ulster  6,700 and 2,200;
    Mr. Morrison  10,100 and 3,400; and
    Mr. Tubbesing  6,700 and 2,200. The value on the date
    of grant is based on a 20 day weighted average trading
    price, as more fully described within the Report of the Human
    Resources and Compensation Committee on Executive Compensation.
|   
|(f) | On March 23, 2004, Masonite adopted its Full
    Value Incentive Plan providing for the grant of RSUs and DSUs,
    described within the report of Human Resources and Compensation
    Committee on Executive Compensation. The RSUs and DSUs,
    respectively, granted to each Named Executive Officer were: Mr.
    Orsino  99,900 and 42,800; Mr. Bernards  7,200
    and 3,100; Mr. Repar  21,300 and 9,200;
    Mr. Ulster  21,300 and 9,200; Mr. Morrison
     21,300 and 9,200; and Mr. Ambruz  21,300
    and 9,200.                                                                                                                                                                                                                                                                                                      

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(g) | In June 2004, Robert Tubbesing assumed the
    position of Executive Vice President-Finance and Paul Bernards,
    Masonites former Vice President and Corporate Controller,
    was appointed Executive Vice President and Chief Financial
    Officer of Masonite. Prior to July 2004, Mr. Bernards was
    remunerated in Canadian dollars. Amounts paid to
    Mr. Bernards denominated in Canadian dollars have been
    converted to U.S. dollars for ease of comparison to the other
    Named Executive Officers at the average exchange rate for each
    period.
|   
|(h) | John Ambruz was employed by Masonite as Executive
    Vice-President, Strategic Development on May 1, 2004. Prior
    to that time, he was a consultant to Masonite on matters
    primarily relating to acquisitions, dispositions and other
    strategic matters. From January 1, 2004 to April 30, 2004,
    Mr. Ambruz received US$706,000 as a consultant to Masonite.
    He received US$862,000 and US$412,000 in 2003 and 2002,
    respectively, as a consultant to Masonite.                                                                                    

2004
Stock Option Grants and Exercises

In the year ended December 31, 2004,
Masonite did not grant any options to purchase Common Shares to
the Named Executive Officers. The following table shows the
aggregate number of Company Options each Named Executive Officer
held as of December 31, 2004 and the value of those Company
Options based on the market price of the Common Shares on the
TSX as at December 31, 2004, which was C$41.28.

Aggregated Option Exercises During the Year
Ended December 31, 2004

and Financial Year-end Option Values


|                    |  |              |         |  |                 |                     |                         |                         |                        |  |                 |  |             |       |  |                 |            |  |  |      
|------------------- |  | ------------ | ------- |  | --------------- | ------------------- | ----------------------- | ----------------------- | ---------------------- |  | --------------- |  | ----------- | ----- |  | --------------- | ---------- |  |  | -----
|                    |  |              |         |  |                 |                     |                         |                         |                        | 
|                    |  |              |         |  |                 |                     |                         | Value of unexercised   
|                    |  |              |         |  |                 | Unexercised options |                         | in-the-money options at
|                    |  | Securities   |         |  |                 |                     | at December 31, 2004(#) |                         | December 31, 2004 (C$)
|                    |  | acquired on  |         |  | Aggregate value |                     |                         |                         |                        | 
|Name                |  | exercise (#) |         |  | realized (C$)   |                     |                         | Exercisable             |                        |  | / Unexercisable |  | Exercisable |       |  | / Unexercisable
|                   
|                   
|Philip S. Orsino    |  |              | 60,000  |  |                 |                     | 1,485,000               |                         |                        |  | 947,500         |  |             | / Nil |  |                 | 23,782,366 |  |  | / Nil
|Paul Bernards       |  |              | 3,000   |  |                 |                     | 72,660                  |                         |                        |  | 26,000          |  |             | / Nil |  |                 | 627,880    |  |  | / Nil
|Harley Ulster       |  |              | 20,900  |  |                 |                     | 508,393                 |                         |                        |  | 150,000         |  |             | / Nil |  |                 | 3,997,750  |  |  | / Nil
|Lawrence P. Repar   |  |              | 50,000  |  |                 |                     | 1,045,000               |                         |                        |  | 170,000         |  |             | / Nil |  |                 | 3,939,600  |  |  | / Nil
|James U. Morrison   |  |              | Nil     |  |                 |                     | Nil                     |                         |                        |  | 210,000         |  |             | / Nil |  |                 | 5,784,800  |  |  | / Nil
|Robert V. Tubbesing |  |              | 125,000 |  |                 |                     | 2,747,250               |                         |                        |  | 25,000          |  |             | / Nil |  |                 | 640,750    |  |  | / Nil
|John Ambruz         |  |              | Nil     |  |                 |                     | Nil                     |                         |                        |  | 315,000         |  |             | / Nil |  |                 | 8,393,450  |  |  | / Nil
|                   

Employment
Agreement and Termination of Employment

Masonites predecessor, Premdor Inc.,
entered into an employment agreement with Philip Orsino on
October 27, 1989, which agreement has been extended by the
Board four times (most recently on February 13, 2003).
Under his employment agreement, Mr. Orsino has agreed to
serve as the President and Chief Executive Officer of Masonite
until December 31, 2007 and Masonite has agreed that he
shall continue in that position thereafter unless he is
terminated in accordance with the terms of the agreement. If
Mr. Orsinos employment is terminated other than for
cause, he is entitled to at least 24 months notice
and his termination date shall not be earlier than
December 31, 2007. In the event that this provision is not
complied with, Mr. Orsino is entitled to payment of his
salary and other compensation and benefits that he would have
otherwise been entitled to receive during the period from the
termination notice to the later of (i) the expiry of the
24 month period and (ii) December 31, 2007. The
agreement provides that Masonite shall pay to Mr. Orsino an
annual salary approved by the Board, excluding Mr. Orsino.

Masonite has also entered into agreements with
the Named Executive Officers in order to induce such executives
to remain in the employ of Masonite following a change in
control. The terms and conditions of the agreements are similar
for each of the Named Executive Officers. Under the agreements,
a change in control would occur in the three scenarios described
below:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | if a person acquires 20% or more of
    Masonites outstanding Common Shares, and a change in the
    composition of the Board occurs within two years after the date
    of such acquisition such that the directors of Masonite in
    office immediately before such date cease to constitute a
    majority of the Board;                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | a person acquires 35% or more of Masonites
    outstanding Common Shares; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | the Shareholders of Masonite approve (i) an
    amalgamation or merger of Masonite with any other corporation
    (other than a subsidiary of Masonite), (ii) any other
    business combination or consolidation, (iii) a plan for the
    liquidation of Masonite, or (iv) an agreement for the sale or
    disposition of all or substantially all of Masonites
    assets and within two years following any such transaction, a
    majority of the board of directors of the amalgamated or merged
    entity or successor entity into which Masonite was liquidated or
    which acquired all or substantially all of Masonites
    assets is not comprised of individuals who were directors of
    Masonite immediately prior to such event.

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##### 



Upon a change in control, Masonite has agreed,
among other things, to continue the employment of the Named
Executive Officers. If their employment is terminated by
Masonite, at any time prior to a change of control or at any
time within three years following a change of control (other
than for cause, disability, retirement or death), or if the
executives employment is terminated by the executive for
good reason at any time within three years following
a change in control, or if the executives employment is
terminated by the executive at any time within 60 days
after the end of the 12 month period following a change in
control with or without good reason, the executive
will be entitled to receive an amount equal to two to three
times (depending on the executive) the executives annual
salary and bonus (subject to reduction if the executive would
have retired within two years following the date of termination).

It is a condition to Stiles obligation to
complete the Arrangement that each of the Executive Signatories
waive the right to receive any such change in control payments
that are triggered by the completion of the Arrangement.
Pursuant to a letter agreement with KKR dated December 22,
2004, the Executive Signatories agreed to waive such payments
subject to reaching satisfactory investment terms with Stile
Holding. In addition, Masonite has agreed to use its
commercially reasonable efforts to cause all employees who are
entitled to any change in control payments arising as a result
of the Arrangement to waive such entitlement.

Report of the Human Resource and Compensation
Committee on Executive Compensation

It is the responsibility of the Human Resource
and Compensation Committee to review and recommend to the Board
annually the compensation proposed to be paid to Masonites
executive officers and to make recommendations to the Board
concerning annual bonus levels and grants under the
Masonites long-term incentive plans. The Committee also
reviews such human resources and compensation issues as it
considers appropriate, and retains consultants from time to time
to provide advice regarding Masonites compensation
strategy and programs.

Compensation
Strategy

The major elements of Masonites
pay-for-performance executive compensation program are base
salary, a short-term incentive in the form of an annual cash
bonus and long-term incentives. The Human Resource and
Compensation Committee believes that this approach best serves
the interests of Shareholders by ensuring that executive
officers are compensated in a manner that advances both the
short and long-term interests of Shareholders. Thus,
compensation for Masonites executive officers involves a
high proportion of pay which is at risk: the annual cash bonus
is based primarily on the extent to which the objectives set out
in the business plan are achieved and the long-term incentive
grants are based on the criteria outlined below under
Long-Term Incentives. Annual cash bonuses and
long-term incentives can also be based, in part, on an
evaluation of the contribution made by the executive to
Masonites performance. Long-term incentives also directly
relate a significant portion of the executives
remuneration to share price appreciation realized by
Masonites Shareholders. The Board has the authority to
grant additional discretionary bonuses based on performance.

The Human Resource and Compensation Committee
places a greater emphasis on short-term and long-term incentives
than might be expected for a Canadian incorporated public
company. Approximately 80% of Masonites revenue is derived
from North American sources with a significant portion thereof
deriving from United States sources. Consequently, Masonite
competes for executive talent in the United States market. The
Committee has used short-term and long-term incentives to more
closely align Masonites compensation with that of the
executives counterparts in the United States. The target
is for the aggregate compensation payable to executive officers
to be above average in relation to compensation paid for
comparable executives in the United States and Canada. The
comparative group consists of corporations in similar businesses
with similar revenues and performance achievements.

(i) Base
Salary

Annual base salary levels for the executive
officers are established for each year by reference to the range
of salaries paid in general industry in North America with the
intention that the salaries will be in the 75(th) percentile of
that range. The Chief Executive Officer has an employment
contract which provides for a specified minimum annual salary
subject to such increases as the Board (excluding the Chief
Executive Officer) determines appropriate. See Executive
Compensation  Employment Agreement and Termination of
Employment above.

(ii) Annual
Cash Bonus

The entitlement of each executive officer to an
annual bonus is tied to the satisfaction of Masonites
objectives set out in its business plan for that year as
approved by the Board. In Masonites senior executive
compensation plan, the Committee establishes the amount of the
bonus to be paid should these objectives be achieved. The bonus
is a percentage, ranging from 30% to 120%, of an
executives base salary.

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##### 



(iii) Long-Term
Incentives

The Committee believes that a material portion of
total compensation must be aligned with the market price of
Masonite Common Shares. The Committee has established a
guideline that the total number of Masonite Common Shares
reserved for issuance pursuant to grant of stock options, minus
those options that have been exercised, shall not exceed 10% of
the issued and outstanding Common Shares. Company Options
granted in past years were exercisable over a ten year period
and vest in three equal instalments following the date granted.
A small number of Company Options were granted in 2003 to
non-executive employees. On March 16, 2004, the Committee
recommended, and the Board approved, an amendment to the Company
Stock Option Plan to provide that future grants of options to
directors are conditional upon the approval of a majority of
Shareholders.

In 2003 and the beginning of 2004, the Human
Resources and Compensation Committee altered its approach to the
provision of long term incentives to executive employees. In
2003, all members of the executive and senior management group
received grants of RSUs and DSUs. Neither RSUs nor DSUs dilute
the ownership position of Shareholders and the cost thereof is
both fully deductible from Masonites tax obligations and
is expensed in full to the income statement. The Committee
undertook this change to strengthen linkages between the
interests of executives and those of the Shareholders through
simulated equity ownership and in the light of emerging
executive compensation trends and sentiment in the market place.

The total number of RSUs and DSUs granted in 2003
reflected an actuarial value approximately equivalent to the
companys previous practice in respect of the grant of
stock options. Seventy-five percent of the equivalent value was
disbursed on RSUs and 25% in DSUs. The size of individual grants
of RSUs and DSUs to specific executives relates to the
responsibilities and performance of the executive concerned.

RSUs are phantom shares with a nominal value
equal to the fair market value of a Common Share. Each RSU is
converted into a cash payment based on the prevailing price of
Masonite Common Shares. The Masonite 2002 Restricted Share Bonus
Plan, effective October 21, 2003, provided certain senior
officers of Masonite with a one-time grant of RSUs as a bonus in
respect of services rendered in 2002. A total of 201,300 RSUs
were granted under the terms of the plan. Except in the case of
anti-dilution adjustments and the granting of additional units
based on notional equivalents of dividends paid on Common
Shares, no additional RSUs will be granted under the plan.

One third of the RSU grants made in 2003 vested
on each of October 21, 2003 and 2004 and, subject to
continued employment, one third of the RSU grants made in 2003
vest on October 21, 2005. The payment to be made on vesting
is based on the number of RSUs granted multiplied by the
weighted average closing prices of Masonite Common Shares for
the 20 trading days prior to the vesting date. Vesting and
payment of these RSUs is accelerated on a change in control of
Masonite.

DSUs are also phantom shares with a nominal value
equal to the fair market value of a Common Share. Each DSU is
converted into a cash payment on retirement of the recipient or
prior termination of employment based on the prevailing price of
Common Shares. The Masonite 2002 Deferred Share Plan, effective
October 21, 2003, provided certain senior officers of
Masonite with a one-time grant of DSUs as a bonus in respect of
services rendered in 2002.

A total of 66,900 DSUs were granted under the
terms of the plan that vested in the recipient immediately.
Except in the case of anti-dilution adjustments and the granting
of additional units based on notional equivalents of dividends
paid on Common Shares, no additional DSUs will be granted under
the plan. The payment to be made at retirement or termination of
employment is based on the number of DSUs granted multiplied by
the weighted average closing prices of Masonite Common Shares
for the 20 trading days prior to the vesting date. This plan
will be amended if Shareholder approval of the Arrangement is
obtained to provide that payment in respect of these DSUs will
accelerate upon a change in control of Masonite.

The Human Resources and Compensation Committee
has continued to develop executive incentive arrangements in
2004. Under the provisions of the Full Value Incentive Plan,
effective March 23, 2004, eligible participants will
receive a long-term incentive grant valued appropriately to the
nature of their accountabilities in the ratio 70% RSUs and 30%
DSUs. Subject to the performance criteria outlined below, a
total of 192,500 RSUs and 82,500 DSUs were distributed to the
Named Executive Officers in 2004. The RSUs and DSUs,
respectively, awarded to the Named Executive Officers in 2004
were: Mr. Orsino  99,900 and 42,800; Mr. Bernards
 7,200 and 3,100; Mr. Ulster  21,300 and 9,200;
Mr. Repar  21,300 and 9,200; Mr. Morrison 
21,300 and 9,200; and Mr. Ambruz  21,300 and 9,200.

In addition to continued employment, vesting of
RSUs granted in 2004 will be subject to the following
requirements:



| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Vesting will only occur at the end of the three
    year term of the RSU,                                                                                                                             
|
| |  | 50% of the grant will be subject to Masonite
    achieving pre-established increased Earnings per Share
    (EPS) targets, which are recommended by the
    Committee and approved by the Board, and

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##### 





| |   |                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 50% of the grant will be subject to Masonite
    achieving return on equity (ROE) that falls between
    the median and the 75th percentile of comparable publicly-traded
    Canadian and U.S. companies with sales between US$1 and
    US$5 billion.

The number of RSUs subject to EPS performance
vesting standards can be increased by up to 20% if the EPS
target is exceed by 50%. Conversely, only 50% of such RSUs will
vest if EPS equals 80% of the EPS target and none will vest if
EPS falls below this level.

The number of RSUs subject to ROE performance
vesting standards can be increased by up to 20% if ROE exceeds
the 75th percentile of comparable publicly-traded Canadian and
U.S. Companies with sales between US$1 and US$5 billion.
Conversely, only 50% of such RSUs will vest if ROE equals the
35th percentile of such companies and none will vest if ROE
falls below the 35th percentile.

DSUs granted in 2004 under the provisions of the
Full Value Incentive Plan will vest over five years at the rate
of 20% per annum commencing one year after the date granted.
While DSUs may vest prior to the termination of an
executives employment or prior to his or her retirement,
they are not paid out until such retirement or termination. Both
RSUs and DSUs granted in 2004 are eligible to accrue additional
fractional units to reflect dividends paid by Masonite based on
the prevailing fair market value of Common Shares.

The payment to be made after three years in the
case of RSUs or at retirement or termination of employment in
the case of DSUs is based on the number of RSUs or DSUs, as
applicable, that have vested in accordance with the provisions
thereof described above multiplied by the weighted average
closing prices of Common Shares for the 20 trading days prior to
the payment date.

Vesting and payment of the RSUs granted under the
Full Value Incentive Plan accelerate upon a change in control of
Masonite. Currently, vesting of DSUs granted under the Full
Value Incentive Plan accelerates upon a change in control of
Masonite; however the plan will be amended if Shareholder
approval of the Arrangement is obtained to provide that payment
in respect of these DSUs will also accelerate upon a change in
control of Masonite.

Masonite does not currently have specific target
ownership guidelines for equity holdings in Masonite by
executive officers. However, vested and unvested DSUs have
substantially the same motivational effect and value to
executives as owning real shares. Further, DSUs cannot be
converted into a cash payment or a tradable security during
employment. Accordingly, the accumulation of DSUs into the
future will implicitly create a holding by each executive and
senior manager that parallels the intent of ownership guidelines.

The Human Resource and Compensation Committee
believes that Masonites compensation structure
appropriately takes into account Masonites performance and
the individual contributions toward that performance by the
Chief Executive Officer and other executive officers of
Masonite. In summary, the Human Resource and Compensation
Committee believes that Masonites compensation policy and
practices are helping Masonite attract, retain and motivate its
executive officers in the attainment of its business goals and
in the best interests of Shareholders.

Submitted by the Human Resource and Compensation
Committee of the Board:

|                               |  |                             
|------------------------------ |  | ----------------------------
|Howard L. Beck (signed)(Chair) |  | Peter A. Crossgrove (signed)

Alan R. McFarland (signed)

Compensation of Directors

During the year ended December 31, 2004,
Masonite had nine directors (eight non-employee, one
management). Non-employee directors received, in 2004, an annual
retainer of US$20,000 (US$45,000 for the Chairman of the Board)
and US$1,000 per Board or committee meeting attended (US$750 if
participating by telephone). The Chair of each Committee of the
Board also received an additional US$5,000 in 2004 and
non-employee directors also received related travel and
out-of-pocket expenses incurred when attending meetings. The
members of the Special Committee will receive fees, in addition
to their regular Board fees, in consideration for acting on the
Special Committee. The Chair of the Special Committee will
receive US$30,000, each other member will receive US$20,000 and
each member will receive US$1,000 per meeting.

On March 23, 2004, the Board adopted a
Directors Deferred Unit Plan, whereby directors can elect
to receive all or a part of the fees payable to them as
directors in the form of DSUs. The number of DSUs to be granted
is calculated by dividing the dollar amount of the fee the
director elects to receive in the form of DSUs by the weighted
average closing prices of Masonite Common Shares for the 20
trading days prior to the payment date. The DSUs granted to
directors are paid out only when the director ceases to be a
member of the Board and the payment is calculated by multiplying
the number of DSUs held by the director by the weighted average
closing prices of Masonite Common Shares for the 20 trading days
prior to the date the individual ceases to be a member of the
Board.

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##### 



Currently, vesting of DSUs granted under the
Directors Deferred Unit Plan accelerates upon a change in
control of Masonite, however the plan will be amended if
Shareholder approval of the Arrangement is obtained to provide
that payment in respect of these DSUs will also accelerate upon
a change in control of Masonite.

Performance Graph

The following graph compares the total cumulative
shareholder return for C$100 invested in Common Shares of
Masonite on December 31, 1999 with the cumulative total
return of the S&P/ TSX Composite Index (formerly the TSE 300
Composite Index) for the five most recently completed years. The
S&P/ TSX Composite Index is a total return index, including
dividends reinvested.

(GRPH)

INFORMATION CONCERNING STILE AND STILE
HOLDING

Stile is a corporation formed by affiliates of
KKR on December 21, 2004 under the OBCA and is a wholly
owned Subsidiary of Stile Holding. It was organized solely for
the purpose of entering into the Combination Agreement and
consummating the Arrangement contemplated thereby. Stile has not
carried on any activities to date other than activities incident
to its formation and in connection with the Arrangement.

Stile Holding is a corporation formed on
January 4, 2005 under the OBCA and continued
January 14, 2005 under the CBCA, and is controlled by a
private investment fund affiliated with KKR. It was organized
solely for the purpose of facilitating the Arrangement. Stile
Holding has not carried on any activities to date other than
activities incident to its formation and in connection with the
Arrangement.

The business address of each of Stile and Stile
Holding is 9 West 57th Street, New York, NY ((212)
750-8300).

RIGHTS OF DISSENTING SHAREHOLDERS

A registered Shareholder is entitled to dissent
under the Plan of Arrangement and to be paid the fair value of
such Shareholders Common Shares if such Shareholder duly
objects to the Arrangement Resolution and the Arrangement
becomes effective. The Plan of Arrangement provides for dissent
rights that are substantially similar to those provided for
under section 185 of the OBCA. Under the OBCA, if registered
Shareholders exercised Dissent Rights, Masonite would be
required to pay the fair value of the Common Shares to the
Dissenting Shareholders whereas under the Plan of Arrangement
such payment will be made by Stile. All other dissent procedures
will be substantially the same as those contained in the OBCA.
The following summary is otherwise qualified in its entirety by
the provisions of section 185 of the OBCA, the text of which is
set forth as Appendix E to this Circular.

In addition to any other right that a Dissenting
Shareholder may have, a Dissenting Shareholder who complies with
the dissent procedures of Section 185 of the OBCA is
entitled, when the Arrangement becomes effective, to require
Stile to pay such Shareholder the fair value of such
Shareholders Common Shares, determined as of the close of
business on the date before the Arrangement Resolution is
adopted. A registered Shareholder wishing to exercise such right
must ensure that the Executive Vice-President, General Counsel
and Corporate Secretary of Masonite, at 1600 Britannia Road
East, Mississauga, Ontario, L4W 1J2 (fax: (905) 670-6870),

-55-



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##### 



shall have received from such Dissenting
Shareholder prior to 5:00 p.m. on the last business day
preceding the Meeting, a Notice of Dissent to the Arrangement
Resolution with respect to all the Common Shares held by such
Shareholder.


The Combination Agreement provides that it is a
condition to the completion of the Arrangement for the benefit
of Stile that Dissent Rights shall not have been exercised by
Shareholders holding more than 15% of the Common Shares. If
Shareholders holding in excess of this number of Common Shares
exercise their Dissent Rights, unless Stile waives the
condition, the Arrangement will not occur.

Section 185 of the OBCA provides that a
shareholder may only make a claim under the section with respect
to all the shares of a class held by the shareholder on behalf
of any one beneficial owner and registered in the
shareholders name. One consequence of the provision is
that a holder of Common Shares may only exercise the right to
dissent under Section 185 in respect of Common Shares which
are registered in that holders name.In many cases,
shares beneficially owned by a person are registered in the name
of an intermediary or a clearing agency, such as CDS.
Accordingly, a non-registered Shareholder will not be entitled
to exercise the right to dissent under Section 185 directly
(unless the Common Shares are re-registered in the
non-registered shareholders name). A non-registered holder
who wishes to exercise the right of dissent should immediately
contact the intermediary with whom the non-registered holder
deals with in respect of his or her Common Shares and either
(i) instruct the intermediary to exercise the right to
dissent on the non-registered holders behalf (which, if
the Common Shares are registered in the name of CDS or other
clearing agency, would require that the Common Shares first be
re-registered in the name of the intermediary), or
(ii) instruct the intermediary to re-register the Common
Shares in the name of the non-registered holder, in which case
the non-registered holder would have to exercise the right to
dissent directly.

The filing of a Notice of Dissent does not
deprive a Shareholder of the right to vote at the Meeting;
however the OBCA provides, in effect, that a Shareholder who has
submitted a Notice of Dissent and who votes in favour of the
Arrangement Resolution will be deprived of further rights under
Section 185 of the OBCA. The OBCA does not provide, and
Masonite will not assume, that a vote against the Arrangement
Resolution or an abstention constitutes a Notice of Dissent,
but a Shareholder need not vote his Common Shares against the
Arrangement Resolution in order to dissent. Similarly, the
revocation of a proxy conferring authority on the proxyholder to
vote in favour of the Arrangement Resolution does not constitute
a Notice of Dissent; however, any proxy granted by a Shareholder
who intends to dissent, other than a proxy that instructs the
proxyholder to vote against the Arrangement Resolution, should
be validly revoked in order to prevent the proxyholder from
voting such Common Shares in favour of the Arrangement
Resolution and thereby causing the Shareholder to forfeit his or
her right to dissent.

Within ten days of the Shareholders adopting the
Arrangement Resolution, Masonite is required to notify in
writing each Dissenting Shareholder that the Arrangement
Resolution has been adopted, unless the Dissenting Shareholder
voted in favour of the Arrangement Resolution or has withdrawn
such Shareholders Notice of Dissent. That notice must set
out the rights of the Dissenting Shareholder and the procedures
to be followed to exercise those rights. A Dissenting
Shareholder shall, within 20 days after such Shareholder
receives notice of the adoption of the Arrangement Resolution,
or if such Shareholder does not receive such notice, within
20 days after such Shareholder learns that the Arrangement
Resolution has been adopted, send to Masonite a written notice
(the Demand for Payment) containing such
Shareholders name and address, the number of Common Shares
in respect of which such Shareholder dissents and a Demand for
Payment of the fair value of the Common Shares held by such
Shareholder. Within 30 days of the sending of such
Shareholders Demand for Payment, the Dissenting
Shareholder must send the certificates representing the Common
Shares in respect of which such Shareholder dissents to Masonite
or the Transfer Agent. Masonite or the Transfer Agent will
endorse thereon notice that the Shareholder is a Dissenting
Shareholder and will then return the share certificates to the
Dissenting Shareholder. After sending a Demand for Payment, a
Dissenting Shareholder ceases to have any rights as a
Shareholder other than the right to be paid the fair value of
the Common Shares held by such Shareholder, except where
(i) the Dissenting Shareholder withdraws such
Shareholders Demand for Payment before Stile makes an
offer to the Dissenting Shareholder in accordance with the OBCA;
(ii) Stile fails to make an offer as hereinafter described
and the Dissenting Shareholder withdraws such Shareholders
Demand for Payment; or (iii) the Combination Agreement is
terminated; in which case such Shareholders rights as a
Shareholder are reinstated as of the date such Shareholder sent
the Demand for Payment. Not later than seven days after the
later of the Effective Date and the day Masonite receives a
Demand for Payment, Stile is required to send to each Dissenting
Shareholder who has sent a Demand for Payment, an offer to pay
for the Common Shares of the Dissenting Shareholder in an amount
considered by the directors of Stile to be the fair value
thereof, accompanied by a statement showing how the fair value
was determined, or, if applicable a notification that Stile is
unable lawfully to pay Dissenting Shareholders for their Common
Shares.

Every offer to pay for Common Shares held by
Dissenting Shareholders must be on the same terms and is to be
paid by Stile within ten days of the acceptance, but an offer to
pay lapses if Stile has not received an acceptance thereof
within 30 days of making the offer to pay. If an offer to
pay is not made by Stile or if a Dissenting Shareholder does not
accept an offer to pay, Stile may within 50 days after the
Effective Date or within such further period as the Court may
allow, apply to the Court to fix a fair value for the Common

-56-



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##### 



Shares of any Dissenting Shareholder. At the
present time, Stile does not intend to apply to the Court to fix
a fair value for the Common Shares. If Stile fails to apply to
the Court, a Dissenting Shareholder may apply to the Court for
the same purpose within a further period of 20 days or
within such further period as the Court may allow.


Before making an application to the Court, or not
later than seven days after receiving notice of an application
to the Court by a Dissenting Shareholder, as the case may be,
Stile shall give to each Dissenting Shareholder who, at the date
upon which the notice is given (a) has sent to Masonite a
Demand for Payment and (b) has not accepted the offer to
pay made by Stile, notice of the date, place and consequences of
the application and of such Shareholders right to appear
and be heard in person or by counsel. A similar notice shall be
given to each Dissenting Shareholder who, after the date of such
first mentioned notice and before the termination of the
proceedings commenced by the application, satisfies the
conditions in (a) and (b) above within three days
after such Shareholder satisfies such conditions. All Dissenting
Shareholders who satisfy the conditions in (a) and
(b) above shall be deemed to be joined in the application
on the later of the date upon which the application is brought
and the date upon which they satisfy the conditions, and such
Shareholders are bound by the decision rendered by the Court in
the proceedings commenced by the application. Upon an
application to the Court, the Court may determine whether any
other person is a Dissenting Shareholder who should be joined as
a party and the Court is to fix a fair value for the Common
Shares of all Dissenting Shareholders.

A Shareholder of Masonite who dissents but elects
to receive the fair value of such Shareholders Common
Shares and does not accept the offer to pay made by Stile, or if
the offer to pay lapses and Stile has not received an acceptance
thereof, will be bound to accept the amount determined by the
Court to be the fair value of the Common Shares even if such
amount is lower than the amount offered by Stile. In addition,
in certain circumstances, Dissenting Shareholders may be
responsible for certain of the costs of the Court incurred by
the Court in the application.

The above is only a summary of the Dissenting
Shareholder provisions of the Plan of Arrangement and the OBCA,
which are technical and complex. It is suggested that any
Masonite Shareholders wishing to avail themselves of their
rights under those provisions seek their own legal advice, as
failure to comply strictly with the provisions of the Plan of
Arrangement and the OBCA may prejudice their right of
dissent.

Common Shares held by a Dissenting Shareholder
will not be acquired by Stile on the Effective Date.
Notwithstanding the above, Dissenting Shareholders who duly
exercise Dissent Rights and who are ultimately entitled to be
paid fair value for their Common Shares shall be deemed to have
transferred their Common Shares without any further
authorization, act or formality and free and clear of all liens,
charges, claims and encumbrances, to Stile in consideration of a
payment equal to such fair value, concurrently with the transfer
of Common Shares to Stile as described under Particulars
of the Arrangement  Summary of the Arrangement.
In the event that a Dissenting Shareholder fails to perfect or
effectively withdraws a claim under Section 185 of the OBCA
or forfeits the right to make a claim under that section or such
Shareholders rights as a Shareholder are otherwise
reinstated, such Shareholders Common Shares shall
thereupon be deemed to have been transferred to Stile
concurrently with the transfer of Common Shares to Stile
pursuant to the Arrangement for the consideration and on the
basis herein described.

PROCEDURES FOR THE SURRENDER OF SHARE
CERTIFICATES AND PAYMENT

The details of the procedures for the deposit of
Common Share certificates where issued and the delivery by the
Depositary of cash are set out in the Letter of Transmittal
accompanying this Circular. Shareholders who have not received a
Letter of Transmittal should contact the Depositary at
100 University Avenue, 9th Floor, Toronto, Ontario.

Shareholders who forward a properly completed and
signed Letter of Transmittal, together with accompanying Common
Share certificates, at or prior to 5:00 p.m. (Toronto time) on
February 17, 2005 will be forwarded the consideration to
which they are entitled under the Arrangement as soon as
practicable after the Effective Date. Shareholders who deposit
properly completed and signed Letters of Transmittal, together
with accompanying Common Share certificates, after 5:00 p.m.
(Toronto time) on February 17, 2005 will be forwarded the
consideration to which they are entitled as soon as practicable
after the later of the Effective Date and the date of receipt by
the Depositary of the relevant Letter of Transmittal and
accompanying Common Share certificates. Once Shareholders
surrender their Common Share certificates, they will not be
entitled to sell the securities to which those certificates
relate.

Shareholders who do not forward to the Depositary
a properly completed and signed Letter of Transmittal, together
with their Common Share certificate(s), will not receive the
consideration to which they are otherwise entitled until deposit
is made. Whether or not Shareholders forward their Common Share
certificate(s) upon the completion of the Plan of Arrangement on
the Effective Date, Shareholders, other than Investing Employees
with respect to their Employee Rollover Shares, will cease to be
shareholders of Masonite as of the Effective Date and will only
be entitled to receive the consideration to which they are
entitled under the Plan of Arrangement or, in the case of
registered Shareholders who properly exercise Dissent Rights,
the right to receive fair value for their

-57-



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##### 



Common Shares in accordance with the Dissent
Procedures. Immediately following the effectiveness of the
Arrangement, Stile Holding will acquire the Employee Rollover
Shares as described under Particulars of the
Arrangement.


No commission will be charged to Shareholders who
deliver their certificate(s) evidencing Common Shares according
to the instructions set out in the Letter of Transmittal. It is
not possible to determine precisely when the Arrangement will
become effective. If the Final Order is obtained and all
conditions set forth in the Combination Agreement, including the
receipt of regulatory approvals, are satisfied or waived,
Masonite will file the Articles of Arrangement giving effect to
the Arrangement as soon as reasonably practicable, such that the
Effective Date is expected to occur on or about
February 28, 2005.

Any use of the mail to transmit a share
certificate, a related Letter of Transmittal, and any other
required documents is at the risk of the Shareholder. If these
documents are mailed, it is recommended that registered mail,
with (if applicable) return receipt requested, properly insured,
be used.

A cheque representing the amount payable to a
former holder of Common Shares who has complied with the
procedures set out above will, as soon as practicable after the
Effective Date and after the receipt of all required documents:
(i) be forwarded to the former Shareholder at the address
specified in the Letter of Transmittal by insured first-class
mail; or (ii) be made available at the offices of the
Depositary 100 University Avenue, Toronto, Ontario for pickup by
the holder as requested by the holder, in the Letter of
Transmittal.

Where a share certificate has been destroyed,
lost or misplaced, the registered holder of that share
certificate should immediately complete the Letter of
Transmittal as fully as possible and return it together with a
letter describing the loss, to the Depositary in accordance with
instructions in the Letter of Transmittal. The Depositary has
been instructed to respond with replacement share certificate
requirements which are also set out in Section 4.3 of the Plan
of Arrangement.

Shareholders whose Common Shares are
registered in the name of a broker, investment dealer, bank,
trust company or other intermediary should contact that
intermediary for instructions and assistance in delivering share
certificates representing those Common Shares.

PURCHASES AND SALES OF COMMON SHARES

During the last two years, the only purchases of
Common Shares made by Masonite were pursuant to its normal
course issuer bid. Masonite repurchased a total of 100,000
Common Shares under that issuer bid from July 21, 2004 to
July 29, 2004 at prices ranging from C$30.70 to C$31.92 for
an average price of C$31.52. Masonite did not repurchase any of
its Common Shares in 2003, during the first, second or fourth
quarters of 2004 or in January 2005.

During the last five years, the only distribution
by the Company of Common Shares (other than pursuant to the
exercise of Company Options and warrants to acquire Common
Shares) occurred in August 2001 when the Company, pursuant to a
short form prospectus under Canadian securities laws,
distributed a total of 7,150,000 Common Shares at a price
of C$14.00 per Common Share for gross proceeds
of C$100,100,000.

ADDITIONAL INFORMATION

Additional information relating to Masonite is
available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Shareholders may obtain copies of Masonites most recent
annual and interim financial statements by retrieving them from
SEDAR or EDGAR or by contacting Masonite at 1600 Britannia Road
East, Mississauga, Ontario, L4W 1J2. Financial information
concerning Masonite is provided in Masonites comparative
consolidated financial statements for the year ended
December 31, 2003 and the fiscal quarters ended
March 31, 2004, June 30, 2004 and September 30,
2004 and the Managements Discussion and Analysis related
thereto.

-58-



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##### 



APPROVAL BY THE COMPANY

The contents of this Circular and its sending to
the Shareholders have been unanimously approved by the Board of
Directors.

January 18, 2005

By order of the Board of Directors.

(Peter A. Crossgrove Signature)

Peter A. Crossgrove


Chairman of the Board of Directors


-59-



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##### 



APPENDIX A  ARRANGEMENT
RESOLUTION

BE IT RESOLVED THAT:



|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | The arrangement (the Arrangement)
    under Section 182 of the Business Corporation Act(Ontario) (the OBCA) involving Masonite
    International Corporation (the Company), as more
    particularly described and set forth in the Management
    Information Circular (the Circular) of the Company
    dated January 18, 2005 accompanying this notice of meeting,
    as the Arrangement may be modified or amended, is hereby
    authorized, approved and adopted.                                                                                                                                                                                            
|  
|2. | The plan of arrangement (the Plan of
    Arrangement) involving the Company, the full text of which
    is set out as Schedule 1.1A to the amended and restated
    Combination Agreement dated January 16, 2005 (the
    Agreement) made between Stile Acquisition Corp. and
    the Company, as the Plan of Arrangement may be modified or
    amended, is hereby authorized, approved and adopted.                                                                                                                                                                                                                                                                   
|  
|3. | Notwithstanding that this resolution has been
    passed (and the Plan of Arrangement adopted) by the shareholders
    of the Company or that the Arrangement has been approved by the
    Superior Court of Justice (Ontario) (the Court), the
    directors of the Company are hereby authorized and empowered
    without further notice to or approval of the shareholders of the
    Company (i) to amend the Agreement or the Plan of
    Arrangement to the extent permitted by the Agreement in any
    manner not inconsistent with an applicable order of the Court,
    and (ii) subject to the terms of the Agreement not to
    proceed with the Arrangement.
|  
|4. | Any one officer or director of the Company is
    hereby authorized and directed for and on behalf of the Company
    to execute, under the seal of the Company or otherwise, and to
    deliver articles of arrangement and such other documents as are
    necessary or desirable to the Director under the OBCA in
    accordance with the Agreement for filing.                                                                                                                                                                                                                                                                                                         
|  
|5. | Any one officer or director of the Company is
    hereby authorized and directed, for and in the name of and on
    behalf of the Company, to execute or cause to be executed, under
    the seal of the Company or otherwise, and to deliver or cause to
    be delivered, all such other documents and instruments and to
    perform or cause to be performed all such other acts and things
    as may be necessary or desirable to give full effect to the
    foregoing resolution and the matters authorized thereby.                                                                                                                                                

A-1



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##### 



Appendix B

| |  | 
| |  | 
|
|
|
|
|
|

STILE ACQUISITION CORP.


and

MASONITE INTERNATIONAL CORPORATION



---

AMENDED AND RESTATED COMBINATION
AGREEMENT

DATED

January 16, 2005



---

B-1



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##### 










TABLE OF CONTENTS

|                                                           |                                                                             |      |      |      | 
|---------------------------------------------------------- | --------------------------------------------------------------------------- | ---- | ---- | ---- | 
|                                                           |                                                                             | Page |     
|                                                           |                                                                             |      |     
|ARTICLE 1 DEFINITIONS AND
    PRINCIPLES OF INTERPRETATION |                                                                             |      | B-3  |     
|                                                           | 1.1 Definitions                                                             |      |      | B-3  | 
|                                                           | 1.2 Certain Rules of
    Interpretation                                     |      |      | B-8  | 
|                                                           | 1.3 Entire Agreement                                                        |      |      | B-9  | 
|                                                           | 1.4 Schedules                                                               |      |      | B-9  | 
|                                                           | 1.5 Accounting
    Matters                                                  |      |      | B-9  | 
|                                                           | 1.6 Knowledge                                                               |      |      | B-9  | 
|ARTICLE 2 THE TRANSACTION                                  |                                                                             |      | B-9  |     
|                                                           | 2.1 Articles of
    Arrangement                                             |      |      | B-9  | 
|                                                           | 2.2 Implementation
    Steps by the Company                                 |      |      | B-10 | 
|                                                           | 2.3 Implementation
    Steps by Acquisitionco                               |      |      | B-10 | 
|                                                           | 2.4 Interim Order                                                           |      |      | B-10 | 
|                                                           | 2.5 The Company
    Circular                                                |      |      | B-11 | 
|                                                           | 2.6 Closing Matters                                                         |      |      | B-11 | 
|                                                           | 2.7 Preparation of
    Filings, etc.                                        |      |      | B-11 | 
|                                                           | 2.8 Disclosure
    Letter                                                   |      |      | B-11 | 
|ARTICLE 3 REPRESENTATIONS
    AND WARRANTIES               |                                                                             |      | B-12 |     
|                                                           | 3.1 Representations and
    Warranties of the Company                       |      |      | B-12 | 
|                                                           | 3.2 Representations and
    Warranties of Acquisitionco                     |      |      | B-12 | 
|                                                           | 3.3 Survival                                                                |      |      | B-12 | 
|ARTICLE 4 COVENANTS                                        |                                                                             |      | B-12 |     
|                                                           | 4.1 Retention of
    Goodwill                                               |      |      | B-12 | 
|                                                           | 4.2 Covenants of the
    Company                                            |      |      | B-12 | 
|                                                           | 4.3 Covenants of
    Acquisitionco                                          |      |      | B-15 | 
|                                                           | 4.4 Covenants of the
    Company Regarding Non-Solicitation                 |      |      | B-16 | 
|                                                           | 4.5 Notice of Superior
    Proposal Determination                           |      |      | B-17 | 
|                                                           | 4.6 Access to
    Information                                               |      |      | B-18 | 
|                                                           | 4.7 Financing                                                               |      |      | B-18 | 
|                                                           | 4.8 Indemnification                                                         |      |      | B-18 | 
|ARTICLE 5 CONDITIONS                                       |                                                                             |      | B-19 |     
|                                                           | 5.1 Mutual Conditions
    Precedent                                         |      |      | B-19 | 
|                                                           | 5.2 Additional
    Conditions Precedent to the Obligations of Acquisitionco |      |      | B-19 | 
|                                                           | 5.3 Additional
    Conditions Precedent to the Obligations of the Company   |      |      | B-21 | 
|                                                           | 5.4 Satisfaction of
    Conditions                                          |      |      | B-21 | 
|ARTICLE 6 AMENDMENT AND
    TERMINATION                    |                                                                             |      | B-21 |     
|                                                           | 6.1 Amendment                                                               |      |      | B-21 | 
|                                                           | 6.2 Termination                                                             |      |      | B-22 | 
|                                                           | 6.3 Termination and
    Other Payments                                      |      |      | B-23 | 
|                                                           | 6.4 Effect of
    Termination Payment                                       |      |      | B-23 | 
|                                                           | 6.5 Remedies                                                                |      |      | B-23 | 
|ARTICLE 7 GENERAL                                          |                                                                             |      | B-24 |     
|                                                           | 7.1 Notices                                                                 |      |      | B-24 | 
|                                                           | 7.2 Assignment                                                              |      |      | B-24 | 
|                                                           | 7.3 Further
    Assurances                                                  |      |      | B-25 | 
|                                                           | 7.4 Expenses                                                                |      |      | B-25 | 
|                                                           | 7.5 Public Notices                                                          |      |      | B-25 | 
|                                                           | 7.6 Execution and
    Delivery                                              |      |      | B-25 | 
|                                                           | 7.7 No Recourse                                                             |      |      | B-25 | 
|                                                           | 7.8 No Third Party
    Beneficiaries                                        |      |      | B-25 | 

B-2



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##### 



AMENDED AND RESTATED COMBINATION AGREEMENT

THIS AGREEMENTis
made the 16th day of January, 2005

B E T W E E N :

STILE ACQUISITION CORP.

a corporation governed by the laws of Ontario
(Acquisitionco)

-and -

MASONITE INTERNATIONAL CORPORATION

a corporation governed by the laws of Ontario
(the Company)

RECITALS:



|   |                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|A. | Acquisitionco and the Company wish to propose a
    Transaction the result of which, together with other
    transactions relating thereto, will result in the acquisition of
    all of the shares of the Company by Acquisitionco.
|  
|B. | The Transaction will be effected by means of an
    arrangement involving the Company, the Companys
    Shareholders and Acquisitionco.                                                                                            
|  
|C. | The Parties entered into a combination agreement
    dated December 22, 2004 to set out their agreements in
    respect of the Transaction.                                                                                         
|  
|D. | The Parties wish to amend and restate that
    combination agreement on the terms set out in this Agreement.                                                                                                                        

THEREFORE, the
parties agree as follows:



ARTICLE 1

DEFINITIONS AND PRINCIPLES OF
INTERPRETATION





1.1 Definitions

In this Agreement, unless there is something in
the subject matter or context inconsistent therewith, the
following terms shall have the following meanings respectively:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1933 Actmeans the United States Securities Act of 1933;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | Accounts
    Receivablehas the meaning
    ascribed to it in Section (i) of Schedule 3.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Acquisition Proposalmeans any proposal or offer with
    respect to any merger, amalgamation, arrangement, business
    combination, liquidation, dissolution, recapitalization,
    take-over bid, tender offer, purchase of any assets representing
    greater than 20% of the fair market value of the Transaction, or
    purchase of more than 20% of the equity (or rights thereto) of
    the Company or a Subsidiary of the Company, or similar
    transactions or series of transactions involving the Company or
    any Subsidiary of the Company, excluding the Transaction;
|
| | Actmeans the Business Corporations Act(Ontario), the governing corporate statute of the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | Affiliatehas the meaning ascribed to it under
    the Securities Act;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Agreementmeans this amended and restated
    agreement, including all schedules, and all amendments or
    restatements as permitted, and references to
    Article, Section or Schedule
    mean the specified Article, Section or Schedule of this
    agreement.                                                                                                                                                                                                                                                                                                                 
|
| | Arms Lengthhas the meaning ascribed to it for
    purposes of the Tax Act;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Articles of Arrangementmeans the articles of arrangement of
    the Company in respect of the Transaction that are required by
    the Act to be filed with the Director under the Act after the
    Final Order is made in order to effect the Transaction;                                                                                                                                                                                                                                                                                                                              
|
| | Balance Sheetmeans the consolidated balance sheet
    of the Company as at December 31, 2003, forming part of the
    Financial Statements;                                                                                                                                                                                                                                                                                                                                                                                                                                               

B-3



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Business Daymeans any day on which commercial
    deposit taking banks are generally open for business in Toronto,
    Ontario and New York, New York other than a Saturday, a Sunday
    or a day observed as a holiday in such locations under
    applicable Laws;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Cashed-out Optionmeans each Company Option in respect
    of which a Cash Election (as defined in the Company Stock Option
    Plan) has been duly made by a Holder of Company Options prior to
    the Effective Time in accordance with the terms and conditions
    of the Company Stock Option Plan;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Certificate of Arrangementmeans the Certificate of Arrangement
    to be issued by the Director in respect of the Articles of
    Arrangement to be filed by the Company to give effect to the
    Transaction contemplated by this Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Closing Timehas the meaning ascribed to it in
    Section 2.6;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Codemeans the United States Internal
    Revenue Code of 1986;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Commitment Lettersmeans the equity and debt commitment
    letters from KKR Millennium Fund (Overseas) Limited Partnership
    and The Bank of Nova Scotia, respectively, copies of which were
    provided by Acquisitionco to the Company on December 22,
    2004;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Company Benefit Plansmeans all employee benefit
    plans (within the meaning of Section 3(3) of ERISA)
    and all equity-based, severance, employment, change in control,
    collective bargaining, bonus, incentive, deferred compensation,
    supplemental retirement and all other employee benefit plans,
    arrangements, agreements, programs, policies, practices or
    undertakings, whether oral or written, formal or informal,
    funded or unfunded, registered or unregistered, whether or not
    subject to ERISA, under which (i) any employees or former
    employees (or any spouses, dependants, survivors or
    beneficiaries of any such employees or former employees),
    directors or officers, individuals working on contract with the
    Company or its Subsidiaries or other individuals providing
    services to it of a kind normally provided by employees or
    eligible dependants of any of the foregoing Persons has any
    present or contingent right to benefits which are contributed
    to, sponsored by or maintained by the Company or any of its
    Subsidiaries or (ii) under which the Company or any of its
    Subsidiaries has any present or contingent liability;
|
| | Company Circularmeans the notice of the Company
    Meeting and accompanying management information circular,
    including all appendices thereto, prepared in accordance with
    this Agreement, to be sent to the Company Shareholders in
    connection with the Company Meeting;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Company Documentshas the meaning ascribed to it in
    Section (v) of Schedule 3.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Company IPmeans (i) all domestic, foreign,
    registered and pending applications for patents, trademarks,
    service marks, copyrights, trade names, domain names and all
    material licenses running to or from the Company or any of its
    Subsidiaries relating to the Companys or any of its
    Subsidiaries businesses or owned by the Company or any of
    its Subsidiaries, (ii) all material common law trademarks,
    service marks, copyrights and copyrightable works (including
    databases, software and Internet site content), trade names,
    websites, URLs, brand names and logos; and (iii) all trade
    secrets, inventions, formulae, data, improvements, know-how,
    confidential information, material computer programs (including
    any source code and object code) documentation, engineering and
    technical drawings, processes, methodologies, trade dress, and
    all other proprietary technology utilized in or incidental to
    the businesses of the Company and its Subsidiaries and all
    common law rights relating to the foregoing.                                                                                                                                
|
| | Company Meetingmeans the special meeting of the
    Company Shareholders, including any adjournment or postponement
    thereof, to be called and held in accordance with the Interim
    Order to consider and, if deemed advisable, approve the
    Transaction;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | Company Optionsmeans the options granted under the
    Company Stock Option Plan to purchase Company Shares that remain
    outstanding on the Effective Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Company Securityholdersmeans the Holders of Company Shares
    and Company Options;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Company Shareholdersmeans Holders of Company Shares;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Company Sharesmeans the common shares of the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Company Stock Option Planmeans the Masonite International
    Corporation Share Option Plan, amended and restated as of
    March 16, 2004 as amended to the date hereof;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | Contractmeans a contract, lease, instrument,
    note, bond, debenture, mortgage, agreement, arrangement or
    understanding, written or oral, to which a Party, or any of its
    Subsidiaries, is a party or under which a Party or any of its
    Subsidiaries is bound,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

B-4



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##### 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | has unfulfilled obligations or contingent
    liabilities or is owed unfulfilled obligations, whether known or
    unknown, and whether asserted or not;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Courtmeans the Superior Court of Justice
    (Ontario);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Depositarymeans Computershare Investor
    Services Inc., being the depositary appointed by the
    Company for the purpose, amongst other things, of exchanging
    certificates representing Company Shares for cash;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Directormeans the Director appointed pursuant
    to the Act;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | Disclosure Lettermeans the disclosure letter provided
    by the Company to Acquisitionco prior to the execution of the
    Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Dissent Rightsmeans the rights of dissent in respect
    of the Transaction as described in the Plan of Arrangement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | Dissenting Shareholdermeans any Company Shareholder who has
    properly exercised its Dissent Rights and has not withdrawn or
    been deemed to have withdrawn such Dissent Rights;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | DSUmeans deferred share units granted to
    management and certain key employees of the Company pursuant to
    the Companys 2002 Deferred Share Plan effective as of
    October 21, 2003, as amended, and the Companys 2004
    Full Value Incentive Plan dated as of March 23, 2004, as
    amended, and the deferred share units granted to directors of
    the Company pursuant to the Directors Deferred Unit Plan
    dated as of March 23, 2004, as amended;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Effective Datemeans the date shown on the
    Certificate of Arrangement to be issued under the Act giving
    effect to the Transaction, which date shall be determined in
    accordance with Section 2.6;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | Effective Timehas the meaning ascribed to it in the
    Plan of Arrangement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | Eligible Propertiesmeans any non-depreciable capital
    property for the purposes of the Tax Act held by the Company on
    the Effective Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Employee Rollover
    Agreementmeans a written
    agreement between Acquisitionco (or one of its Affiliates) and
    an officer or employee of the Company or its subsidiaries in a
    form acceptable to the board of directors of the Company,
    (i) pursuant to which (A) Acquisitionco (or one of its
    Affiliates) has agreed to acquire, and such officer or employee
    has agreed to sell, that number of the Company Shares held by
    such officer or employee stipulated in the agreement (if any)
    for consideration not exceeding $40.20 per Company Share, which
    consideration consists of shares in the capital of Acquisitionco
    (or such Affiliate), except that cash may be paid in lieu of
    issuing fractional shares and/or (B) such officer or
    employee has agreed to dispose of that number of the Company
    Options held by such officer or employee stipulated in the
    agreement (if any) for consideration consisting solely of
    Replacement Options and for which the total In-the-Money Amount
    of such Replacement Options shall, at the time of granting of
    such Replacement Options, equal (subject to rounding down to
    take into account fractional shares) the total In-the-Money
    Amount of the Company Options exchanged for such Replacement
    Options; (ii) which has been entered into prior to the
    Effective Time but is to be completed immediately after the
    Effective Time in the case of a transaction referred to in
    (i)(A) or to occur contemporaneously with the transfer of
    Company Shares pursuant to section 3.1(f) of this Plan of
    Arrangement in the case of a transaction referred to in (i)(B);
    (iii) under which all conditions to closing (other than
    completion of the Arrangement) have been satisfied or waived as
    of the Effective Time; and (iv) which has not been
    terminated by such officer or employee or by Acquisitionco (or
    one of its Affiliates) as of the Effective Time;
|
| | Employee Rollover Optionsmeans Company Options which are to be
    disposed of in exchange for Replacement Options pursuant to an
    Employee Rollover Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Employee Rollover Sharesmeans Company Shares which are to be
    acquired pursuant to an Employee Rollover Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Environmental Lawsmeans all applicable Laws relating to
    the environment, natural resources or employee health or safety,
    including any such Laws and applicable, enforceable guidelines,
    policies and codes published by a Governmental Authority
    relating to Hazardous Substances including the storage,
    generation, use, handling, control, manufacture, processing,
    labelling, deposit, disposal, transport, remediation, discharge
    or release of Hazardous Substances;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | ERISAmeans the Employee Retirement
    Income Security Actof 1974, as amended;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Exchange Actmeans the United States Securities
    Exchange Act of 1934;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Existing Credit Facilitiesmeans the credit facilities of the
    Company or its Subsidiaries listed in section 3.1(j)(iv) of
    the Disclosure Letter;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

B-5



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Final Ordermeans the final order of the Court
    approving the Transaction as such order may be amended by the
    Court at any time prior to the Effective Date or, if appealed,
    then, unless such appeal is withdrawn or denied, as affirmed or
    as amended on appeal;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Financial Statementsmeans the audited consolidated
    financial statements of the Company for the fiscal year ended
    December 31, 2003, including the notes to such statements
    and the unaudited consolidated financial statements of the
    Company for the nine months ended September 30, 2004,
    including the notes to such statements;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Governmental Authoritymeans any (a) multinational,
    federal, provincial, state, regional, municipal, local or other
    government, governmental or public department, central bank,
    court, tribunal, arbitral body, commission, board, bureau or
    agency, domestic or foreign, (b) self-regulatory
    organization or stock exchange including without limitation the
    NYSE and the TSX, (c) subdivision, agent, commission,
    board, or authority of any of the foregoing, or
    (d) quasi-governmental or private body exercising any
    regulatory, expropriation or taxing authority under or for the
    account of any of the foregoing;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Hazardous Substancemeans any hazardous, dangerous or
    toxic substance, including petroleum (including crude oil or any
    fraction thereof), petroleum products, asbestos and
    asbestos-containing materials, polychlorinated biphenyls, radon,
    toxic mould, urea-formaldehyde solvent, chemical and any other
    material, substance or thing that is regulated pursuant to any
    Environmental Law or that could result in liability under any
    Environmental Law, and shall include any contaminant, pollutant,
    waste, hazardous waste, special waste or dangerous good as
    defined under Environment Laws;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | Holdersmeans (a) when used with
    reference to the Company Shares, the holders thereof shown from
    time to time in the register of holders of Company Shares
    maintained by or on behalf of the Company and, where the context
    so provides, includes joint holders of such Company Shares,
    (b) when used with reference to the Company Options, means
    the holders thereof shown from time to time in the register
    maintained by or on behalf of the Company in respect of Company
    Options and (c) when used with reference to the RSUs and/or
    DSUs, means the holders thereof shown from time to time in the
    registers maintained by or on behalf of the Company in respect
    of the RSUs and/or DSUs;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | In-the-Money Amountmeans, (i) for each Company
    Option, the difference between the Purchase Price and the
    exercise price of that Company Option, and (ii) for each
    Replacement Option, the difference, if any, between the fair
    market value of each share issuable upon the exercise of such
    Replacement Option and the per share exercise price
    of that Replacement Option, provided that, where more than one
    share is issuable upon the exercise of a Replacement Option, the
    In-the-Money Amount of such Replacement Option will be the
    difference as so determined multiplied by the number of shares
    issuable;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Interim Ordermeans the interim order of the Court,
    as the same may be amended, in respect of the Transaction, as
    contemplated by this Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | Lawsmeans all applicable laws (including
    common law), statutes, regulations, statutory rules, by-laws,
    orders, ordinances, directives and the terms and conditions of
    any approvals, permits, licences or judgements of any
    Governmental Authority, together with any applicable enforceable
    published notes, guidelines or policies, and the term
    applicable, with respect to such Laws and in the
    context that refers to one or more Persons, means such Laws that
    apply to such Person or Persons or its or their business,
    undertaking, property or securities and that emanate from a
    Governmental Authority having jurisdiction over the Person or
    Persons or its or their business, undertaking, property or
    securities;                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Leased Real Propertyhas the meaning ascribed to it in
    Section (t) of Schedule 3.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | Material Adverse
    Change, when used in connection
    with the Company, means any change, effect, event or occurrence
    with respect to the condition (financial or otherwise),
    properties, assets, liabilities, obligations (whether absolute,
    accrued, conditional or otherwise), businesses, operations or
    results of operations or prospects of the Company or its
    Subsidiaries that is, or would reasonably be expected to be,
    material and adverse to the Company and its Subsidiaries on a
    consolidated basis. For certainty, Material Adverse
    Changedoes not include any change, effect, event or
    occurrence caused by or arising from (a) changes in the
    markets in which the Company and its Subsidiaries operate (other
    than changes in reaction to the announcement of the Transaction)
    or (b) macroeconomic factors, interest rates, general
    financial market conditions, war, terrorism or hostilities,
    except, in each case, to the extent any change, effect, event or
    occurrence has had a disproportionate effect on the Company and
    its Subsidiaries as compared to other Persons in the industry in
    which the Company and its Subsidiaries operate.
|
| | Material Adverse Effectwhen used in connection with the
    Company, means any effect of a Material Adverse Change relating
    to the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Material Contractshas the meaning ascribed to it in
    Section (j) of Schedule 3.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | material facthas the meaning ascribed to it under
    the Securities Act;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

B-6



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Notice Periodhas the meaning ascribed to it in
    Section 4.5;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | NYSEmeans the New York Stock Exchange;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | OSCmeans the Ontario Securities
    Commission;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Outside Datemeans March 31, 2005 or such
    later date as may be mutually agreed by the Parties;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Owned Real Propertyhas the meaning ascribed to it in
    Section (t) of Schedule 3.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | Partymeans Acquisitionco or the Company and
    Partiesmeans Acquisitionco and the Company,
    collectively;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Personincludes any individual, sole
    proprietorship, partnership, firm, entity, limited partnership,
    limited liability company, unlimited liability company,
    unincorporated association, unincorporated syndicate,
    unincorporated organization, trust, body, corporation, or
    Governmental Authority, and any group (as defined in
    Section 13(d)(3) of the Exchange Act) comprised of more
    than one Person and, where the context requires, any of the
    foregoing when they are acting as trustee, executor,
    administrator or other legal representatives;                                                    
|
| | Plan of Arrangementmeans the plan of arrangement
    substantially in the form and content of Schedule 1.1A and
    any amendments or variations made thereto in accordance with
    this Agreement or the Plan of Arrangement or made at the
    direction of the Court;                                                                                                                                                                                                                                                                                                                                                                      
|
| | Pre-Effective Date Periodmeans the period from
    December 22, 2004 until the Closing Time, subject to the
    earlier termination of this Agreement in accordance with its
    terms;                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | Publicly Disclosed by the Companymeans disclosed by the Company in a
    public filing made by it with the OSC on the SEDAR system or
    with the SEC on the EDGAR system prior to the date hereof;                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | Purchase Pricemeans $40.20 cash per Company Share;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Qualifying Company Shareholdermeans a Company Shareholder but, for
    greater certainty, does not include (i) a Dissenting
    Shareholder or (ii) Acquisitionco or any Affiliate of
    Acquisitionco;                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Real Propertyhas the meaning ascribed to it in
    Section (t) of Schedule 3.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Real Property Leaseshas the meaning ascribed to it in
    Section (t) of Schedule 3.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Regulatory Approvalsmeans those sanctions, rulings,
    consents, orders, exemptions, permits and other approvals
    (including the lapse, without objection, of a prescribed time
    under a statute or regulation that states that a Transaction may
    only be implemented if a prescribed time lapses following the
    giving of notice without an objection being made) of any
    Governmental Authority, as set out in Schedule 2.5;                                                                                                                                                                                                
|
| | Replacement Optionsmeans options to acquire shares of
    Acquisitionco (or one of its Affiliates) granted in exchange for
    Company Options pursuant to an Employee Rollover Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | RSUmeans restricted share units granted
    to management and certain key employees of the Company pursuant
    to the Companys 2002 Restricted Share Bonus Plan dated as
    of October 21, 2003 as amended on March 23, 2004 and
    the Companys 2004 Full Value Incentive Plan dated as of
    March 23, 2004, as amended;                                                                                                                                                                                                                                                                                                               
|
| | SECmeans the U.S. Securities and Exchange
    Commission;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | Securities Actmeans the Securities Act(Ontario) and the rules, regulations and policies made
    thereunder, as they may be amended from time to time prior to
    the Effective Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Senior Managementmeans the senior officers of the
    Company, including the senior executives identified in
    Schedule 5.2, but excluding the non-executive Chairman of
    the Board of Directors;                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Subsidiarymeans, with respect to a specified
    body corporate, any other body corporate of which more than 50%
    of the outstanding shares ordinarily entitled to elect a
    majority of the board of directors thereof (whether or not
    shares of any other class or classes shall or might be entitled
    to vote upon the happening of any event or contingency) are at
    the time owned directly or indirectly by such specified body
    corporate, and shall include also any partnership, joint venture
    or other entity over which the specified body corporate is
    entitled to exercise similar direction or control;
|
| | Superior Proposalmeans any bona fidewritten
    Acquisition Proposal that, in the good faith determination of
    the board of directors of the Company after consultation with
    its financial advisors and with outside counsel, (a) is
    reasonably likely to be                                                                                                                                                                                                                                                                                                                                                                        

B-7



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##### 



| |                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | completed, taking into account all legal,
    financial, regulatory and other aspects of such proposal and the
    Person making such proposal, and (b) would, if consummated
    in accordance with its terms be more favourable to the Company
    Shareholders from a financial point of view than the Transaction;                                                                              
|
| | Taxand
    Taxeshave the respective meanings ascribed
    to such terms in Section (p) of Schedule 3.1;                                                                                                                                                                                                                                                                                         
|
| | Tax Actmeans the Income Tax Act(Canada);                                                                                                                                                                                                                                                                                                                                                          
|
| | Tax Returnsincludes all returns, reports,
    declarations, elections, notices, filings, forms, statements and
    other documents (whether in tangible, electronic or other form)
    and including any amendments, schedules, attachments,
    supplements, appendices and exhibits thereto, made, prepared,
    filed or required to be made, prepared or filed by Law in
    respect of Taxes;
|
| | Termination Paymenthas the meaning ascribed to it by
    Section 6.3(1);                                                                                                                                                                                                                                                                                                                          
|
| | Transactionmeans the arrangement of the Company
    under Section 182 of the Act on the terms and subject to
    the conditions set out in the Plan of Arrangement, subject to
    any amendments or variations thereto made in accordance with
    this Agreement or the Plan of Arrangement or made at the
    direction of the Court;                                                          
|
| | Transaction Resolutionmeans the special resolution of the
    Company Shareholders approving the Transaction, to be
    substantially in the form and content of Schedule 1.1B;                                                                                                                                                                                                                   
|
| | TSXmeans The Toronto Stock Exchange; and                                                                                                                                                                                                                                                                                                                                                          
|
| | WARNhas
    the meaning ascribed to it in Section 4.2(a)(viii)(C).                                                                                                                                                                                                                                                                                                                                




1.2 Certain Rules of
Interpretation

In this Agreement:



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| | (a) | Currency
    Unless otherwise specified, all references to money amounts are
    to lawful currency of Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (b) | Governing
    Law This Agreement is a
    contract made under and shall be governed by and construed in
    accordance with the laws of the Province of Ontario and the
    federal laws of Canada applicable in the Province of Ontario.
    Each Party hereby irrevocably attorns to the jurisdiction of the
    courts of the Province of Ontario in respect of all matters
    arising under or in relation to this Agreement.                                                                                                                                                  
|
| | (c) | Headings
    Headings of Articles and Sections are inserted for convenience
    of reference only and shall not affect the construction or
    interpretation of this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (d) | Including
    Where the word including or includes is
    used in this Agreement, it means including (or includes)
    without limitation.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (e) | No Strict
    Construction The language
    used in this Agreement is the language chosen by the Parties to
    express their mutual intent, and no rule of construction to the
    effect that any ambiguity is to be resolved against the drafting
    Party shall be applied against either Party.                                                                                                                                                                                                                                                                               
|
| | (f) | Number and
    Gender Unless the context
    otherwise requires, words importing the singular include the
    plural and vice versa and words importing gender include all
    genders.                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (g) | Severability
    If, in any jurisdiction, any provision of this Agreement or its
    application to any Party or circumstance is restricted,
    prohibited or unenforceable, such provision shall, as to such
    jurisdiction, be ineffective only to the extent of such
    restriction, prohibition or unenforceability without
    invalidating the remaining provisions of this Agreement and
    without affecting the validity or enforceability of such
    provision in any other jurisdiction or without affecting its
    application to other Parties or circumstances.
|
| | (h) | Statutory
    references A reference to
    a statute includes all rules and regulations made pursuant to
    such statute and, unless otherwise specified, the provisions of
    any statute or regulation or rule which amends, supplements or
    supersedes any such statute or any such regulation or rule.                                                                                                                                                                                                                                                                    
|
| | (i) | Time
    Time is of the essence in the performance of the Parties
    respective obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (j) | Time
    Periods Unless otherwise
    specified, time periods within or following which any payment is
    to be made or act is to be done shall be calculated by excluding
    the day on which the period commences and including the day on
    which the                                                                                                                                                                                                                                                                                                                        

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| |     | period ends and by extending the period to the
    next Business Day following if the last day of the period is not
    a Business Day.                                                                                                                                                                                                                                       
|
| | (k) | Subsidiaries
    To the extent any representations, warranties, covenants or
    agreements contained herein relate, directly or indirectly, to a
    Subsidiary of any Party, each such provision shall be construed
    as a covenant by such Party to cause (to the fullest extent to
    which it is legally capable) such Subsidiary to perform the
    required action.




1.3 Entire Agreement

This Agreement, together with the agreements and
other documents required to be delivered pursuant to this
Agreement, constitutes the entire agreement between the Parties
and sets out all the covenants, promises, warranties,
representations, conditions, understandings and agreements
between the Parties pertaining to the subject matter of this
Agreement and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written. No
reliance has been made upon, and there are no covenants,
promises, warranties, representations, conditions,
understandings or other agreements, oral or written, between the
Parties in connection with the subject matter of this Agreement
except as specifically set forth in this Agreement and any
document required to be delivered pursuant to this Agreement.
There shall be no liability, either in tort or in contract or
otherwise, assessed in relation to any such warranty,
representation, opinion, advice or assertion of fact, not
reduced to writing as part of this Agreement.




1.4 Schedules

The Schedules to this Agreement, as listed below,
are an integral part of this Agreement:

|         |  |                                                
|-------- |  | -----------------------------------------------
|Schedule |  | Description                                    
|         |  |                                                
|1.1A     |  | Plan of Arrangement                            
|1.1B     |  | Transaction Resolution                         
|2.5      |  | Regulatory Approvals                           
|3.1      |  | Representations and Warranties of the Company  
|3.2      |  | Representations and Warranties of Acquisitionco
|5.2      |  | Senior Executives                              




1.5 Accounting Matters

Unless otherwise stated, all accounting terms
used in this Agreement shall have the meanings attributable
thereto under Canadian generally accepted accounting principles
and all determinations of an accounting nature required to be
made shall be made in a manner consistent with Canadian
generally accepted accounting principles.




1.6 Knowledge

Any reference to the knowledge of a Party shall
mean, unless otherwise specified, to the best of the knowledge,
information and belief of such Partys senior officers
after reviewing all relevant records and making reasonable
inquiries regarding the relevant matter of such Partys
directors and senior officers. For these purposes the senior
officers of the Company are the persons so designated in the
Disclosure Letter.




ARTICLE 2

THE TRANSACTION





2.1 Articles of Arrangement

The Articles of Arrangement shall provide, with
such other matters as are necessary to effect the Transaction,
for the implementation of the Plan of Arrangement, as a result
of which:



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| | (a) | each Cashed-out Option will be cancelled by the
    Company in exchange for a cash payment by the Company in an
    amount equal to the In-the-Money Amount of such Cashed-out
    Option (and, for greater certainty the Company shall withhold
    any required withholding Taxes);
|
| | (b) | each Company Option issued and outstanding
    immediately prior to the Effective Time, other than a Cashed-out
    Option or an Employee Rollover Option, will cease to represent a
    right to receive any Company Shares. Instead, beginning                                     

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| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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| |     | immediately after the Effective Time, the sole
    entitlement of a Holder of such a Company Option will be to
    receive, upon exercise of the Company Option, a cash payment
    from the Company equal to the In-the-Money Amount of such
    Company Option (and, for greater certainty the Company shall be
    entitled to withhold any required withholding Taxes);                                                                                                        
|
| | (c) | each RSU and DSU will be cancelled by the Company
    in exchange for a cash payment by the Company in the amount of
    $40.20 per RSU or DSU, as applicable (and, for greater certainty
    the Company shall withhold any required withholding Taxes);                                                                                                                                                                                                                          
|
| | (d) | the outstanding Company Shares (excluding
    Employee Rollover Shares) held by Qualifying Company
    Shareholders shall be transferred by the Holders thereof to
    Acquisitionco without any further authorization, act or
    formality, in exchange for cash in the amount of the Purchase
    Price per Company Share, and Acquisitionco will be deemed to be
    the legal and beneficial owner thereof, free and clear of all
    liens, charges, claims and encumbrances.
|
| | (e) | the transactions contemplated by
    section (i)(B) of the definition of Employee Rollover
    Agreement shall be deemed to occur contemporaneously with the
    transfers in paragraph 2.1(d).                                                                                                                                                                                                                                                                                    




2.2 Implementation Steps by the
Company

The Company shall:



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| | (a) | as soon as reasonably practicable, apply in a
    manner acceptable to Acquisitionco, acting reasonably, under the
    Act for an order approving the Arrangement and in connection
    with such application the Company shall file and diligently
    prosecute an application for an Interim Order providing for the
    calling and holding of the Company Meeting for the purpose of
    considering, and if deemed advisable, approving the Transaction;
|
| | (b) | subject to Section 2.5, convene and hold the
    Company Meeting as soon as practicable after the date hereof,
    but in any case, before February 22, 2005 for the purpose
    of considering the Transaction Resolution and, with the consent
    of Acquisitionco, for any other proper purpose as may be set out
    in the notice for such meeting;                                                                                                     
|
| | (c) | except as required for quorum purposes, not
    adjourn, postpone, cancel (or propose the adjournment,
    postponement or cancellation of) or fail to call the Company
    Meeting without Acquisitioncos prior written consent,
    except as required by Laws;                                                                                                                                                                                            
|
| | (d) | use commercially reasonable efforts to solicit
    from the Company Shareholders proxies in favour of the approval
    of the Transaction Resolution, including if so requested by
    Acquisitionco using the services of dealers and proxy
    solicitation services, and take all other action that is
    necessary or desirable to secure the approval of the Transaction
    by the Company Shareholders;                                               
|
| | (e) | subject to obtaining the approvals as are
    required by the Interim Order, use its best efforts to
    diligently pursue the application to the Court for the Final
    Order; and                                                                                                                                                                                                                                                                          
|
| | (f) | subject to obtaining the Final Order and the
    satisfaction or waiver of the other conditions herein contained
    in favour of each Party, on the date contemplated in
    Section 2.6 send to the Director, for endorsement and
    filing by the Director, the Articles of Arrangement and such
    other documents as may be required in connection therewith under
    the Act to give effect to the Transaction.                                      




2.3 Implementation Steps by
Acquisitionco

Acquisitionco shall, subject to obtaining the
Final Order and the satisfaction or waiver of the other
conditions precedent contained in this Agreement in its favour,
on or before the Effective Date deposit or cause to be deposited
with the Depositary, immediately available funds equal to the
aggregate cash consideration payable for Company Shares under
the Transaction.




2.4 Interim Order

The application referred to in
Section 2.2(a) shall request that the Interim Order provide:



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| | (a) | for the class of Persons to whom notice is to be
    provided in respect of the Plan of Arrangement and the Company
    Meeting and for the manner in which such notice is to be
    provided;                                                                                                                                                                                                                                                                 
|
| | (b) | that the requisite approval for the Transaction
    Resolution shall be, (i) 66 2/3% of the votes cast on
    the Transaction Resolution by the Company Shareholders present
    in person or by proxy at the Company Meeting, and (ii) a
    simple majority of the votes cast on the Transaction Resolution
    by the Company Shareholders present in person or by proxy at the
    Company Meeting, excluding Company Shares held by Senior
    Management;

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| | (c) | that, in all other respects, the terms,
    restrictions and conditions of the by-laws and articles of the
    Company, including quorum requirements and all other matters,
    shall apply in respect of the Company Meeting; and
|
| | (d) | for the grant of the Dissent Rights.                                                                                                                                                                                               




2.5 The Company Circular

As promptly as reasonably practicable after the
execution of this Agreement, the Company shall prepare and
complete, in consultation with Acquisitionco, the Company
Circular (and any amendments thereto) together with any other
documents required by the Securities Act, the 1933 Act and
Exchange Act and other applicable Laws in connection with the
Company Meeting and the Transaction. As promptly as reasonably
practicable thereafter, and after obtaining the Interim Order,
but subject to obtaining any required Regulatory Approvals in
connection with mailing the Company Circular, the Company shall
cause the Company Circular and other documentation required in
connection with the Company Meeting to be sent to each Company
Shareholder and to be filed with applicable Governmental
Authorities, as required by the Interim Order and applicable
Laws. The Company shall permit Acquisitionco to review and
comment on drafts of the Company Circular and other
documentation referred to above in the course of its preparation
and shall not file or amend such documentation without the
consent of Acquisitionco, not to be unreasonably withheld or
delayed.




2.6 Closing Matters

The Effective Date shall be the third Business
Day following the latest of the date of the Company Meeting, the
date of issuance of the Final Order (unless appealed in which
case, the Effective Date shall be the date such appeal is
delivered or withdrawn) and the date upon which the last
Regulatory Approval is obtained. Closing shall take place at the
office of Osler, Hoskin & Harcourt LLP in Toronto, Ontario
at 11:00 a.m. on the Effective Date or at such other place,
date and time as the Parties shall agree (the Closing
Time). Each of Acquisitionco and the Company shall
deliver, at the closing of the Transaction, such customary
certificates, resolutions and other closing documents as may be
required by the other Party, acting reasonably.




2.7 Preparation of Filings,
etc.



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| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | Each of Acquisitionco and the Company shall
    furnish to the other all information that may be required under
    Law to be provided concerning such Party and its shareholders
    for the Company Circular and the implementation of the other
    actions described in Section 2.5. Each Party covenants with
    the other that information to be furnished by it (to its
    knowledge in the case of information concerning its
    shareholders) in connection with such Company Circular, actions
    or otherwise in connection with the consummation of the
    Transaction will not contain any untrue statement of a material
    fact or omit to state a material fact required to be stated in
    any such document or which is necessary in order to make any
    information so furnished for use in any such document not
    misleading in the light of the circumstances in which it is
    furnished.                                
|
| | (b) | Acquisitionco and the Company shall each promptly
    notify the other if, at any time before the Closing Time, it
    becomes aware that the Company Circular or any application for
    an order hereunder contains any untrue statement of a material
    fact or omits to state a material fact required to be stated
    therein or which is necessary to make the statements contained
    therein not misleading in light of the circumstances in which
    they are made, or that otherwise requires an amendment or
    supplement to the Company Circular or such application. In any
    such event, Acquisitionco and the Company shall cooperate in the
    preparation of a supplement or amendment to the Company Circular
    or such application, as required and as the case may be, and, if
    required, shall cause the same to be distributed to Company
    Shareholders and/or filed with the relevant Governmental
    Authorities.
|
| | (c) | The Company shall ensure that the Company
    Circular complies in all material respects with all applicable
    Laws. Without limiting the generality of the foregoing, the
    Company shall ensure that the Company Circular provides Company
    Shareholders with information in sufficient detail to permit
    them to form a reasoned judgement concerning the matters to be
    placed before them at the Company Meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         




2.8 Disclosure Letter

Notwithstanding anything in the Disclosure Letter
to the contrary, all disclosures in the Disclosure Letter must
reference or be associated with a particular section in this
Agreement (including the Schedules) but will also be interpreted
to relate to or modify other sections of this Agreement
(including the Schedules) if the intention to so relate or
modify is readily apparent on the face of such disclosure. The
inclusion of any item in the Disclosure Letter shall not be
construed as an admission by the Company of the materiality of
such item.

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES







|    |                                                  
|--- | -------------------------------------------------
|3.1 | Representations and Warranties of the
    Company

The Company represented and warranted on
December 22, 2004 to and in favour of Acquisitionco as set
out in Schedule 3.1 and acknowledges that Acquisitionco is
relying upon such representations and warranties in connection
with the matters contemplated by this Agreement.






|    |                                                    
|--- | ---------------------------------------------------
|3.2 | Representations and Warranties of
    Acquisitionco

Acquisitionco represented and warranted on
December 22, 2004 to and in favour of the Company as set
out in Schedule 3.2 and acknowledges that the Company is
relying upon such representations and warranties in connection
with the matters contemplated by this Agreement.






|    |         
|--- | --------
|3.3 | Survival

The representations and warranties of the Company
and Acquisitionco contained herein shall survive the execution
and delivery of this Agreement but shall terminate on the
earlier of the termination of this Agreement in accordance with
its terms and as of the Effective Date. Any investigation by a
Party or its advisors shall not mitigate, diminish or affect the
representations and warranties of the other Party.



ARTICLE 4

COVENANTS







|    |                      
|--- | ---------------------
|4.1 | Retention of Goodwill

During the Pre-Effective Date Period, the Company
shall continue to carry on the business of the Company and its
Subsidiaries in a manner consistent with prior practice in all
material respects, using commercially reasonable efforts to
preserve the attendant goodwill of such entities and to
contribute to retention of that goodwill to and after the
Effective Date, but subject to the following provisions of this
Article 4. The provisions of Section 4.2(a) are
intended to be in furtherance of this general commitment.






|    |                         
|--- | ------------------------
|4.2 | Covenants of the Company



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | The Company covenants and agrees that, during the
    Pre-Effective Date Period, except (I) with the consent of
    Acquisitionco to any deviation therefrom (such consent not to be
    unreasonably withheld or delayed taking into account
    Acquisitioncos financing structure and its plans for the
    Company); (II) as set out in the Disclosure Letter;
    (III) with respect to any matter expressly contemplated by
    this Agreement; or (IV) as expressly required by Law, the
    Company will, and will cause its Subsidiaries to:



| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | continue to carry on its business in the ordinary
    course consistent with past practice in all material respects
    and use commercially reasonable efforts to preserve intact its
    present business organization, and its relationships with those
    having material business dealings with it, to the end that its
    goodwill and business shall be maintained;                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (ii)  | not split, consolidate or reclassify any of the
    outstanding shares of the Company or of any Subsidiary of the
    Company, nor declare, set aside or pay any dividends on or make
    any other distributions on or in respect of the outstanding
    shares of the Company or of any Subsidiary of the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (iii) | not amend the articles or by-laws of the Company
    or amend the articles or by-laws of any Subsidiary of the
    Company that is not wholly-owned in a manner that would affect
    its ownership or control by the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (iv)  | not sell, pledge, encumber, allot, reserve, set
    aside or issue, or purchase or redeem, any shares in its capital
    or of any Subsidiary of the Company or any class of securities
    convertible or exchangeable into, or rights, warrants or options
    to acquire, or financial instruments the performance of which is
    based upon any such shares or other securities having a right to
    vote or convertible or exchangeable into such shares or
    securities, except (I) for pledges required to be made by
    the terms of the Existing Credit Facilities, (II) issuances
    of Company Shares pursuant to the exercise of previously granted
    Company Options and (III) to carry out existing shareholder
    and similar agreements relating to non-wholly-owned Subsidiaries
    as set forth in the Disclosure Letter;

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| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
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| | (v)    | not amend, vary or modify the Company Stock
    Option Plans, or the Company Options or the Company Benefit
    Plans involving Company Shares or phantom equity;                                                                                                                                                                                                                                                                                                                              
|
| | (vi)   | not reorganize, amalgamate or merge the Company
    or any of its Subsidiaries with any other Person, nor acquire or
    agree to acquire by amalgamating, merging or consolidating with,
    or purchasing a substantial equity interest or substantial
    portion of the business of, any business or Person;                                                                                                                                                                               
|
| | (vii)  | not sell, lease, encumber or otherwise dispose of
    any material assets except (A) transactions between two or
    more wholly-owned Subsidiaries of the Company or between a
    wholly-owned Subsidiary of the Company and the Company;
    (B) with respect to the sale of inventory of the Company or
    any Subsidiary of the Company in the ordinary course of business
    consistent with past practice; or (C) encumbrances granted
    pursuant to the Existing Credit Facilities.
|
| | (viii) | not:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



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| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) | in the case of directors and senior or executive
    officers of the Company, enter into or modify any Company
    Benefit Plans or other employment, retention, severance, or
    similar agreements, policies or arrangements with, or grant any
    bonuses, salary increases, pension or supplemental pension
    benefits, profit sharing, retirement allowances, deferred
    compensation, incentive compensation, retention, severance or
    termination pay to or any other form of compensation to, or
    increase of benefits payable to, or make any loan to, any
    officers or directors of the Company or any Subsidiary of the
    Company other than as contemplated by this Agreement or required
    under the terms of a Company Benefit Plan or written employment
    agreement in effect prior to December 22, 2004;                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (B) | in the case of employees who are not senior or
    executive officers or directors of the Company or any Subsidiary
    of the Company, take any action with respect to the entering
    into or modification of any Company Benefit Plans or other
    employment, retention, severance, collective bargaining or
    similar agreements, policies or arrangements or grant any
    bonuses, salary increases, pension or supplemental pension
    benefits, profit sharing, retirement allowances, deferred
    compensation, incentive compensation, retention, severance or
    termination pay or any other form of compensation that are
    individually or in the aggregate material to the Company and its
    Subsidiaries on a consolidated basis or any increase of benefits
    payable, other than as required by Law, or as contemplated by
    this Agreement or as required by under the terms of a Company
    Benefit Plan or written employment agreement or collective
    bargaining agreement in effect prior to December 22, 2004
    or for annual increases in salary in the ordinary course of
    business consistent with past practice or in connection with
    promotions in the ordinary course of business consistent with
    past practice; or
|
| | (C) | at any time within the 90-day period prior to the
    Effective Date, effectuate a plant closing or
    mass layoff as those terms are defined in the
    Worker Adjustment and Retraining Notification Act
    (WARN) or any similar Laws, affecting in
    whole or in part any site of employment, facility, operating
    unit or employee of the Company or its Subsidiaries;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ix) | not guarantee the payment of material
    indebtedness of another Person or enter into any keep
    well or other agreement having the economic effect of the
    foregoing (other than in respect of a wholly-owned Subsidiary or
    pursuant to contractual obligations in effect prior to
    December 22, 2004;                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (x)  | not incur indebtedness for money borrowed or
    issue or sell any debt securities or warrants or other rights to
    acquire debt securities other than (A) in connection with
    the renewal or replacement (on substantially equivalent terms)
    of the Existing Credit Facilities; or (B) for short term
    indebtedness incurred in the ordinary course of business
    consistent with past practice (provided, however, that
    the Company shall not be prohibited from making draw-downs under
    the Existing Credit Facilities in the ordinary course of
    business consistent with past practice);                                                                                                                  
|
| | (xi) | not, except in the ordinary course of business
    consistent with past practice: (A) satisfy or settle any
    claims or liabilities substantially prior to the same being due,
    except such as have been reserved against in the Financial
    Statements, which are, individually or in the aggregate,
    material to the Company and its Subsidiaries on a consolidated
    basis; (B) grant any waiver, exercise any option or
    relinquish any contractual rights which are, individually or in
    the aggregate, material to the Company and its Subsidiaries on a
    consolidated basis; or (C) enter into any interest rate,
    currency equity or commodity swaps, hedges or other similar
    financial instruments;

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| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (xii)  | use its reasonable commercial efforts (and cause
    each of its Subsidiaries to use reasonable commercial efforts)
    to cause its current insurance (or re-insurance) policies not to
    be cancelled or terminated or any of the coverage thereunder to
    lapse, unless simultaneously with such termination, cancellation
    or lapse, replacement policies underwritten by insurance and
    re-insurance companies of nationally recognized standing
    providing coverage equal to or greater than the coverage under
    the cancelled, terminated or lapsed policies for substantially
    similar premiums are in full force and effect;
|
| | (xiii) | not make any loan, advances or capital
    contributions to, or investments in, any other Person, except
    for:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



| |     |                                                                                                                                                          
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) | loans or investments by the Company or a
    wholly-owned Subsidiary of the Company to or in any wholly-owned
    Subsidiary of the Company; and         
|
| | (B) | advances made to employees (other than officers)
    for travel and moving expenses in the ordinary course of
    business consistent with past practice.



| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (xiv)   | incur or commit to capital expenditures only in
    the ordinary course of business consistent with past practice
    and in accordance with the capital plan for 2005 provided to
    Acquisitionco prior to the date hereof;                                                                                                                                                                                                                                                                            
|
| | (xv)    | not make any changes to existing accounting
    practices relating to the Company or any Subsidiary of the
    Company, except as required by Law or a Governmental Authority
    or required by applicable generally accepted accounting
    principles, or make any tax election other than, in either case,
    those that would not have a significant impact on the Financial
    Statements or the financial statements of each of the
    Companys Subsidiaries;                                  
|
| | (xvi)   | not (A) rescind or change any election
    relating to Taxes, annual Tax accounting period or method of Tax
    accounting in any material respect, other than, in each case,
    rescissions or changes made in the ordinary course of business
    consistent with prior practice, (B) enter into any closing
    agreement relating to Taxes, (C) settle any material Tax
    claim or assessment, (D) surrender any right to claim a Tax
    refund or (E) amend any of its transfer pricing policies;
|
| | (xvii)  | not take any action or enter into any transaction
    that would preclude Eligible Properties from becoming properties
    of Acquisitionco in a manner such that the cost to Acquisitionco
    of the Eligible Properties determined in accordance with
    subsection 88(1) of the Tax Act including the addition to
    that cost determined under paragraph 88(1)(d) of the Tax
    Act, will be the fair market value of the Eligible Properties on
    the Effective Date;                          
|
| | (xviii) | not enter into, renew or revise any Material
    Contract; and                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (xix)   | not authorize, agree or propose to take any
    actions prohibited by this Section 4.2(a).                                                                                                                                                                                                                                                                                                                                                                                                                



| |     |                                                           
| | --- | ----------------------------------------------------------
| | (b) | The Company shall and shall cause its
    Subsidiaries to:



| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | perform all obligations required to be performed
    by the Company or any of its Subsidiaries under this Agreement
    and co-operate with Acquisitionco in connection therewith, in
    order to consummate and make effective, as soon as reasonably
    practicable, the Transaction;                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (ii)  | use commercially reasonable efforts to obtain the
    requisite approvals of the Company Shareholders to the
    Transaction including participating in joint presentations to
    the Company Shareholders;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (iii) | advise Acquisitionco as reasonably requested, and
    on a daily basis on each of the last seven Business Days prior
    to the Company Meeting, as to the aggregate tally of the proxies
    and votes received in respect of the Company Meeting and all
    matters to be considered at such meeting;                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (iv)  | apply for and use commercially reasonable efforts
    to obtain all Regulatory Approvals relating to the Company or
    any of its Subsidiaries and, in doing so, keep Acquisitionco
    informed as to the status of the proceedings related to
    obtaining the Regulatory Approvals, including providing
    Acquisitionco with copies of all related applications and
    notifications in draft form (except that commercially
    confidential information of the Company may be expurgated in
    Acquisitioncos copy and shall be provided to
    Acquisitioncos counsel on an external counsel basis), in
    order for Acquisitionco to provide its reasonable comments and
    providing Acquisitionco with copies of all material
    correspondence;
|
| | (v)   | use commercially reasonable efforts to effect all
    necessary registrations, filings and submissions of information
    required by Governmental Authorities from the Company or any of
    its Subsidiaries relating to the Transaction;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

B-14



---



##### 





| |        |                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (vi)   | use commercially reasonable efforts to obtain all
    necessary waivers, consents and approvals required to be
    obtained by the Company or a Subsidiary of the Company in
    connection with the Transaction from other parties to any
    material leases, licences or contracts, including the consents
    set forth in section 3.1(c)(iv)(A)(III) of the Disclosure
    Letter;               
|
| | (vii)  | carry out the terms of the Interim Order and the
    Final Order applicable to it and use commercially reasonable
    efforts to comply promptly with all requirements which
    applicable Laws may impose on the Company or its Subsidiaries
    with respect to the Transaction;                                                                                                                   
|
| | (viii) | use all commercially reasonable efforts to defend
    all lawsuits and other legal, regulatory or other proceedings to
    which it is a party, challenging or affecting this Agreement or
    the consummation of the Transaction;                                                                                                                                                                   
|
| | (ix)   | use all commercially reasonable efforts to have
    lifted or rescinded any injunction or restraining order relating
    to the Company or other order which may adversely affect the
    ability of the Parties to consummate the Transaction;                                                                                                                                                       
|
| | (x)    | provide Acquisitionco with a copy of any
    purported exercise of the Dissent Rights and written
    communications with any Holders exercising or purporting to
    exercise Dissent Rights; and not settle or compromise any claim
    brought by any present, former or purported Holder of any of its
    securities in connection with the Transaction without the
    consent of Acquisitionco;
|
| | (xi)   | promptly advise Acquisitionco orally and, if then
    requested, in writing:                                                                                                                                                                                                                                                                                                                          



| |     |                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) | of any event occurring subsequent to
    December 22, 2004 that would render any representation or
    warranty of the Company contained in this Agreement (except any
    such representation or warranty which speaks solely as of a date
    prior to the occurrence of such event), if made on or as of the
    date of such event or the Closing Time, untrue or inaccurate in
    any material respect;
|
| | (B) | of any Material Adverse Change in respect of the
    Company; and                                                                                                                                                                                                                                                                                                                                            
|
| | (C) | of any material breach by the Company of any
    covenant or agreement contained in this Agreement;                                                                                                                                                                                                                                                                                                          



| |        |                                                                                                                                                                                                                                                                                       
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (xii)  | use its commercially reasonable efforts to cause
    all employees who are entitled to any change of control payments
    arising as a result of the Transaction, to waive such
    entitlement; and                                                                                  
|
| | (xiii) | use commercially reasonable efforts to cause at
    least US$8 million of cash from Rochman Universal Doors Inc. and
    other non-wholly owned Subsidiaries and at least
    US$20 million from Specialty Building Products Ltd.,
    respectively, to be distributed to the Company.






|    |                           
|--- | --------------------------
|4.3 | Covenants of Acquisitionco

Acquisitionco covenants and agrees to:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | perform all obligations required to be performed
    by it under this Agreement and to co-operate with the Company in
    connection therewith in order to consummate and make effective,
    as soon as reasonably practicable, the transactions contemplated
    by this Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (b) | apply for and use commercially reasonable efforts
    to obtain all Regulatory Approvals relating to Acquisitionco
    and, in doing so, to keep the Company informed as to the status
    of the proceedings related to obtaining the Regulatory
    Approvals, including, but not limited to, providing the Company
    with copies of all related applications and notifications, in
    draft form (except that commercially confidential information of
    Acquisitionco may be expurgated in the Companys copy and
    shall be provided to the Companys counsel on an external
    counsel basis), in order for the Company to provide its
    reasonable comments and providing the Company with copies of all
    material correspondence;
|
| | (c) | use commercially reasonable efforts to effect all
    necessary registrations, filings and submissions of information
    required by Governmental Authorities from Acquisitionco or its
    Subsidiaries relating to the Transaction;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (d) | carry out the terms of the Interim Order and
    Final Order applicable to it and use commercially reasonable
    efforts to comply promptly with all requirements which
    applicable Laws may impose on Acquisitionco or its Subsidiaries
    with respect to the Transaction;                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (e) | use all commercially reasonable efforts to defend
    all lawsuits or other legal, regulatory or other proceedings, to
    which it is a party, challenging or affecting this Agreement or
    the consummation of the Transaction;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

B-15



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##### 





| |     |                                                                                                                                                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (f) | use all commercially reasonable efforts to have
    lifted or rescinded any injunction or restraining order or other
    order relating to Acquisitionco which may adversely affect the
    ability of the Parties to consummate the Transaction;
|
| | (g) | promptly advise the Company orally and, if then
    requested, in writing:                                                                                                                                                                       



| |      |                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)  | of any event occurring subsequent to
    December 22, 2004 that would render any representation or
    warranty of Acquisitionco contained in this Agreement (except
    any such representation or warranty which speaks solely as of a
    date prior to the occurrence of such event), if made on or as of
    the date of such event or the Closing Time, untrue or inaccurate
    in any material respect; and
|
| | (ii) | of any material breach by Acquisitionco of any
    covenant or agreement contained in this Agreement; and                                                                                                                                                                                                                                                                                                          



| |     |                                                                                                                                                              
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (h) | use all commercially reasonable efforts to obtain
    and effectuate the financing contemplated by the Commitment
    Letters on the terms set forth therein.






|    |                                                        
|--- | -------------------------------------------------------
|4.4 | Covenants of the Company Regarding
    Non-Solicitation



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company shall, and shall cause the officers,
    directors, employees, representatives (which term includes for
    greater certainty any investment banker, lawyer or accountant)
    and agents of the Company and its Subsidiaries to, cease
    immediately all current discussions and negotiations regarding
    any proposal that constitutes, or may reasonably be expected to
    lead to, an Acquisition Proposal, and request and enforce the
    return or destruction of all confidential information provided
    in connection therewith. The Company shall not release any
    Person from any confidentiality agreement or standstill
    agreement. Prior to the Closing Time, the Company shall confirm
    to Acquisitionco that all Persons with whom it has discussed any
    Acquisition Proposal in the last six months have either returned
    such confidential information or have certified its destruction.                                                                                                                                                                                                                                       
|   
|(2) | The Company shall not, directly or indirectly,
    through any officer, director, employee, representative or agent
    of the Company or any of its Subsidiaries or otherwise,
    (i) solicit, initiate, knowingly encourage or otherwise
    facilitate (including by way of furnishing information or
    entering into any form of agreement, arrangement or
    understanding) the initiation of any inquiries or proposals
    regarding an Acquisition Proposal, (ii) participate in any
    discussions or negotiations regarding, or provide any
    confidential information with respect to, any Acquisition
    Proposal, (iii) approve or recommend, or publicly propose
    to approve or recommend, any Acquisition Proposal;
    (iv) accept or enter into, or publicly propose to accept or
    enter into, any letter of intent, agreement, arrangement or
    understanding related to any Acquisition Proposal; or
    (v) withdraw or modify, or propose publicly to withdraw or
    modify, in a manner adverse to Acquisitionco the approval or
    recommendation of the board of directors of the Company or any
    committee thereof of the Transaction.
|   
|(3) | Notwithstanding Section 4.4(2), the board of
    directors of the Company shall be permitted to (i) comply
    with the Companys disclosure obligations under applicable
    Laws with regard to an Acquisition Proposal, (ii) take any
    other action with regard to an Acquisition Proposal to the
    extent ordered or otherwise mandated by any court of competent
    jurisdiction; and (iii) respond to a bona fiderequest for information that could reasonably be expected to
    lead to an Acquisition Proposal, solely by advising that no
    information can be provided unless a bona fidewritten
    Acquisition Proposal is made, and then only in compliance with
    Section 4.4(4).                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(4) | Notwithstanding Section 4.4(2), if the
    Company receives an unsolicited, bona fidewritten
    Acquisition Proposal the board of directors of the Company shall
    be permitted to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



| |     |                                                                                                                                                                                                              
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | consider, participate in any discussions or
    negotiations, or enter into a confidentiality agreement and
    provide information pursuant to Section 4.4(6), or                                           
|
| | (b) | withdraw, modify, change or qualify (or publicly
    propose to withdraw, modify or qualify), in a manner adverse to
    Acquisitionco, the approval or recommendation of the Transaction
    by the Company,



| |                                                                       
| | ----------------------------------------------------------------------
| | if and only to the extent that, in the case of
    clause (a) and (b):



| |       |                                                                                                                                                                                                                       
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | the Company Meeting shall not have occurred;                                                                                                                                                                          
|
| | (ii)  | the Company shall have complied with
    Sections 4.4(5) and 4.4(6);                                                                                                                                                  
|
| | (iii) | the board of directors concludes in good faith,
    after consultation with its outside legal and financial
    advisors, that it would be necessary to take such action in
    order to fulfill its fiduciary duties;

B-16



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | and, the board of directors of the Company
    concludes in good faith, after consultation with its outside
    legal and financial advisors, (A) in the case of
    clause (a), that such Acquisition Proposal is or is
    reasonably likely to be a Superior Proposal, or (B) in the
    case of clause (b), that such Acquisition Proposal is a
    Superior Proposal.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | The Company shall forthwith notify Acquisitionco
    of any Acquisition Proposal and any inquiry that could lead to
    an Acquisition Proposal, or any amendments to the foregoing, or
    any request for non-public information relating to the Company
    or any Subsidiary of the Company in connection with an
    Acquisition Proposal or for access to the properties, books or
    records of the Company or any Subsidiary of the Company by any
    Person. Such notice shall include a description of the material
    terms and conditions of any proposal, the identity of the Person
    making such proposal, inquiry or contact and provide such other
    details of the proposal, inquiry or contact as Acquisitionco may
    reasonably request. The Company shall keep Acquisitionco
    reasonably informed of the status of any such Acquisition
    Proposal or inquiry in a timely manner.                                                                                                                                                                                                                                                            
|   
|(6) | If the Company receives a request for material
    non-public information from a Person who has made an unsolicited
    bona fidewritten Acquisition Proposal and the Company is
    permitted, subject to and as contemplated under
    Section 4.4(4), to negotiate the terms of such Acquisition
    Proposal, then, and only in such case, the board of directors of
    the Company may, subject to the execution by such Person of a
    confidentiality agreement containing employee non-solicitation
    and standstill provisions substantially similar to those
    contained in the Confidentiality Agreement, provide such Person
    with access to information regarding the Company; provided that,
    (i) the Company sends a copy of any such confidentiality
    agreement to Acquisitionco promptly upon its execution,
    (ii) Acquisitionco is provided with a complete list of all
    information provided to such Person on a timely basis, and
    (iii) Acquisitionco is provided on a timely basis with
    similar access to information (to the extent not previously
    provided to Acquisitionco) to that which such Person was
    provided.
|   
|(7) | The Company shall ensure that its officers,
    directors and employees and its Subsidiaries and their officers,
    directors and employees and any representatives or agents
    retained by it or its Subsidiaries are aware of the provisions
    of this Section 4.4, and the Company shall be responsible
    for any breach of this Section 4.4 by its and its
    Subsidiaries officers, directors, employees,
    representatives or agents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(8) | Nothing contained in this Section 4.4 shall
    limit in any way the obligation of the Company to convene and
    hold the Company Meeting in accordance with Section 2.2 of
    this Agreement unless this Agreement is terminated in accordance
    with Article 6. Nothing in this Section 4.4 shall
    permit the Company to terminate this Agreement (except as
    specifically provided in Article 6).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  






|    |                                              
|--- | ---------------------------------------------
|4.5 | Notice of Superior Proposal
    Determination

The Company shall not accept, approve or
recommend or enter into any agreement in respect of an
Acquisition Proposal on the basis that it constitutes a Superior
Proposal (or change or withdraw its recommendation in favour of
the Transaction) unless: (a) it has promptly provided
Acquisitionco with a copy of the Acquisition Proposal document
which has been determined to be a Superior Proposal;
(b) five Business Days (the Notice
Period) shall have elapsed from the date Acquisitionco
received notice of the determination to accept, approve or
recommend an agreement in respect of such Acquisition Proposal;
and (c) before entering into any agreement with respect to
a Superior Proposal, this Agreement shall have been terminated
pursuant to Section 6.2(3)(d). During the Notice Period,
the Company shall provide a reasonable opportunity to
Acquisitionco to consider, discuss and offer such adjustments in
the terms and conditions of this Agreement as would enable the
Company to proceed with its recommendation to the Company
Shareholders with respect to the Transaction; provided,
however, that any such adjustment shall be at the
discretion of Acquisitionco at the time. The board of directors
of the Company will review in good faith any offer made by
Acquisitionco to amend the terms of this Agreement in order to
determine, as part of its exercising its fiduciary duties,
whether the proposed amendments would, upon acceptance, result
in such Superior Proposal ceasing to be a Superior Proposal (and
whether it will change or withdraw its recommendation in favour
of the Transaction). If a majority of the board of directors of
the Company determines that the Superior Proposal would cease to
be a Superior Proposal, the Company will so advise Acquisitionco
and will accept the offer by Acquisitionco to amend the terms of
this Agreement and the Parties agree to take such actions and
execute such documents as are necessary to give effect to the
foregoing. If the board of directors of the Company continues to
believe, in good faith and after consultation with financial
advisors and outside counsel, that such Superior Proposal
remains a Superior Proposal and therefore rejects the amendments
offered by Acquisitionco, then the Company may, subject to the
terms of this Agreement, accept, approve, recommend or enter
into an agreement, understanding or arrangement in respect of
such Superior Proposal (and change or withdraw its
recommendation in favour of the Transaction). Each successive
material modification of any Acquisition Proposal or a Superior
Proposal shall constitute a new Acquisition Proposal for the
purposes of this Section 4.5 and shall require a three
Business Day Notice Period from the date a copy of such
amendment is provided to Acquisitionco (other than an amendment
to improve upon a Superior Proposal in respect of which
Acquisitionco has been provided with an opportunity to amend the
terms of this Agreement and such Superior Proposal has not
ceased to be a Superior Proposal prior to the proposed
amendment). If the Company provides Acquisitionco with the
notice contemplated in

B-17



---



##### 



this Section on a date that is less than seven
calendar days prior to the Company Meeting, if requested by
Acquisitionco, the Company shall adjourn the Company Meeting to
a date that is not less than seven calendar days and not more
than ten calendar days after the date of such notice.







|    |                      
|--- | ---------------------
|4.6 | Access to Information

Subject to applicable Laws, upon reasonable
notice, the Company shall (and shall cause each of its
Subsidiaries to) afford Acquisitioncos officers,
employees, counsel, accountants and other authorized
representatives and advisors access, during normal business
hours from December 22, 2004 and until the earlier of the
Effective Date or the termination of this Agreement, to its and
its Subsidiaries properties, books, contracts and records
as well as to its management personnel and its accountants and
use commercially reasonable efforts to afford such access to its
other advisors, and, during such period, the Company shall (and
shall cause each of its Subsidiaries to) furnish promptly to
Acquisitionco all information concerning the Companys and
its Subsidiaries businesses, properties and personnel as
Acquisitionco may reasonably request, other than information in
respect of which the Company is under an enforceable obligation
to a third party to maintain confidentiality after the Company
has used its commercially reasonable efforts to obtain a waiver
of such obligation.






|    |          
|--- | ---------
|4.7 | Financing

Prior to the Effective Date, the Company shall
provide, and shall cause its Subsidiaries to, and shall use its
commercially reasonable efforts to cause the respective
officers, employees, representatives and advisors, including
legal and accounting, of the Company and its Subsidiaries to,
provide all cooperation reasonably requested by Acquisitionco in
connection with the financing of the transactions contemplated
by this Agreement, including, without limitation, using
commercially reasonable efforts to cause (i) appropriate
officers and employees to be available on a customary basis to
meet with prospective lenders and investors in presentations,
meetings, road shows and due diligence sessions, to assist with
the preparation of disclosure documents in connection therewith,
to execute and deliver any pledge and security documents, other
definitive financing documents, or other certificates, legal
opinions or documents as may be reasonably requested by
Acquisitionco, and (ii) its independent accountants and
counsel to provide assistance to Acquisitionco, including
providing consent to Acquisitionco to prepare and use their
audit reports relating to the Company and its Subsidiaries and,
at the cost of Acquisitionco, to provide any necessary
comfort letters.




4.8 Indemnification



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Acquisitionco agrees that all rights to
    indemnification or exculpation existing in favour of the
    directors or officers of the Company or any Subsidiary of the
    Company as provided in the Companys articles or by-laws as
    at the date of the Confidentiality Agreement shall survive the
    Transaction and shall continue in full force and effect for a
    period of not less than six years from the Closing Time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(2) | There shall be maintained in effect, for not less
    than six years from the Closing Time, coverage substantially
    equivalent to that in effect under the current policies of the
    directors and officers liability insurance
    maintained by the Company, which is no less advantageous, and
    with no gaps or lapses in coverage with respect to matters
    occurring prior to the Closing Time; provided that in no event
    shall Acquisitionco be required to expend in any one year an
    amount in excess of 300% of the annual amount currently paid by
    the Company and if the annual premiums of such insurance
    coverage exceed such amount, Acquisitionco shall be obligated
    only to obtain a substantially similar policy with the greatest
    coverage available (as to quantum and events) for such maximum
    cost. Alternatively, at Acquisitioncos option, it may
    cause the Company to purchase run-off
    directors and officers liability insurance providing
    coverage substantially as favourable to such directors and
    officers as that in effect under such current policies to cover
    prior events during such six year period or the balance thereof.

B-18



---



##### 





ARTICLE 5

CONDITIONS





5.1 Mutual Conditions Precedent

The respective obligations of the Parties to
complete the Transaction shall be subject to the satisfaction,
on or before the Closing Time, of the following conditions
precedent, each of which may only be waived by the mutual
consent of Acquisitionco and the Company:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | the Transaction Resolution shall have been
    approved by (i) 66 2/3% of the votes cast on the
    Transaction Resolution by the Company Shareholders present in
    person or by proxy at the Company Meeting, and (ii) a
    simple majority of the votes cast on the Transaction Resolution
    by the Company Shareholders present in person or by proxy at the
    Company Meeting, excluding Company Shares held by Senior
    Management;
|
| | (b) | the Transaction shall have been approved at the
    Company Meeting in accordance with any conditions in addition to
    those set out in Section 5.1(a) which may be imposed by the
    Interim Order;                                                                                                                                                                                                                                          
|
| | (c) | the Interim Order and the Final Order shall each
    have been obtained on terms consistent with this Agreement and
    in a form satisfactory to the Parties, acting reasonably, and
    shall not have been set aside or modified in a manner
    unacceptable to such Parties, acting reasonably, on appeal or
    otherwise;                                                                                                                 
|
| | (d) | the Articles of Arrangement shall be in content
    consistent with this Agreement and in form satisfactory to the
    Parties acting reasonably;                                                                                                                                                                                                                                                                                                
|
| | (e) | there shall not be in force any Law, final and
    non-appealable injunction, order or decree prohibiting,
    restraining or enjoining the consummation of the Transaction;                                                                                                                                                                                                                                                                     
|
| | (f) | the Regulatory Approvals shall have been obtained
    or satisfied on terms and conditions satisfactory to the Parties
    acting reasonably; and                                                                                                                                                                                                                                                                                                
|
| | (g) | this Agreement shall not have been terminated
    pursuant to Article 6.                                                                                                                                                                                                                                                                                                                                                                         




5.2 Additional Conditions Precedent to
the Obligations of Acquisitionco



|    |                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | obligations of Acquisitionco to complete the
    Transaction shall also be subject to the fulfilment of each of
    the following conditions precedent (each of which is for
    Acquisitioncos exclusive benefit and may be waived by
    Acquisitionco):



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | all covenants of the Company under this Agreement
    to be performed on or before the Closing Time shall have been
    duly performed by the Company in all material respects and
    Acquisitionco shall have received a certificate of the Company
    addressed to Acquisitionco and dated the Effective Date, signed
    on behalf of the Company by two senior executive officers of the
    Company (on the Companys behalf and without personal
    liability), confirming the same as at the Effective Date;                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (b) | (i) the representations and warranties of
    the Company contained in Sections (b), (c) (i), (ii) and
    (iii) and (s)(iv) of Schedule 3.1 shall have been
    true and correct on December 22, 2004; (ii) the
    representations and warranties of the Company that are qualified
    by references to materiality or Material Adverse Effect shall
    have been true and correct on December 22, 2004; and
    (iii) the representations and warranties of the Company not
    so qualified (other than those contained in Sections (b), (c)
    (i), (ii) and (iii) and (s)(iv) of
    Schedule 3.1) shall have been true and correct in all
    material respects on December 22, 2004;                                                                                                                                                                                                                                                                  
|
| | (c) | (i) the representations and warranties of
    the Company that are qualified by references to materiality or
    Material Adverse Effect shall be true and correct; and
    (ii) the representations and warranties of the Company not
    so qualified shall be true and correct in all material respects,
    in each case as of the Closing Time as if made on and as of such
    time (except to the extent such representations and warranties
    speak solely as of an earlier date, in which event such
    representations and warranties shall be true and correct to such
    extent as of such earlier date); and Acquisitionco shall have
    received a certificate of the Company addressed to Acquisitionco
    and dated the Effective Date, signed on behalf of the Company by
    two senior executive officers of the Company (on the
    Companys behalf and without personal liability),
    confirming the same as at the Effective Date;
|
| | (d) | the board of directors of the Company shall have
    adopted all necessary resolutions, and all other necessary
    corporate action shall have been taken by the Company and its
    Subsidiaries to permit the consummation of the Transaction;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (e) | during the Pre-Effective Date Period, there shall
    not have occurred or have been disclosed to the public if
    previously undisclosed to the public, a Material Adverse Change
    to the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

B-19



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##### 





| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (f) | there shall not be pending or threatened in
    writing any suit, action or proceeding by any Governmental
    Authority: (i) seeking to prohibit or restrict the
    acquisition by Acquisitionco of any Company Shares, seeking to
    restrain or prohibit the consummation of the Transaction or
    seeking to obtain from the Company or Acquisitionco any material
    damages directly or indirectly in connection with the
    Transaction, (ii) seeking to prohibit or materially limit
    the ownership or operation by Acquisitionco of the Company or
    any material portion of the business or assets of the Company or
    any of its Subsidiaries or to compel Acquisitionco to dispose of
    or hold separate any portion of the business or assets of the
    Company or any of its Subsidiaries, (iii) seeking to impose
    limitations on the ability of Acquisitionco to acquire or hold,
    or exercise full rights of ownership of, any Company Shares,
    including the right to vote the Company Shares to be acquired by
    them on all matters properly presented to the shareholders of
    the Company, (iv) seeking to prohibit Acquisitionco from
    effectively controlling in any material respect the business or
    operations of the Company or any of its Subsidiaries or
    (v) which, if successful, in the judgement of Acquisitionco
    is reasonably likely to have a Material Adverse Effect on the
    Company or Acquisitionco;
|
| | (g) | Holders of Company Shares representing in excess
    of 15% of the outstanding Company Shares shall not have
    exercised dissent or similar rights, or have instituted
    proceedings to exercise dissent or similar rights, in connection
    with the Transaction;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (h) | (i) none of the senior executives identified
    in Schedule 5.2 shall have resigned; (ii) each of the
    senior executives identified in Schedule 5.2 shall have
    waived their entitlement (if any) to any change of control
    payments arising as a result of the Transaction; (iii) each
    of the senior executives identified in Schedule 5.2 shall
    have made an equity investment in Acquisitionco (or its direct
    or indirect parent) in the amounts set forth opposite their
    respective names; and (iv) the aggregate equity investment
    of employees and officers of the Company (including the senior
    executives identified in Schedule 5.2) in Acquisitionco (or
    its direct or indirect parent) shall be not less than
    US$25,000,000;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (i) | Acquisitionco shall have received the funds in
    the amount contemplated by the Commitment Letters to be
    delivered as of the Effective Date on the terms and conditions
    set forth therein;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (j) | all consents and waivers from any Persons (other
    than Governmental Authorities) required under the terms of any
    of the contracts of the Company or its Subsidiaries listed in
    section 3.1(c)(iv)(A)(III) of the Disclosure Letter with
    respect to the acquisition of control by Acquisitionco, shall
    have been duly obtained or given, as the case may be, at or
    before the Closing Time on terms satisfactory to Acquisitionco
    acting reasonably except for any which the failure to obtain or
    provide does not and would not reasonably be expected to
    constitute, individually or in the aggregate, a Material Adverse
    Effect on the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (k) | other than the Regulatory Approvals, all other
    consents, waivers, permits, orders and approvals of any
    Governmental Authority, and the expiry of any waiting periods,
    in connection with, or required to permit, the consummation of
    the Transaction, the failure of which to obtain would render
    completion of the Transaction unlawful, shall have been obtained
    or satisfied on terms that would not reasonably be expected to
    have a Material Adverse Effect on Acquisitionco and/or the
    Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (l) | the board of directors of the Company shall not
    have approved or recommended any Acquisition Proposal;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | (m) | all of the directors of the Company shall have
    resigned from the Company effective as of the Closing Time;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (n) | there shall not have occurred any actual change
    or amendment to (or any proposal by or on behalf of the Minister
    of Finance (Canada) or Internal Revenue Service to change or
    amend) the Tax Actor Code, as applicable, or to any
    applicable provincial tax legislation or to the regulations
    thereunder or any published administrative position, which
    individually or in the aggregate, directly or indirectly, has or
    could reasonably be expected to have any material adverse effect
    with respect to the Transaction or Acquisitioncos
    ownership of the Company, and which was not publicly announced
    or proposed on or prior to December 22, 2004;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (o) | no Person other than Acquisitionco shall have
    entered into a definitive agreement or an agreement in principle
    with the Company with respect to an Acquisition Proposal;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (p) | Acquisitionco shall have been provided with
    payoff letters from the providers of the Existing
    Credit Facilities in form and content satisfactory to
    Acquisitionco; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (q) | no more than 350,000 Company Shares shall have
    been issued under the Company Stock Option Plan between
    December 22, 2004 and the Effective Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

B-20



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##### 





|    |                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Acquisitionco may not rely on the failure to
    satisfy any of the conditions precedent in Section 5.1 or
    Section 5.2 if the condition precedent was not satisfied
    solely as a result of a material default by Acquisitionco in
    complying with its obligations under this Agreement.




5.3 Additional Conditions Precedent to
the Obligations of the Company



|    |                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The obligations of the Company to complete the
    Transaction shall also be subject to the following conditions
    precedent (each of which is for the exclusive benefit of the
    Company and may be waived by the Company):



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | all covenants of Acquisitionco under this
    Agreement to be performed on or before the Closing Time shall
    have been duly performed by Acquisitionco in all material
    respects, and the Company shall have received a certificate of
    Acquisitionco addressed to the Company and dated the Effective
    Date, signed on behalf of Acquisitionco by two senior executive
    officers of Acquisitionco (on Acquisitioncos behalf and
    without personal liability), confirming the same as at the
    Effective Date;                                                                                                                                                                                                       
|
| | (b) | all representations and warranties of
    Acquisitionco under this Agreement shall have been true and
    correct on December 22, 2004;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (c) | (i) the representations and warranties of
    Acquisitionco that are qualified by references to materiality or
    Material Adverse Effect shall be true and correct; and
    (ii) the representations and warranties of Acquisitionco
    not so qualified shall be true and correct in all material
    respects, in each case as of the Closing Time as if made on and
    as of such time; and the Company shall have received a
    certificate of Acquisitionco addressed to the Company and dated
    the Effective Date, signed on behalf of Acquisitionco by two
    senior executive officers of Acquisitionco (on
    Acquisitioncos behalf and without personal liability),
    confirming the same as at the Effective Date;
|
| | (d) | the board of directors of Acquisitionco shall
    have adopted all necessary resolutions, and all other necessary
    corporate action shall have been taken by Acquisitionco to
    permit the consummation of the Transaction; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (e) | Acquisitionco shall have deposited the aggregate
    cash purchase price payable under the Transaction for the
    Company Shares and Company Options with the Depositary or the
    Company, as applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



|    |                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The Company may not rely on the failure to
    satisfy any of the conditions precedents in Section 5.1 or
    Section 5.3 if the condition precedent was not satisfied
    solely as a result of a material default by the Company in
    complying with its obligations in this Agreement.




5.4 Satisfaction of Conditions

The conditions precedent set out in
Sections 5.1, 5.2 and 5.3 shall be conclusively deemed
to have been satisfied, waived or released when, with the
agreement of Acquisitionco and the Company, a Certificate of
Arrangement in respect of the Transaction is issued by the
Director.



ARTICLE 6

AMENDMENT AND TERMINATION





6.1 Amendment



|    |                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This Agreement and the Plan of Arrangement may,
    at any time and from time to time before or after the holding of
    the Company Meeting but not later than the Effective Date, be
    amended by mutual written agreement of the Parties, and any such
    amendment may without further Shareholder approvals, subject to
    applicable Laws and any applicable order of the Court, without
    limitation:



| |     |                                                                                                                                                               
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | change the time for performance of any of the
    obligations or acts of the Parties;                                                                         
|
| | (b) | waive any inaccuracies or modify any
    representation or warranty contained herein or in any document
    delivered pursuant hereto;                        
|
| | (c) | waive compliance with or modify any of the
    covenants herein contained and waive or modify performance of
    any of the obligations of the Parties; and/or
|
| | (d) | waive compliance with or modify any conditions
    precedent herein contained.                                                                                

B-21



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##### 





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Prior to the date of the Company Meeting,
    Acquisitionco may propose actions or transactions, including
    (i) a reorganization of the Companys Irish
    operations, (ii) settlement of indebtedness held by 1535638
    Ontario Limited, (iii) the winding-up of Castlegate Entry
    Systems Inc., and (iv) structures to enable senior officers
    of the Company to transfer all or a portion of their Company
    Shares and/or Company Options to Acquisitionco (or one of its
    Affiliates) in exchange for shares and/or options of
    Acquisitionco (or such Affiliate), on a tax-efficient basis to
    the extent that the same (A) shall not prejudice the Company
    Securityholders and (B) are either to be completed
    immediately prior to or contemporaneously with the Closing Time,
    or can be unwound without adversely affecting the Company and
    its Subsidiaries. The Company shall take such actions or
    undertake such transactions and, if necessary, the Plan of
    Arrangement shall be modified accordingly. The Parties will
    ensure that such planning activities do not impede the progress
    of the Transaction in any material way. If, at the request of
    Acquisitionco, the Company effects any transaction before the
    Effective Date for such purposes, Acquisitionco will be
    responsible for any structuring and unwinding costs if the
    Transaction is not consummated.




6.2 Termination



|    |                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | If any condition contained in Section 5.1 or
    5.2 is not satisfied at or before the Closing Time, then
    Acquisitionco may, subject to Section 5.2(2), by notice to
    the Company terminate this Agreement and the obligations of the
    Parties hereunder (except as otherwise herein provided,
    including under Section 6.3).
|   
|(2) | If any condition contained in Section 5.1 or
    5.3 is not satisfied at or before the Closing Time, then the
    Company may, subject to Section 5.3(2) by notice to
    Acquisitionco terminate this Agreement and the obligations of
    the Parties hereunder (except as otherwise herein provided,
    including under Section 6.3). 
|   
|(3) | This Agreement may be terminated:                                                                                                                                                                                                                                                                                                         



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | by the mutual agreement of the Company and
    Acquisitionco (and for greater certainty, without further action
    on the part of the Company Shareholders if terminated after the
    holding of the Company Meeting);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (b) | by either the Company or Acquisitionco if there
    shall be passed any Law that makes consummation of the
    Transaction illegal or otherwise prohibited;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (c) | by Acquisitionco, if (i) the board of
    directors of the Company shall have failed to recommend or shall
    have withdrawn, modified or changed in a manner adverse to
    Acquisitionco its approval or recommendation of this Agreement,
    the Transaction or the Transaction Resolution; (ii) the
    board of directors of the Company shall have approved or
    recommended any Acquisition Proposal; (iii) the Company
    shall have breached Section 4.4; or (iv) an
    Acquisition Proposal shall have been publicly made, publicly
    announced or otherwise publicly disclosed by any Person prior to
    the Company Meeting and the board of directors shall not have
    (A) in the case of an Acquisition Proposal in the form of a
    take-over bid, sent to the Company Shareholders, within ten days
    after such take-over bid is made, a statement disclosing that
    the board of directors of the Company re-affirms its
    recommendation of the Transaction; or (B) in the case of an
    Acquisition Proposal in any other form, issued a press release
    within ten days after such Acquisition Proposal is publicly
    made, publicly announced or otherwise publicly disclosed,
    disclosing that the board of directors of the Company re-affirms
    its recommendation of the Transaction;
|
| | (d) | by the Company, provided that the Company is not
    then in breach or default of Section 4.4, in order to enter
    into a definitive agreement with respect to a Superior Proposal
    in accordance with Section 4.4, subject to the prior
    payment by the Company of the amounts payable to Acquisitionco
    under Section 6.3;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (e) | by either Acquisitionco or the Company, if the
    Company Shareholders do not approve the Transaction at the
    Company Meeting in the manner required by the Interim Order;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (f) | by Acquisitionco, if (i) any of the
    representations and warranties of the Company herein become
    untrue or inaccurate such that the condition contained in
    Section 5.2(1)(c) would not be satisfied, or
    (ii) there has been a breach on the part of the Company of
    any of its covenants or agreements herein such that the
    condition in Section 5.2(1)(a) would not be satisfied; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (g) | by Acquisitionco if the Company Meeting has not
    occurred on or before March 1, 2005,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

in each case, prior to the Closing Time.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | If the Effective Date has not occurred on or
    prior to the Outside Date, then, unless otherwise agreed in
    writing by the parties, this Agreement shall terminate provided
    that in the event that the condition set forth in
    Section 5.1(f) above shall not have been satisfied by the
    date which is five Business Days prior to the Outside Date,
    either Party may unilaterally extend the Outside Date for a
    period of 30 days upon written notice to the other given no
    later than the Outside Date, in which case the Outside Date shall

B-22



---



##### 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | be deemed for all purposes to be the date as so
    extended. The right to terminate this Agreement pursuant to this
    Section 6.2(4) shall not be available to the Party seeking
    to terminate if any action of such Party or its Affiliates or
    the failure of such Party or its Affiliates to perform any of
    its obligations under this Agreement required to be performed at
    or prior to the Closing Time shall have resulted in the
    conditions contained in Section 5.1, 5.2 or 5.3 (as
    applicable) not having been satisfied prior to the Outside Date.                                                 
|   
|(5) | If this Agreement is terminated in accordance
    with the foregoing provisions of this Section 6.2, no Party
    shall have any further liability to perform its obligations
    under this Agreement except as provided in Section 6.3 and
    as otherwise expressly contemplated by this Agreement, and
    provided that neither the termination of this Agreement nor
    anything contained in this Section 6.2(5) shall relieve any
    Party from any liability for breach of its obligations under
    this Agreement or for an intentional or wilful breach of its
    representations and warranties prior to termination.




6.3 Termination and Other
Payments



|    |    
|--- | ---
|(1) | If:



| |     |                                                                                   
| | --- | ----------------------------------------------------------------------------------
| | (a) | Acquisitionco shall terminate this Agreement
    pursuant to Section 6.2(3)(c); or
|
| | (b) | the Company shall terminate this Agreement
    pursuant to Section 6.2(3)(d),     



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | then in any such case the Company shall pay to
    Acquisitionco (or as Acquisitionco may otherwise direct)
    $27,400,000 (the Termination Payment) in
    immediately available funds to an account designated by
    Acquisitionco. Such payment shall be made (i) in the case
    of a termination by Acquisitionco, within one Business Day after
    written notice of termination by Acquisitionco, and (ii) in
    the case of a termination by the Company, immediately prior to
    such termination. The Company shall not be obligated to make
    more than one payment pursuant to this Section 6.3(1).



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | If Acquisitionco or the Company terminates this
    Agreement pursuant to Section 6.2(3)(e), 6.2(3)(f)(i) (as a
    result of an intentional or wilful breach of a representation or
    warranty), 6.2(3)(f)(ii) or 6.2(3)(g) and concurrently with such
    termination or within 12 months following the date of such
    termination, the Company enters into, or submits to the
    shareholders of the Company for approval, an agreement with
    respect to an Acquisition Proposal, or an Acquisition Proposal
    is consummated, then the Company shall also pay Acquisitionco
    (or as Acquisitionco may otherwise direct) immediately upon the
    occurrence of such event the Termination Payment.
|   
|(3) | In the event that the Company fails to pay the
    Termination Payment or the Expense Reimbursement on the date as
    required by this Section, the unpaid amount shall bear interest
    at a rate equal to 8% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        




6.4 Effect of Termination
Payment

If the Company pays to Acquisitionco the amounts
required by Section 6.3(1) or 6.3(2) as a result of the
occurrence of any of the events giving rise to a right of
termination referred to therein (except for a breach of
Section 4.4), Acquisitionco shall have no other remedy with
respect to the occurrence of such event.




6.5 Remedies

Subject to Section 6.4, the Parties
acknowledge and agree that an award of money damages would be
inadequate for any breach of this Agreement by any Party or its
representatives and any such breach would cause the
non-breaching Party irreparable harm. Accordingly, the Parties
agree that, in the event of any breach or threatened breach of
this Agreement by one of the Parties, the non-breaching Party
will also be entitled, without the requirement of posting a bond
or other security, to equitable relief, including injunctive
relief and specific performance. Such remedies will not be the
exclusive remedies for any breach of this Agreement but will be
in addition to all other remedies available at law or equity to
each of the Parties.

B-23



---



##### 





ARTICLE 7

GENERAL





7.1 Notices

Any notice, consent or approval required or
permitted to be given in connection with this Agreement (in this
Section referred to as a Notice) shall be in
writing and shall be sufficiently given if delivered (whether in
person, by courier service or other personal method of
delivery), or if transmitted by facsimile or email:



| |     |                         
| | --- | ------------------------
| | (a) | If to Acquisitionco, at:



| |                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c/o Kohlberg Kravis Roberts & Co. 
     9 West 57th Street 
     Suite 4200 
     New York, New York, USA 
     100019 
     Attention:      Scott C. Nuttall
    
     Telecopier No.: (212) 750-0003



| |                
| | ---------------
| | with a copy to:



| |                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Osler, Hoskin & Harcourt LLP 
     66th Floor, 1 First Canadian Place 
     100 King Street West 
     Toronto, Ontario, Canada 
     M5X 1B8 
     Attention:      Stephen P.
    Sigurdson 
     Telecopier No.: (416) 862-6666



| |     |                      
| | --- | ---------------------
| | (b) | If to the Company at:



| |                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Masonite International Corporation 
     1600 Britannia Road 
     Mississauga, Ontario, Canada 
     L4W 2J2 
     Attention:      Harley Ulster 
     Telecopier No.: (905) 670-6520



| |                
| | ---------------
| | with a copy to:



| |                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Davies Ward Phillips & Vineberg LLP 
     44th Floor, 1 First Canadian Place 
     Toronto, Ontario, Canada 
     M5X 1B1 
     Attention:      William N. Gula
    
     Telecopier No.: (416) 863-0871



Any Notice delivered or transmitted to a Party as
provided above shall be deemed to have been given and received
on the day it is delivered or transmitted, provided that it is
delivered or transmitted on a Business Day prior to
5:00 p.m. local time in the place of delivery or receipt.
However, if the Notice is delivered or transmitted after
5:00 p.m. local time or if such day is not a Business Day
then the Notice shall be deemed to have been given and received
on the next Business Day.

Any Party may, from time to time, change its
address by giving Notice to the other Party in accordance with
the provisions of this Section.




7.2 Assignment

Neither this Agreement nor any rights or
obligations under this Agreement shall be assignable by either
Party without the prior written consent of the other Party,
except that Acquisitionco may assign all or part of its rights
or obligations, including without limitation the rights to
acquire the Company Shares, without reducing its own obligations
hereunder, to an Affiliate. Subject thereto, this Agreement

B-24



---



##### 



shall enure to the benefit of and be binding upon
the Parties and their respective successors (including any
successor by reason of amalgamation of any Party) and permitted
assigns.





7.3 Further Assurances

The Parties shall with reasonable diligence do
all such things and provide all such reasonable assurances as
may be required to consummate the Transaction, and each Party
shall provide such further documents or instruments required by
the other Party as may be reasonably necessary or desirable to
effect the purpose of this Agreement and carry out its
provisions.




7.4 Expenses

Subject to Section 6.3, the Parties agree
that all costs and expenses of the Parties relating to the
Transaction and the transactions contemplated hereby, including
legal fees, accounting fees, financial advisory fees, regulatory
filing fees, stock exchange fees, all disbursements of advisors
and printing and mailing costs, shall be paid by the Party
incurring such expenses.




7.5 Public Notices

All public notices to third parties and all other
publicity concerning the transactions contemplated by this
Agreement shall be jointly planned and co-ordinated by the
Parties and neither Party shall act unilaterally in this regard
without the prior approval of the other Party, such approval not
to be unreasonably withheld, unless such disclosure shall be
required to meet timely disclosure obligations of any Party
under applicable securities laws and stock exchange rules in
circumstances where prior consultation with the other Party is
not practicable.




7.6 Execution and Delivery

This Agreement may be executed by the Parties in
counterparts and may be executed and delivered by facsimile and
all such counterparts and facsimiles shall together constitute
one and the same agreement.




7.7 No Recourse



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Notwithstanding anything that may be expressed or
    implied in this Agreement, except as provided in
    Section 7.2, the Company covenants, agrees and acknowledges
    that no recourse under this Agreement shall be had against any
    current or future Affiliates, shareholders or agents of
    Acquisitionco, as such, or any current or former director,
    officer, employee, member, general or limited partner or
    shareholder of any of the foregoing, as such, whether by the
    enforcement of any assessment or by any legal or equitable
    proceeding, or by virtue of any Law, it being expressly agreed
    and acknowledged that no personal liability whatsoever shall
    attach to, be imposed on or otherwise be incurred by any current
    or future Affiliate, shareholder or agent of Acquisitionco, as
    such, or any current or future director, officer, employee,
    member, general or limited partner or shareholder of any of the
    foregoing, as such, for any obligation of Acquisitionco under
    this Agreement.
|   
|(2) | Notwithstanding anything that may be expressed or
    implied in this Agreement, Acquisitionco covenants, agrees and
    acknowledges that no recourse under this Agreement shall be had
    against any current or future Affiliates, shareholders or agents
    of the Company, as such, or any current or former director,
    officer, employee or shareholder of any of the foregoing, as
    such, whether by the enforcement of any assessment or by any
    legal or equitable proceeding, or by virtue of any Law, it being
    expressly agreed and acknowledged that no personal liability
    whatsoever shall attach to, be imposed on or otherwise be
    incurred by any current or future Affiliate, shareholder or
    agent of the Company, as such, or any current or future
    director, officer, employee or shareholder of any of the
    foregoing, as such, for any obligation of the Company under this
    Agreement.                                                                                                                       




7.8 No Third Party
Beneficiaries

Other than Section 4.8 and Section 7.7,
this Agreement is not intended to confer on any Person other
than the Parties any rights or remedies.

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##### 



IN WITNESS WHEREOFthe Parties have executed this
Combination Agreement as of the date first written above.



| |                        
| | -----------------------
| | STILE ACQUISITION CORP.



| |     |              
| | --- | -------------
| | By: | Scott Nuttall

| |                                   
| | ----------------------------------
| |                                   
| | Vice-President                    
|
| | MASONITE INTERNATIONAL CORPORATION



| |     |            
| | --- | -----------
| | By: | John Ambruz

| |                           
| | --------------------------
| |                           
| | Authorized Signing Officer

B-26



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##### 



SCHEDULE 1.1A

PLAN OF ARRANGEMENT

Under section 182 of the Business Corporations
Act (Ontario)

concerning

STILE ACQUISITION CORP.

- and -

MASONITE INTERNATIONAL CORPORATION

ARTICLE 1

INTERPRETATION


1.1 Definitions

Wherever used in this Plan of Arrangement, unless
there is something inconsistent in the subject matter or
context, the following words and terms shall have the respective
meanings set out below and grammatical variations of such terms
shall have corresponding meanings:



| |                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Acquisitioncomeans Stile Acquisition Corp., a
    corporation existing under the OBCA;                                                                                                                                                                                                                                                                                                                     
|
| | Affiliatehas the meaning ascribed to it in the
    Securities Act;                                                                                                                                                                                                                                                                                                                                         
|
| | Arrangementmeans the arrangement under the
    provisions of section 182 of the OBCA on the terms and
    conditions set out in this Plan of Arrangement subject to any
    amendments or variations hereto made in accordance with section
    6.1 of the Combination Agreement, section 6.1 of this Plan of
    Arrangement or made at the direction of the Court in accordance
    with the Final Order;
|
| | Arrangement Resolutionmeans the special resolution of the
    Company Shareholders approving the Plan of Arrangement, to be
    considered at the Company Meeting, substantially in the form and
    content of Schedule 1.1B of the Combination Agreement;                                                                                                                                                
|
| | Articles of Arrangementmeans the articles of arrangement of
    the Company in respect of the Arrangement, required by the OBCA
    to be filed with the Director after the Final Order is made in
    order for the Arrangement to become effective;                                                                                                                                                      
|
| | Business
    Daymeans any day on which
    commercial deposit taking banks are generally open for business
    in Toronto, Ontario and New York, New York other than a
    Saturday, a Sunday or a day observed as a holiday in such
    locations under applicable laws;                                                                                                                                  
|
| | Cashed-out Optionmeans each Company Option in respect
    of which a Cash Election (as defined in the Company Stock Option
    Plan) has been duly made by a Holder of Company Options prior to
    the Effective Time in accordance with the terms and conditions
    of the Company Stock Option Plan;                                                                                                   
|
| | Certificate of Arrangementmeans the certificate of arrangement
    issued by the Director pursuant to subsection 183(2) of the OBCA
    after the Articles of Arrangement have been filed;                                                                                                                                                                                                                 
|
| | Combination Agreementmeans the amended and restated
    combination agreement dated as of January 16, 2005, between
    Acquisitionco and the Company, as the same may be amended in
    accordance with section 6.1 thereof, providing for, among other
    things, the Arrangement;                                                                                                                      
|
| | Companymeans Masonite International Corporation, a corporation existing
    under the OBCA;                                                                                                                                                                                                                                                                                                                
|
| | Company Circularhas the meaning ascribed to it in the
    Combination Agreement;                                                                                                                                                                                                                                                                                                                           
|
| | Company Credit Facilitymeans the Amended and Restated Credit
    Agreement dated July 31, 2002, as amended on
    January 23, 2004, June 1, 2004 and June 23, 2004,
    among Masonite Holdings, Inc., the Company, the lenders party
    thereto and SunTrust Bank, as Administrative Agent;                                                                                                              
|
| | Company Credit Facility Payoff
    Loanshas the meaning ascribed
    to it in section 3.1(a);                                                                                                                                                                                                                                                                                                              
|
| | Company Meetingmeans the special meeting of the
    Company Shareholders, including any adjournment or postponement
    thereof, to be called and held in accordance with the Interim
    Order to consider, and if deemed advisable, approve the
    Arrangement;                                                                                                                                         

B-27



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Company Optionsmeans the options granted under the
    Company Stock Option Plan to purchase Company Shares that remain
    outstanding on the Effective Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Company Securityholdersmeans Holders of Company Shares and
    Company Options;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | Company Shareholdersmeans Holders of Company Shares;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | Company Sharesmeans the common shares of the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Company Stock Option Planmeans the Masonite International
    Corporation Share Option Plan, amended and restated as of
    March 16, 2004 as amended to the date hereof;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Courtmeans the Superior Court of Justice
    (Ontario);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Depositarymeans Computershare Investor Services
    Inc., being the depositary appointed by the Company for the
    purpose, amongst other things, of exchanging certificates
    representing Company Shares for cash;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Directormeans the Director appointed under
    section 278 of the OBCA;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Dissent Rightshas the meaning ascribed to it in
    section 5.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Dissenting Shareholdermeans any Company Shareholder who has
    properly exercised its Dissent Rights and has not withdrawn or
    been deemed to have withdrawn such Dissent Rights;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | DSUmeans deferred share units granted to
    management and certain key employees of the Company pursuant to
    the Companys 2002 Deferred Share Plan effective as of
    October 21, 2003, as amended, and the Companys 2004
    Full Value Incentive Plan dated as of March 23, 2004, as
    amended, and the deferred share units granted to directors of
    the Company pursuant to the Directors Deferred Unit Plan
    dated as of March 23, 2004, as amended;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Effective Datehas the meaning ascribed to it in the
    Combination Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Effective Timemeans 11:30 a.m. on the Effective
    Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Employee Rollover
    Agreementmeans a written
    agreement between Acquisitionco (or one of its Affiliates) and
    an officer or employee of the Company or its subsidiaries in a
    form acceptable to the board of directors of the Company, (i)
    pursuant to which (A) Acquisitionco (or one of its
    Affiliates) has agreed to acquire, and such officer or employee
    has agreed to sell, that number of the Company Shares held by
    such officer or employee stipulated in the agreement (if any)
    for consideration not exceeding $40.20 per Company Share, which
    consideration consists of shares in the capital of Acquisitionco
    (or such Affiliate), except that cash may be paid in lieu of
    issuing fractional shares and/or (B) such officer or
    employee has agreed to dispose of that number of the Company
    Options held by such officer or employee stipulated in the
    agreement (if any) for consideration consisting solely of
    Replacement Options and for which the total In-the-Money Amount
    of such Replacement Options shall, at the time of granting of
    such Replacement Options, equal (subject to rounding down to
    take into account fractional shares) the total In-the-Money
    Amount of the Company Options exchanged for such Replacement
    Options; (ii) which has been entered into prior to the
    Effective Time but is to be completed immediately after the
    Effective Time in the case of a transaction referred to in
    (i)(A) or to occur contemporaneously with the transfer of
    Company Shares pursuant to section 3.1(f) of this Plan of
    Arrangement in the case of a transaction referred to in (i)(B);
    (iii) under which all conditions to closing (other than
    completion of the Arrangement) have been satisfied or waived as
    of the Effective Time; and (iv) which has not been
    terminated by such officer or employee or by Acquisitionco (or
    one of its Affiliates) as of the Effective Time;
|
| | Employee Rollover Optionsmeans Company Options which are to be
    disposed of in exchange for Replacement Options pursuant to an
    Employee Rollover Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Employee Rollover Sharesmeans Company Shares which are to be
    acquired pursuant to an Employee Rollover Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Final Ordermeans the final order of the Court
    approving the Arrangement as such order may be amended by the
    Court at any time prior to the Effective Date or, if appealed,
    then, unless such appeal is withdrawn or denied, as affirmed or
    as amended on appeal;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Governmental Authoritymeans any (a) multinational,
    federal, provincial, state, regional, municipal, local or other
    government, governmental or public department, central bank,
    court, tribunal, arbitral body, commission, board, bureau or
    agency, domestic or foreign, (b) self-regulatory
    organization or stock exchange including without limitation the
    New York Stock Exchange and the Toronto Stock Exchange,
    (c) subdivision, agent, commission, board, or authority of
    any of the foregoing, or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

B-28



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##### 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (d) quasi-governmental or private body
    exercising any regulatory, expropriation or taxing authority
    under or for the account of any of the foregoing;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Holdersmeans (a) when used with
    reference to the Company Shares, the holders thereof shown from
    time to time in the register of holders of Company Shares
    maintained by or on behalf of the Company and, where the context
    so provides, includes joint holders of such Company Shares,
    (b) when used with reference to the Company Options, means
    the holders thereof shown from time to time in the register
    maintained by or on behalf of the Company in respect of Company
    Options and (c) when used with reference to the RSUs and/or
    DSUs, means the holders thereof shown from time to time in the
    registers maintained by or on behalf of the Company in respect
    of the RSUs and/or DSUs;
|
| | In-the-Money Amountmeans, (i) for each Company
    Option, the difference between the Purchase Price and the
    exercise price of that Company Option, and (ii) for each
    Replacement Option, the difference, if any, between the fair
    market value of each share issuable upon the exercise of such
    Replacement Option and the per share exercise price
    of that Replacement Option, provided that, where more than one
    share is issuable upon the exercise of a Replacement Option, the
    In-the-Money Amount of such Replacement Option will be the
    difference as so determined multiplied by the number of shares
    issuable;                                                                              
|
| | Interim Ordermeans the interim order of the Court,
    as the same may be amended, in respect of the Arrangement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | ITAmeans the Income Tax Act(Canada), as amended;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | Letter of Transmittalmeans the letter of transmittal for
    use by the Company Shareholders, in the form accompanying the
    Company Circular;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | OBCAmeans the Business Corporations Act(Ontario), as amended;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Option Payment Loanhas the meaning ascribed to it in
    section 3.1(a);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | Personincludes any individual, sole
    proprietorship, partnership, firm, entity, limited partnership,
    limited liability company, unlimited liability company,
    unincorporated association, unincorporated syndicate,
    unincorporated organization, trust, body, corporation, or
    Governmental Authority, and any group (as defined in section
    13(d)(3) of the United States Securities Exchange Act of
    1934) comprised of more than one Person and where the
    context requires any of the foregoing when they are acting as
    trustee, executor, administrator or other legal representatives;                                                                                                                  
|
| | Plan of
    Arrangement,
    hereof, herein,
    hereunder, and similar expressions refer to
    this Plan of Arrangement and not to any particular Article,
    section or other portion hereof and includes any agreement or
    instrument supplementary or ancillary hereto;                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | Purchase Pricehas the meaning ascribed to it in
    section 3.1(f);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Qualifying Company Shareholdermeans a Company Shareholder but, for
    greater certainty, does not include (i) a Dissenting
    Shareholder or (ii) Acquisitionco or any Affiliate of
    Acquisitionco;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | Replacement Optionsmeans options to acquire shares of
    Acquisitionco (or one of its Affiliates) granted in exchange for
    Company Options pursuant to an Employee Rollover Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | RSUmeans restricted share units granted
    to management and certain key employees of the Company pursuant
    to the Companys 2002 Restricted Share Bonus Plan dated as
    of October 21, 2003 as amended on March 23, 2004 and
    the Companys 2004 Full Value Incentive Plan dated as of
    March 23, 2004, as amended;                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | RSU/ DSU Payment Loanhas the meaning ascribed to it in
    section 3.1(a);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Securities Actmeans the Securities Act(Ontario), as amended; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | Taxand
    Taxeshave the meanings ascribed thereto in
    the Combination Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

1.2 Headings and References

The division of this Plan of Arrangement into
Articles and sections and the insertion of headings are for
convenience of reference only and do not affect the construction
or interpretation of this Plan of Arrangement. Unless otherwise
specified, references to Articles and sections are to Articles
and sections of this Plan of Arrangement.

B-29



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##### 



1.3 Time Periods

Unless otherwise specified, time periods within
or following which any payment is to be made or act is to be
done shall be calculated by excluding the day on which the
period commences and including the day on which the period ends
and by extending the period to the next Business Day following
if the last day of the period is not a Business Day.

1.4 Currency

All sums of money which are referred to in this
Plan of Arrangement are expressed in lawful money of Canada
unless otherwise specified.

1.5 Time

Unless otherwise indicated, all times expressed
herein or in any Letter of Transmittal are to local time,
Toronto, Ontario.

1.6 Construction

In this Plan of Arrangement:



| |     |                                                                                                                                                                                                                                                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | unless the context otherwise requires, words
    importing the singular include the plural and vice versa and
    words denoting any gender include all genders;                                                                                                                         
|
| | (b) | the word including or
    includes shall mean including (or includes)
    without limitation; and                                                                                                                                                                                  
|
| | (c) | any reference to a statute includes all rules and
    regulations made pursuant to such statute and, unless otherwise
    specified, the provisions of any statute or regulation or rule
    which amends, supplements or supersedes any such statute or any
    such regulation or rule.

1.7 Governing Law

This Plan of Arrangement shall be governed by and
construed in accordance with the laws of the Province of Ontario
and the laws of Canada applicable therein.

ARTICLE 2

PURPOSE AND EFFECT OF THE PLAN OF
ARRANGEMENT


2.1 Arrangement

This Plan of Arrangement is made pursuant to, is
subject to the provisions of and forms part of, the Combination
Agreement.

2.2 Effectiveness

This Plan of Arrangement, upon filing the
Articles of Arrangement and the issuance of the Certificate of
Arrangement, will become effective and will be binding without
any further authorization, act or formality on the part of the
Court, the Director, Acquisitionco (or its Affiliates), the
Company, or the Company Securityholders, from and after the
Effective Time. Other than as expressly provided in
Article 3, no portion of this Plan of Arrangement shall
take effect with respect to any Person until the Effective Time.

ARTICLE 3

THE ARRANGEMENT


3.1 Arrangement

Pursuant to the Arrangement the following
transactions shall occur and shall be deemed to occur at the
Effective Time (unless otherwise specified), in the following
order:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | Acquisitionco (or one of its Affiliates) will
    provide (i) one or more loans (the Company Credit
    Facility Payoff Loans) to the Company (and/or one of
    its subsidiaries) in an aggregate amount equal to the aggregate
    of all amounts owing under the Company Credit Facility,
    (ii) a loan to the Company equal to the aggregate amount
    payable by the Company under section 3.1(c) (the
    Option Payment Loan) and (iii) a loan to
    the Company equal to the aggregate amount payable by the Company
    under section 3.1(e) (the RSU/DSU Payment
    Loan). The Company Credit Facility Payment Loans, the

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##### 



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | Option Payoff Loan and the RSU/DSU Payment Loan
    will be evidenced by demand promissory notes issued by the
    Company (or the applicable subsidiary of the Company) to the
    lender thereof.                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (b) | The Company and its subsidiaries will,
    immediately upon receipt of the Company Credit Facility Payoff
    Loans, repay in full all amounts owing under the Company Credit
    Facility.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (c) | Each Cashed-out Option will be cancelled by the
    Company in exchange for a cash payment by the Company in an
    amount equal to the In-the-Money Amount of such Cashed-out
    Option (and, for greater certainty the Company shall withhold
    any required withholding Taxes).                                                                                                                                                                                                                                                                                                                                           
|
| | (d) | Each Company Option issued and outstanding
    immediately prior to the Effective Time, other than a Cashed-out
    Option or an Employee Rollover Option, will cease to represent a
    right to receive any Company Shares. Instead, beginning
    immediately after the Effective Time, the sole entitlement of a
    Holder of such a Company Option will be to receive, upon
    exercise of the Company Option, a cash payment from the Company
    equal to the In-the-Money Amount of such Company Option (and,
    for greater certainty the Company shall be entitled to withhold
    any required withholding Taxes).
|
| | (e) | Each RSU and DSU will be cancelled by the Company
    in exchange for a cash payment by the Company in the amount of
    $40.20 per RSU or DSU, as applicable (and, for greater certainty
    the Company shall withhold any required withholding Taxes).                                                                                                                                                                                                                                                                                                                                                                       
|
| | (f) | Two minutes after the completion of the
    immediately preceding step, the outstanding Company Shares
    (excluding Employee Rollover Shares) held by Qualifying Company
    Shareholders shall be transferred by the Holders thereof to
    Acquisitionco without any further authorization, act or
    formality, in exchange for cash in the amount of $40.20 per
    Company Share (the Purchase Price), and
    Acquisitionco will be deemed to be the legal and beneficial
    owner thereof, free and clear of all liens, charges, claims and
    encumbrances.                                                      
|
| | (g) | The transactions contemplated by
    section (i)(B) of the definition of Employee Rollover
    Agreement shall be deemed to occur contemporaneously with the
    transfers in the immediately preceding step.                                                                                                                                                                                                                                                                                                                                                                                                                   

ARTICLE 4

PAYMENT


4.1 Delivery of Cash

At or before the Effective Time, Acquisitionco
shall deposit or cause to be deposited with the Depositary, for
the benefit of each Company Shareholder, the cash, in Canadian
dollars, to which each such Company Shareholder is entitled
pursuant to section 3.1 upon the transfer of the Company
Shares to Acquisitionco. Upon surrender by a Company Shareholder
to the Depositary of a certificate which immediately prior to
the Effective Time represented one or more Company Shares,
together with a duly completed and executed Letter of
Transmittal, the Holder of such surrendered certificate(s) of
Company Shares shall be entitled to receive in exchange
therefor, and the Depositary shall deliver to such Company
Shareholder, as soon as practicable after the Effective Time, a
cheque issued by the Depositary (or other form of immediately
available funds) representing that amount of cash which such
Company Shareholder has the right to receive, less any amounts
withheld pursuant to section 4.5 and any certificate(s) of
Company Shares so surrendered shall forthwith be cancelled. In
addition, the Company shall deliver to each Holder of Cashed-out
Options, RSUs and/or DSUs, forthwith after the Effective Time, a
cheque issued by the Company (or other form of immediately
available funds) representing that amount of cash which such
Holder of Cashed-out Options, RSUs and/or DSUs has the right to
receive, less any amounts withheld pursuant to section 4.5.
In the event of a transfer of ownership of Company Shares that
is not registered in the transfer records of the Company, a
cheque representing the proper amount of cash (or other form of
immediately available funds) may be delivered to the transferee
if the certificate representing such Company Shares is
surrendered to the Depositary, accompanied by a duly completed
and executed Letter of Transmittal and all documents required to
evidence and effect such transfer. Until surrendered as
contemplated by this section 4.1, each certificate of
Company Shares (excluding Employee Rollover Shares) shall be
deemed at all times after the Effective Time to represent only
the right to receive upon such surrender a cash payment as
contemplated by this section 4.1, less any amounts withheld
pursuant to section 4.5.

4.2 Distributions with respect to
Unsurrendered Certificates

No dividends or other distributions declared or
made after the Effective Time with respect to Company Shares
with a record date after the Effective Time shall be paid to the
Holder of any unsurrendered certificate which immediately prior
to the Effective Time represented outstanding Company Shares
that were transferred pursuant to section 3.1, and no cash
payment pursuant to section 3.1

B-31



---



##### 



shall be paid to any such Holder, unless and
until the Holder of such certificate shall surrender such
certificate in accordance with section 4.1. Subject to
applicable laws, at the time of such surrender of any such
certificate, there shall be paid to the Holder of the
certificates representing Company Shares, without interest, the
amount of cash to which such Holder is entitled pursuant to
section 3.1.


4.3 Lost Certificates

In the event any certificate which immediately
prior to the Effective Time represented one or more outstanding
Company Shares that were transferred pursuant to
section 3.1 is lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Person claiming such
certificate to be lost, stolen or destroyed, the Depositary will
issue in exchange for such lost, stolen or destroyed
certificate, a cheque (or other form of immediately available
funds) for the cash amount, deliverable in accordance with such
Holders Letter of Transmittal. When authorizing such
payment in exchange for any lost, stolen or destroyed
certificate, the Person to whom cash is to be delivered shall,
as a condition precedent to the payment thereof, give a bond
satisfactory to Acquisitionco and the Company and their
respective transfer agents in such sum as Acquisitionco and the
Company may direct or otherwise indemnify Acquisitionco and the
Company in a manner satisfactory to Acquisitionco and the
Company against any claim that may be made against Acquisitionco
or the Company with respect to the certificate alleged to have
been lost, stolen or destroyed.

4.4 Extinction of Rights

Any certificate which immediately prior to the
Effective Time represented outstanding Company Shares that were
transferred pursuant to section 3.1, and not deposited,
with all other instruments required by section 4.1, on or
prior to the sixth anniversary of the Effective Date shall cease
to represent a claim or interest of any kind or nature as a
shareholder of the Company or for the receipt of cash. On such
date, the cash to which the former Holder of the certificate
referred to in the preceding sentence was ultimately entitled
shall be deemed to have been surrendered for no consideration to
Acquisitionco, together with all entitlements to dividends,
distributions and interest thereon held for such former Holder.
None of Acquisitionco or the Company shall be liable to any
Person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or
similar law.

4.5 Withholding Rights

Acquisitionco, the Company or the Depositary
shall be entitled to deduct and withhold from any consideration
payable to any Holder of Company Shares or Company Options or
RSUs or DSUs pursuant to section 3.1, such amounts as
Acquisitionco, the Company or the Depositary determines is
required or permitted to deduct and withhold with respect to
such payment under the ITA, the United States Internal
Revenue Code of 1986or any provision of federal,
provincial, territorial, state, local or foreign tax laws, in
each case, as amended. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all
purposes hereof as having been paid to the Holder of the
securities in respect of which such deduction and withholding
was made, provided that such withheld amounts are actually
remitted to the appropriate taxing authority.

ARTICLE 5

RIGHTS OF DISSENT


5.1 Dissent Rights



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | Company Shareholders may exercise rights of
    dissent with respect to their Company Shares pursuant to and in
    the manner set forth in section 185 of the OBCA as modified
    by this section 5.1 (the Dissent Rights)
    in connection with the Arrangement, as the same may be modified
    by the Interim Order or the Final Order, provided that,
    (i) notwithstanding subsection 185(6) of the OBCA, the
    written objection to the Arrangement Resolution referred to in
    subsection 185(6) of the OBCA must be received by the
    Company not later than 5:00 p.m. (Toronto time) on the
    Business Day preceding the Company Meeting; and
    (ii) notwithstanding section 185 of the OBCA,
    Acquisitionco, and not the Company, shall be required to offer
    to pay fair value for Company Shares held by Holders who duly
    exercise Dissent Rights, and to pay the amount to which such
    Holders may be ultimately entitled. Holders who duly exercise
    Dissent Rights and who are ultimately entitled to be paid fair
    value for their Company Shares, shall be deemed to have
    transferred their Company Shares, contemporaneously with the
    transfer of Company Shares pursuant to section 3.1(f),
    without any further authorization, act or formality and free and
    clear of all liens, charges, claims and encumbrances, to
    Acquisitionco in consideration of a payment from Acquisitionco
    equal to such fair value at the Effective Time.
|
| | (b) | Company Shareholders who exercise, or purport to
    exercise, Dissent Rights, and who are ultimately determined not
    to be entitled, for any reason, to be paid fair value for their
    Company Shares, shall be deemed to have participated in the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

B-32



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##### 



| |  |                                                                                                                                                                                      
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Arrangement on the same basis as any
    non-dissenting Company Shareholder as at and from the Effective
    Time and shall receive the cash on the basis set forth in
    Article 3.

5.2 Holders

In no circumstances shall the Company,
Acquisitionco or any other Person be required to recognize a
Person exercising Dissent Rights unless such Person is a Holder
of those Company Shares in respect of which such rights are
sought to be exercised.

5.3 Recognition of Dissenting
Shareholders

Neither the Company nor Acquisitionco nor any
other Person shall be required to recognize a Dissenting
Shareholder as a Holder or beneficial owner of Company Shares at
or after the Effective Time, and after the Effective Time the
names of such Dissenting Shareholders shall be deleted from the
register of Holders of Company Shares maintained by or on behalf
of the Company.

5.4 Dissent Right Availability

A Holder is not entitled to exercise Dissent
Rights with respect to Company Shares if such Holder votes (or
instructs, or is deemed, by submission of any incomplete proxy,
to have instructed his, or her or its proxyholder to vote) in
favour of the Arrangement Resolution.

ARTICLE 6

AMENDMENTS


6.1 Amendments



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | The Company reserves the right to amend, modify
    and/or supplement this Plan of Arrangement at any time and from
    time to time prior to the Effective Date provided that any such
    amendment, modification, and/or supplement must be (i) set
    out in writing, (ii) approved by Acquisitionco,
    (iii) filed with the Court and, if made following the
    Company Meeting, approved by the Court and
    (iv) communicated to Company Shareholders if and as
    required by the Court.
|
| | (b) | Any amendment, modification and/or supplement to
    this Plan of Arrangement may be proposed by the Company at any
    time prior to or at the Company Meeting (provided that
    Acquisitionco shall have consented thereto) with or without any
    other prior notice or communication and, if so proposed and
    accepted by the Persons voting at the Company Meeting (other
    than as required under the Interim Order), shall become part of
    this Plan of Arrangement for all purposes.
|
| | (c) | Any amendment, modification and/or supplement to
    this Plan of Arrangement that is approved or directed by the
    Court following the Company Meeting shall be effective only if
    (i) it is consented to by each of the Company and
    Acquisitionco and (ii) if required by the Court, it is
    consented to by the Company Shareholders voting in the manner
    directed by the Court.                                                                                                    
|
| | (d) | Any amendment, modification and/or supplement to
    this Plan of Arrangement may be made following the Effective
    Date unilaterally by Acquisitionco, provided that it concerns a
    matter which, in the reasonable opinion of Acquisitionco, is of
    an administrative nature required to better give effect to the
    implementation of this Plan of Arrangement and is not adverse to
    the financial or economic interests of any former Holder.                                       

ARTICLE 7

FURTHER ASSURANCES




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7.1 | Notwithstanding that the transactions and events
    set out herein shall occur and be deemed to occur in the order
    set out in this Plan of Arrangement without any further
    authorization, act or formality, each of the parties to the
    Combination Agreement shall make, do and execute, or cause to be
    made, done and executed, all such further acts, deeds,
    agreements, transfers, assurances, instruments or documents as
    may reasonably be required by any of them in order further to
    document or evidence any of the transactions or events set out
    herein.

B-33



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##### 



SCHEDULE 1.1B

TRANSACTION RESOLUTION

SPECIAL RESOLUTION OF SHAREHOLDERS


BE IT RESOLVED THAT:



|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | The arrangement (the
    Arrangement) under Section 182 of the
    Business Corporations Act (Ontario) (the
    OBCA) involving Masonite International
    Corporation (the Company), as more
    particularly described and set forth in the Management
    Information Circular (the Circular) of the
    Company accompanying the notice of this meeting, as the
    Arrangement may be modified or amended, is hereby authorized,
    approved and adopted.                                                                                                                                                                                                      
|  
|2. | The plan of arrangement (the Plan of
    Arrangement) involving the Company, the full text of
    which is set out as Schedule 1.1A to the amended and
    restated Combination Agreement dated January 16, 2005 (the
    Agreement) made between Acquisitionco and the
    Company, as the Plan of Arrangement may be modified or amended,
    is hereby authorized, approved and adopted.                                                                                                                                                                                                                                                                              
|  
|3. | Notwithstanding that this resolution has been
    passed (and the Plan of Arrangement adopted) by the shareholders
    of the Company or that the Arrangement has been approved by the
    Superior Court of Justice (Ontario) (the Court), the
    directors of the Company are hereby authorized and empowered
    without further notice to or approval of the shareholders of the
    Company (i) to amend the Agreement or the Plan of
    Arrangement to the extent permitted by the Agreement in any
    manner not inconsistent with an applicable order of the Court,
    and (ii) subject to the terms of the Agreement, not to
    proceed with the Arrangement.
|  
|4. | Any officer or director of the Company is hereby
    authorized and directed for and on behalf of the Company to
    execute, under the seal of the Company or otherwise, and to
    deliver articles of arrangement and such other documents as are
    necessary or desirable to the Director under the OBCA in
    accordance with the Agreement for filing.                                                                                                                                                                                                                                                                                                              
|  
|5. | Any officer or director of the Company is hereby
    authorized and directed for and on behalf of the Company to
    execute or cause to be executed, under the seal of the Company
    or otherwise, and to deliver or cause to be delivered, all such
    other documents and instruments and to perform or cause to be
    performed all such other acts and things as may be necessary or
    desirable to give full effect to the foregoing resolution and
    the matters authorized hereby.                                                                                                                                                                           

B-34



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##### 



SCHEDULE 2.5

REGULATORY APPROVALS



|   |                                                                                                                                                                                                                                                                                                                                           
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | The timely making of any submissions, including
    any General Information Notices, and the timely obtaining of any
    consents or administrative rulings, including Remediation
    Agreement or No Further Action Letters, required pursuant to the
    New Jersey Industrial Site Recovery Act, N.J.S.A.
    Sections 13:1K-6 et seq.
|  
|2. | Competition Act (Canada):                                                                                                                                                                                                                                                                                                                 



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | the issuance of an advance ruling certificate
    (ARC) pursuant to section 102 of the
    Competition Act (Canada) (the Competition
    Act) by the Commissioner of Competition appointed
    under the Competition Act (the Commissioner)
    to the effect that she is satisfied that she would not have
    sufficient grounds upon which to apply to the Competition
    Tribunal for an order under section 92 of the Competition
    Act with respect to the transactions contemplated by this
    Agreement; or
|
| | (b) | that:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



| |      |                                                                                                                                                                                                                                                                                                                                                                                               
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)  | the waiting period under section 123 of the
    Competition Act shall have expired, or the Commissioner
    shall have waived the obligation to notify and supply
    information under section 113(c) of the Competition
    Act because substantially similar information was previously
    supplied in relation to a request for an ARC, and                                              
|
| | (ii) | Acquisitionco shall have been advised in writing
    by the Commissioner that the Commissioner has determined not to
    make an application for an order under section 92 of the
    Competition Act in respect of the transactions
    contemplated by this Agreement and any terms and conditions
    attached to any such advice shall be acceptable to Acquisitionco
    and the Company;



|   |                                                                                                                                                                                                                                                 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | Investment
    Canada Approval or deemed
    approval pursuant to the Investment Canada Act (Canada)
    by the applicable Minister;                                                                                                           
|  
|4. | Hart-Scott-Rodino
    The waiting periods (and any extensions thereof) applicable to
    the Transaction under the Hart-Scott-Rodino Anti-trust
    Improvements Act of 1976, as amended, shall have been
    terminated or shall have expired.
|  
|5. | European
    Commission All required
    approvals of the European Commission applicable to the
    Transaction under the EC Merger Regulations shall have been
    obtained or the waiting period thereunder shall have expired.              
|  
|6. | South
    Africa Any required
    approval clearances or waiting period required to consummate the
    Transaction pursuant to any South African antitrust Law shall
    have been obtained, expired or been terminated.                       

B-35



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##### 



SCHEDULE 3.1

REPRESENTATIONS AND WARRANTIES OF THE COMPANY



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Organization.Each
    of the Company and its Subsidiaries has been duly incorporated
    or formed under all applicable Laws, is validly existing and has
    all necessary corporate or legal power and authority to own its
    property and assets and to carry on its business as currently
    owned and conducted. Except as set out in the Disclosure Letter,
    all Subsidiaries are wholly-owned, directly or indirectly, by
    the Company. All of the outstanding shares and other ownership
    interests of its Subsidiaries which are held directly or
    indirectly by the Company are validly issued, fully paid and
    non-assessable, and except (i) pursuant to restrictions on
    transfer contained in constating documents, (ii) pursuant
    to rights of first refusal and similar rights restricting
    transfer contained in shareholders, partnership, joint venture
    or similar agreements as set forth in the Disclosure Letter, or
    (iii) for encumbrances in connection with security granted
    by the Company and its Subsidiaries to their respective lenders
    in the ordinary course of business, all such shares and other
    ownership interests are owned directly or indirectly by the
    Company, free and clear of all liens, charges, claims or
    encumbrances, and there are no outstanding options, rights,
    entitlements, understandings or commitments (contingent or
    otherwise) regarding the right to acquire any such shares or
    other ownership interests in any of its Subsidiaries. The
    Disclosure Letter sets out the names and jurisdictions of
    incorporation or formation of each of the Companys
    Subsidiaries and each Person in which the Company or any
    Subsidiary owns a direct or indirect equity interest.                                                                                                                                                                                                                                                                                                                                                                         
|   
|(b) | Capitalization.The
    authorized capital of the Company consists of an unlimited
    number of Company Shares. As of December 21, 2004, there
    were: (i) 54,796,531 Company Shares issued and outstanding;
    (ii) Company Options outstanding, entitling the holders
    thereof to acquire an aggregate of 2,281,018 Company Shares;
    (iii) 299,433 RSUs granted by the Company; and
    (iv) 167,443 DSUs granted by the Company. Except for the
    Company Options, RSUs and DSUs described in the immediately
    preceding sentence, there are no options, warrants, conversion
    privileges or other rights, agreements, arrangements or
    commitments (pre-emptive, contingent or otherwise) obligating
    the Company or any Subsidiary of the Company to issue or sell
    any shares of the Company or of any such Subsidiary or
    securities or obligations of any kind convertible into or
    exchangeable for any shares of the Company or any Subsidiary of
    the Company, or to make any payment which is contingent on the
    value of any shares of the Company. All outstanding Company
    Shares have been duly authorized and are validly issued and
    outstanding as fully paid and non-assessable shares, free of
    pre-emptive rights. There are no outstanding bonds, debentures
    or other evidences of indebtedness of the Company or any of its
    Subsidiaries having the right to vote (or that are convertible
    for or exercisable into securities having the right to vote)
    with the holders of the Company Shares on any matter. Except as
    set forth in the Disclosure Letter, there are no outstanding
    obligations of the Company or any of its Subsidiaries to
    repurchase, redeem or otherwise acquire any outstanding Company
    Shares or with respect to the voting or disposition of any
    outstanding securities of the Company or any of its
    Subsidiaries. No holder of securities issued by the Company or
    any Subsidiary of the Company has any right to compel the
    Company to register or otherwise qualify securities for public
    sale in Canada, the United States or elsewhere.
|   
|(c) | Authority and No Violation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) | The Company has the necessary corporate power and
    authority to enter into this Agreement and to perform its
    obligations under this Agreement. The execution and delivery of
    this Agreement by the Company and the consummation by the
    Company of the Transaction have been duly authorized by its
    board of directors and no other corporate proceedings on its
    part are necessary to authorize this Agreement or the
    Transaction, other than:



| |     |                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) | with respect to the Company Circular and other
    matters relating solely thereto, the approval of the board of
    directors of the Company; and
|
| | (B) | with respect to the completion of the
    Transaction, the approval of the Company Shareholders as
    described in Article 2.                    



| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  | This Agreement has been duly executed and
    delivered by the Company and constitutes a legal, valid and
    binding obligation, enforceable against it in accordance with
    its terms, subject to bankruptcy, insolvency and other
    applicable Laws affecting creditors rights generally, and
    to general principles of equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (iii) | The board of directors of the Company
    (A) unanimously determined as of December 22, 2004
    that the Transaction is fair to the Company Shareholders and is
    in the best interest of the Company, (B) received an
    opinion from Merrill Lynch, Pierce, Fenner & Smith Inc. to
    the effect that, as of December 22, 2004, the consideration
    offered to the Company Shareholders pursuant to the Transaction
    is fair from a financial point of view to the Company
    Shareholders and (C) unanimously determined as of
    December 22, 2004 to recommend that the Company
    Shareholders vote in favour of the resolution approving the
    Transaction. As of December 22, 2004, all of the
    Companys directors have advised the Company that they
    intend to vote the Company Shares held by them in favour of the
    resolution approving the Transaction.

B-36



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##### 





| |      |                                                                                                                                                                                                                                                                                     
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) | The authorization of this Agreement, the
    execution and delivery by the Company of this Agreement, the
    performance by the Company of its obligations under this
    Agreement and the completion of the Transaction will not, except
    as set out in the Disclosure Letter:



| |     |                                                                                                                                                                                                                                                                                                                                                      
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) | result (with or without notice or the passage of
    time) in a violation or breach of, or constitute a default
    under, require any consent to be obtained under or give rise to
    any third party right of termination, cancellation,
    acceleration, penalty or payment obligation or right of purchase
    or sale under, any provision of:



| |     |                                                                                                                                                                                                            
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | the Companys or any of its
    Subsidiarys certificate of incorporation, articles,
    by-laws or other charter documents or any agreement with a
    shareholder;                                       
|
| | (2) | any Laws (subject to obtaining the Regulatory
    Approvals); or                                                                                                                                           
|
| | (3) | any Material Contract, or material licence,
    permit or government grant to which the Company or any
    Subsidiary of the Company is party or by which it is bound or
    subject or is the beneficiary;



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (B) | give rise to any right of termination or
    acceleration of indebtedness of the Company or any Subsidiary of
    the Company, or cause any such indebtedness to come due before
    its stated maturity, or cause any available credit of the
    Company or any Subsidiary of the Company to cease to be
    available;                                                                                                                                                                         
|
| | (C) | result in the imposition of any material lien,
    charge, claim or encumbrance upon any of the Companys
    assets or the assets of any Subsidiary of the Company;                                                                                                                                                                                                                                                                                                                              
|
| | (D) | restrict, hinder, impair or limit the ability of
    the Company or any Subsidiary of the Company to carry on the
    business of the Company or any Subsidiary of the Company as and
    where it is now being carried on in all material respects
    (excluding such legal restrictions, hindrances, impairments and
    limitations applicable to the Company or any Subsidiary of the
    Company due solely to the Company having become a wholly owned
    Subsidiary of Acquisitionco); or
|
| | (E) | result in any payment (including retention,
    severance, unemployment compensation, golden parachute, bonus or
    otherwise) becoming due to any director, officer or employee of
    the Company or any Subsidiary of the Company, or increase any
    benefits otherwise payable under any Company Benefit Plan, or
    result in the acceleration of the time of payment or vesting of
    any such benefits, including the time of exercise of stock
    options.                          



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (v) | No consent, approval, order or authorization of,
    or declaration or filing with, any Governmental Authority is
    required to be obtained by the Company and its Subsidiaries in
    connection with the execution and delivery of this Agreement or
    the consummation by the Company of the Transaction other than
    (A) any approvals required by the Interim Order,
    (B) the Final Order, (C) filings under the Act
    contemplated by this Agreement, (D) the Regulatory
    Approvals, (E) filings under the Securities Act, stock
    exchange rules and similar Laws as contemplated by this
    Agreement, and (F) any other consents, approvals, orders,
    authorizations, declarations or filings of or with a
    Governmental Authority (excluding those consents, approvals,
    orders, authorizations, declarations or filings relating to the
    specific character of Acquisitionco), which are set out in the
    Disclosure Letter or which, if not obtained, would not,
    individually or in the aggregate, reasonably be expected to
    prevent or materially delay the Transaction.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | Financial
    Statements.The Financial Statements
    have been prepared in accordance with generally accepted
    accounting principles in Canada and in all material respects in
    accordance with applicable Laws and have been reconciled to
    generally accepted accounting principles in the United States in
    accordance with such accounting principles and in all material
    respects in accordance with applicable Laws. Such Financial
    Statements present fairly, in all material respects, the
    consolidated financial position and results of operations of the
    Company as of the respective dates thereof and for the
    respective periods covered thereby applied on a basis consistent
    with prior periods and throughout the periods indicated (except
    as may be indicated expressly in the notes thereto). In the case
    of unaudited statements, this representation is subject to
    normal, recurring year-end adjustments that would be made in the
    course of an audit and would not be material. Such Financial
    Statements reflect appropriate and adequate reserves in respect
    of contingent liabilities, if any, of the Company and its
    Subsidiaries on a consolidated basis.
|   
|(e) | Contingent
    Liabilities.Except as set forth in
    the Disclosure Letter, or as Publicly Disclosed by the Company,
    neither the Company nor any of its Subsidiaries has any
    liabilities or obligations of any nature (whether accrued,
    absolute, contingent or otherwise) except (i) liabilities
    or obligations set forth in the Balance Sheet or
    (ii) liabilities or obligations incurred since the date of
    the Balance Sheet in the ordinary course of business consistent
    with past practice, none of which have had or would,
    individually or in the aggregate, reasonably be expected to have
    a Material Adverse Effect on the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

B-37



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##### 





|    |                                                                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(f) | Absence of Certain Changes or
    Events.Except as set forth in the
    Disclosure Letter or as Publicly Disclosed by the Company, and
    except for the Transaction, since the date of the Balance Sheet
    each of the Company and its Subsidiaries has conducted its
    business only in the ordinary course of business consistent with
    past practice and there has not occurred:



| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)     | (A) an amendment or proposed amendment to
    the articles or by-laws (or other comparable governing
    documents) of the Company; or (B) a material amendment or
    proposed amendment to the articles and by-laws (or other
    comparable governing documents) of any of the Companys
    Subsidiaries;                                                                                                                                                                                                                                                  
|
| | (ii)    | a Material Adverse Change with respect to the
    Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (iii)   | the filing of any material change reports with
    the OSC or any other securities authority or regulator or stock
    exchange which remain confidential;                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (iv)    | any reorganization, amalgamation or merger of the
    Company or any of its Subsidiaries with any other Person;                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (v)     | any material damage, destruction or loss not
    fully covered by insurance (subject to normal deductibles);                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (vi)    | any redemption, repurchase or other acquisition
    of Company Shares by the Company or the Company Benefit Plans,
    or any declaration, setting aside or payment of any dividend or
    other distribution (whether in cash, shares or property) with
    respect to Company Shares;                                                                                                                                                                                                                                                                        
|
| | (vii)   | any increase in or modification of the
    compensation payable or to become payable by the Company or its
    Subsidiaries to any of their respective directors, officers or
    employees, or any grant to any such director, officer or
    employee of any increase in entitlements under, or general
    institution of, retention, severance or termination programs or
    pay, in each case, other than annual increases consistent with
    past practice or as a result of promotions in the ordinary
    course of business;                        
|
| | (viii)  | the adoption by the Company or its Subsidiaries
    of, any increase in or modification of any bonus, pension,
    retention, insurance or benefit arrangement (including the
    granting of stock options, restricted stock awards or stock
    appreciation rights) made to, for or with any of their
    respective directors, officers or employees, in each case, other
    than annual increases consistent with past practice, as required
    under Law or collective agreements, or as a result of promotions
    in the ordinary course of business;
|
| | (ix)    | any acquisition or sale of any business or
    division of a business aggregating US$10 million or more;                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (x)     | any change in policies with respect to the
    payment of accounts payable or the material collection of
    accounts receivable;                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | (xi)    | any entering into, or amendment of, any Material
    Contract, other than in the ordinary course of business with
    Arms Length Persons consistent with past practice;                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (xii)   | any relinquishment, termination or non-renewal by
    it of any Material Contract;                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (xiii)  | any creation or assumption by it of any material
    mortgage, pledge, security interest or lien or other encumbrance
    on any asset except (A) in connection with security granted
    by the Company and its Subsidiaries to their lenders under the
    Existing Credit Facilities and (B) to Arms Length
    Persons, in each case, in the ordinary course of business
    consistent with past practice;                                                                                                                                               
|
| | (xiv)   | any resolution to approve a split, consolidation
    or reclassification of any of its outstanding shares;                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (xv)    | any change in its accounting methods, policies or
    practices, other than changes required by Canadian generally
    accepted accounting principles or official interpretations
    thereof and except for changes in practices in the ordinary
    course of business;                                                                                                                                                                                                                                                                                      
|
| | (xvi)   | any guarantee of the payment of material
    indebtedness or any incurrence of indebtedness for money
    borrowed (except pursuant to the Existing Credit Facilities), or
    any issue or sale of any debt securities or securities
    convertible or exchangeable for debt securities;                                                                                                                                                                                                                                                                     
|
| | (xvii)  | any satisfaction or settlement of any claims or
    liabilities, which are individually or in the aggregate
    material, that were not reflected in the Balance Sheet, other
    than settlement of liabilities incurred in the ordinary course
    of business with Arms Length Persons consistent with past
    practice;                                                                                                                                                                                                                                  
|
| | (xviii) | except in the ordinary course of business and
    consistent with past practice, the entering into of any interest
    rate, currency or commodity swaps, hedges or other similar
    financial instruments;                                                                                                                                                                                                                                                                                                                                                   

B-38



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##### 





| |        |                                                                                                                                                                                                       
| | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (xix)  | the commencement, participation or agreement to
    commence or participate in any bankruptcy, voluntary
    liquidation, dissolution, winding up, examinership, insolvency
    or similar proceeding;
|
| | (xx)   | the granting of any equity-based awards;                                                                                                                                                              
|
| | (xxi)  | the incurring or commitment to capital
    expenditures except to the extent consistent with the capital
    plan for 2005 provided to Acquisitionco prior to
    December 22, 2004; or               
|
| | (xxii) | any agreement by the Company to do any of the
    foregoing.                                                                                                                                          



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(g) | Books and Records.The financial books, records and accounts of the Company and its
    Subsidiaries, in all material respects, (i) have been
    maintained in accordance with good business practices on a basis
    consistent with prior years, (ii) are stated in reasonable
    detail and accurately and fairly reflect the material
    transactions and dispositions of the assets of the Company and
    its Subsidiaries and (iii) accurately and fairly reflect
    the basis for the Financial Statements. The Company has devised
    and maintains a system of internal accounting controls
    sufficient to provide reasonable assurances that
    (i) transactions are executed in accordance with
    managements general or specific authorization; and
    (ii) transactions are recorded as necessary (A) to
    permit preparation of financial statements in conformity with
    Canadian generally accepted accounting principles, or any other
    criteria applicable to such statements and (B) to maintain
    accountability for assets. The Companys and its
    Subsidiaries corporate records and minute books have been
    maintained substantially in compliance with applicable Laws and
    are complete and accurate in all material respects, and full
    access thereto has been provided to Acquisitionco.
|   
|(h) | Customers and
    Suppliers.The Company has delivered
    to Acquisitionco, prior to the December 22, 2004, a
    complete list of the Companys 15 largest customers
    (on a revenue basis) for the fiscal year ended on
    December 31, 2003. Since the date of the Balance Sheet,
    there has not been, and neither the Company nor any of its
    Subsidiaries has received notice of, any termination or
    cancellation of, or a material adverse modification or change
    in, the business relationship with any such customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Accounts Receivable.All trade accounts receivable of the Company that are reflected
    on the Balance Sheet or the accounting records of the Company as
    of the Effective Date (collectively, the Accounts
    Receivable) represent or will represent valid
    obligations arising from sales actually made or services
    actually performed in the ordinary course of business. There is
    no material contest, claim, or right of set-off, other than
    returns and adjustments in the ordinary course of business,
    under any Contract with any obligor of an Accounts Receivable
    relating to the amount or validity of such Accounts Receivable.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(j) | Material Contracts.Except as set forth in the Disclosure Letter, there is no
    Contract to which the Company or any of its Subsidiaries is a
    party or by which any of them or their respective properties or
    assets are bound, that (i) if terminated, would reasonably
    be expected to have a Material Adverse Effect on the Company,
    (ii) is a Contract or group of related Contracts which
    involves payments to or by the Company or any of its
    Subsidiaries of more than US$5,000,000 per annum (other than
    Contracts with suppliers and customers entered into in the
    ordinary course of business), (iii) is a Contract that
    contains any non-competition obligation or otherwise restricts
    in any material way the business of the Company or any of its
    Subsidiaries, (iv) is a Contract under which the Company or
    any of its Subsidiaries has borrowed any money from, or issued
    any note, bond, debenture or other evidence of indebtedness to,
    any Person (other than the Company or any Subsidiary
    incorporated under the laws of, (A) any jurisdiction within
    the United States, (B) Canada, (C) or any province
    within Canada) or any other note, bond, debenture or other
    evidence of indebtedness issued to any Person in excess of
    US$5,000,000, (v) is a Contract under which (A) any
    Person (including the Company or any of its Subsidiaries) has
    directly or indirectly guaranteed indebtedness, liabilities or
    obligations of the Company or any of its Subsidiaries or
    (B) the Company or any of its Subsidiaries has directly or
    indirectly guaranteed indebtedness, liabilities or obligations
    of any Person in an amount in excess of US$5,000,000 (in each
    case other than endorsements for the purpose of collection in
    the ordinary course of business), (vi) is a partnership or joint
    venture agreement in which the Company or any of its
    Subsidiaries participates as a general partner or joint
    venturer, (vii) is a Contract with respect to factoring or
    other general assignment of Accounts Receivable, or
    (viii) is a Contract pursuant to which the Company or any
    of its Subsidiaries provides an indemnification to any other
    Person (other than the Company or a wholly owned Subsidiary),
    other than Contracts with suppliers, distributors, sales
    representatives and customers entered into in the ordinary
    course of business or in an amount not in excess of US$5,000,000
    (the Contracts described in clauses (i)  (viii),
    collectively, the Material Contracts). Except
    as set forth in the Disclosure Letter, all Material Contracts
    are legal, valid, binding and in full force and effect and are
    enforceable by the Company and its Subsidiaries in accordance
    with their respective terms (subject to bankruptcy, insolvency
    and other applicable Laws affecting creditors rights
    generally, and to general principles of equity), the Company and
    its Subsidiaries have performed in all material respects all
    respective obligations required to be performed by them to date
    under the Material Contracts and are not, and are not alleged to
    be (with or without the lapse of time or the giving of notice,
    or both) in breach or default in any material respect thereunder
    and, to the knowledge of the Company, no other party to any of
    the Material Contracts is (with or without the lapse of time or
    the giving of notice or both) in breach or default in any
    material respect thereunder. True

B-39



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##### 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | and correct copies of the Material Contracts (or
    in the case of oral Material Contracts, accurate summaries of
    the material terms of such Material Contracts) have been made
    available to Acquisitionco. All of the Material Contracts listed
    in the Disclosure Letter were entered into the ordinary course
    of business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(k) | Litigation.Except
    as set forth in the Disclosure Letter, or as Publicly Disclosed
    by the Company: (i) there is no claim, action, proceeding
    or investigation pending or, to the knowledge of the Company,
    threatened against the Company or any Subsidiary of the Company
    before any Governmental Authority which if determined adversely
    to the Company would, individually or in the aggregate,
    reasonably be expected to have a Material Adverse Effect on the
    Company; (ii) neither the Company nor any Subsidiary of the
    Company, nor any of their respective assets and properties, is
    subject to any outstanding judgement, judicial or regulatory
    order, writ, injunction or decree that involves or may involve,
    or requires or may require an expenditure of a material amount
    of money as a condition to or a necessity for the right or
    ability of the Company or a Subsidiary of the Company, to
    conduct its business in a manner in all material respects in
    which it currently carries on such business or that could
    prevent or materially delay consummation of the Transaction;
    (iii) neither the Company nor any Subsidiary of the Company
    is subject to any warranty, negligence, performance or other
    claims or disputes in respect of products or services currently
    being delivered or previously delivered that if resolved
    adversely to the Company would, individually or in the
    aggregate, reasonably be expected to have a Material Adverse
    Effect on the Company, and to the knowledge of the Company there
    are no events or circumstances which would reasonably be
    expected to give rise to any such claims or disputes or
    potential claims or disputes.                                                                                                                                                                                                                                                                                                                                                                      
|   
|(l) | Restrictions on Business
    Activities.Except as set out in the
    Disclosure Letter, or as Publicly Disclosed by the Company,
    there is no Contract, judgement, injunction, order or decree
    binding upon the Company or any Subsidiary of the Company that
    has or would, individually or in the aggregate, reasonably be
    expected to have the effect of prohibiting, materially
    restricting or impairing any material business practice of the
    Company or any Subsidiary of the Company, any material
    acquisition of property by the Company or any Subsidiary of the
    Company or the conduct of business by the Company or any
    Subsidiary of the Company as currently conducted in all material
    respects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(m) | Intellectual
    Property.The Disclosure Letter lists
    all registrations or applications for registration of material
    Company IP in all material jurisdictions. Except as set forth in
    the Disclosure Letter, or as Publicly Disclosed by the Company,
    (i) all rights in material Company IP are valid, subsisting
    and enforceable in all material respects and the Company or its
    Subsidiaries owns or has the right to use all material Company
    IP, free and clear of all liens, charges, claims and
    encumbrances, (except for any encumbrances in connection with
    security granted by the Company or its Subsidiaries under the
    Existing Credit Facilities); (ii) no action is pending or,
    to the Companys knowledge, threatened against or affecting
    the Company or any of its Subsidiaries or any of their
    respective properties, which challenge the validity or use of,
    or the ownership by, the Company and/or its Subsidiaries of the
    Company IP and which, if determined adversely, would,
    individually or in the aggregate, reasonably be expected to have
    a Material Adverse Effect on the Company; (iii) the Company
    has no knowledge of any infringement or infringing use of any of
    the Company IP or licences by any Person which is having or
    would, individually or in the aggregate, reasonably be expected
    to have a Material Adverse Effect on the Company; and
    (iv) to the Companys knowledge, no infringement,
    misappropriation or violation of any intellectual property right
    or other proprietary right of any third party has occurred or
    will result from the conduct of the business of the Company and
    its Subsidiaries or from the signing and execution of this
    Agreement or the consummation of the Transaction, and no written
    claim has been made to the Company or any Subsidiary by any
    third party based upon an allegation of any such infringement,
    in each case, which has or would, individually or in the
    aggregate, reasonably be expected to have a Material Adverse
    Effect on the Company.
|   
|(n) | Employment Matters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)  | Except as set forth in the Disclosure Letter or
    as Publicly Disclosed by the Company, (A) neither the
    Company nor any Subsidiary of the Company is a party to any
    obligation, policy, plan, Contract or understanding providing
    for severance or termination payments to, or any employment
    agreement with, any director, officer or employee, other than
    any common law and statutory obligations of reasonable notice of
    termination or pay in lieu thereof and any statutory
    obligations, (B) neither the Company nor any of its
    Subsidiaries has any liability under any benefit or severance
    policy, practice, agreement, plan or program which exists or
    arises, or may be deemed to exist or arise, under any applicable
    Law or otherwise as a result of or in connection with the
    Transaction other than, in the case of (A) and (B), such
    Contracts, policies, practices, agreements, plans or programs
    which would not, individually or in the aggregate, reasonably be
    expected to have a Material Adverse Effect on the Company.
|
| | (ii) | Except as set forth in the Disclosure Letter,
    neither the Company nor any of its Subsidiaries is subject to
    any collective bargaining agreements, or subject to any
    application or to the knowledge of the Company threatened or
    apparent union organizing campaigns for employees not under a
    collective bargaining agreement and no such campaigns have been
    conducted within the past three years, ongoing, nor are there
    any current, pending or, to the knowledge of the Company,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

B-40



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##### 



| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       | threatened strikes, work stoppages, lockouts, or
    slowdowns at the Company or any Subsidiary and the Company and
    its Subsidiaries have not experienced any such strikes, work
    stoppages, lockouts, or slowdowns within the past three years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (iii) | Except as set forth in the Disclosure Letter,
    neither the Company nor any of its Subsidiaries is subject to
    any claim, litigation, charge, inquiry, investigation,
    grievance, arbitration or proceeding, actual or to the knowledge
    of the Company threatened, relating to its employees,
    prospective employees, former employees, representatives of
    employees, or independent contractors (including any termination
    of such Persons) other than any of the foregoing which would
    not, individually or in the aggregate, reasonably be expected to
    have a Material Adverse Effect on the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (iv)  | Except as set forth in the Disclosure Letter or
    as are not material, the Company and its Subsidiaries have
    operated in accordance with all applicable Laws, agreements,
    policies, plans, and programs with respect to employment and
    labour, including, but not limited to, employment and labour
    standards, labour risk prevention measures, social security and
    other contributions, occupational health and safety, employment
    equity, pay equity, workers compensation, equal employment
    opportunity, human rights and labour relations, the applicable
    provisions of ERISA and the Code and the provisions of the
    Worker Adjustment and Retaining Notification Act of 1998 and
    similar Laws, and there are no current, pending or, to the
    Companys knowledge, threatened claims, litigation or
    proceedings before any board, tribunal or other Governmental
    Authority with respect to any of the areas listed herein. To the
    knowledge of the Company, nothing has occurred which might lead
    to a material claim, litigation or proceeding under any such
    applicable Laws, agreements, policies, plans, and programs.
|
| | (v)   | Except as set forth in the Disclosure Letter,
    neither the Company nor any Subsidiary is a party to, or
    otherwise bound by, any consent decree in effect with, or
    material citation by, any Governmental Authority or other entity
    or Person, relating to employees or employment practices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (vi)  | Except as set forth in the Disclosure Letter, no
    unfair labour practice charge or complaint is pending or, to the
    knowledge of the Company, threatened which, if adversely
    determined, would, individually or in the aggregate, reasonably
    be expected to have a Material Adverse Effect on the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (vii) | Except as set forth in the Disclosure Letter or
    as Publicly Disclosed by the Company, neither the Company nor
    any Subsidiary has closed any plant or facility, effectuated any
    mass layoffs of employees or implemented any early retirement,
    separation or window program within the past three years, nor
    has the Company or any Subsidiary planned or announced any such
    action or program for the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



|    |                               
|--- | ------------------------------
|(o) | Pension and Employee Benefits.



| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | The Disclosure Letter contains a true and
    complete list of the material Company Benefit Plans and
    indicates the country in which the plan is maintained.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (ii)  | The Company has provided or made available to
    Acquisitionco a current, accurate and complete copy (or, to the
    extent no such copy exists, an accurate description) of each
    Company Benefit Plan and, to the extent applicable: (A) any
    related trust agreement or other funding instrument;
    (B) the most recent determination letter, if applicable;
    (C) any summary plan description and other written
    communications (or a description of any oral communication) by
    the Company or any of its Subsidiaries to any employee
    concerning the extent of the benefits provided under a Company
    Benefit Plan; (D) a summary of any proposed amendments or
    changes anticipated to be made to the Company Benefit Plans at
    any time within the twelve months immediately following
    December 22, 2004; and (E) for the most recent year
    (a) the annual report on Form 5500 and attached
    schedules or such other form as applicable, (b) audited
    financial statements, and (c) actuarial valuation reports.
|
| | (iii) | Except as set forth in the Disclosure Letter, no
    Company Benefit Plan established or maintained for the benefit
    of Canadian employees or former Canadian employees of the
    Company or any of its Subsidiaries is a pension, superannuation
    or savings arrangement, including pension plans, supplemental
    pensions, registered pension plans (as defined in
    the Tax Act) and retirement compensation
    arrangements (as defined in the Tax Act).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (iv)  | Except as set forth in the Disclosure Letter, the
    Company and its Subsidiaries have complied with all of their
    obligations under and in respect of the Company Benefit Plans
    and with all applicable Laws, in each case, in all material
    respects. Each Company Benefit Plan is and has been established,
    registered (where required), qualified, administered and
    invested in all material respects in accordance with the terms
    of such plans, any applicable collective agreements and all
    applicable Laws, in each case, in all material respects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

B-41



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##### 





| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (v)    | Except as set forth in the Disclosure Letter, no
    event has occurred or condition exists with respect to any of
    the Company Benefit Plans or relating to any employee of the
    Company or a Subsidiary which, individually or in the aggregate,
    have had or would reasonably be expected to have a Material
    Adverse Effect on the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (vi)   | Except as set forth in the Disclosure Letter, all
    of the Company Benefit Plans are either (A) fully insured
    or (B) fully funded in accordance with applicable Laws on a
    going concern, solvency basis. Neither the Company nor any of
    its Subsidiaries has received, or applied for, any payment of
    surplus out of any Company Benefit Plan. Except as set forth in
    the Disclosure Letter, neither the Company nor its Subsidiaries
    has taken any premium holidays under any Company Benefit Plan
    except as permitted by applicable Laws and the terms of the
    Company Benefit Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (vii)  | Except as set forth in the Disclosure Letter, no
    event has occurred and no condition or circumstance exists that
    has resulted in or would reasonably be expected to result in any
    Company Benefit Plan being ordered, or required to be,
    terminated or wound up in whole or in part, having its
    registration under applicable Laws refused or revoked, being
    placed under the administration of any trustee or receiver or
    regulatory authority or being required to pay any material
    Taxes, penalties, payments or levies under applicable Laws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (viii) | Except as set forth in the Disclosure Letter,
    there are no material outstanding stock appreciation rights,
    phantom equity, profit sharing plan or similar rights,
    agreements, arrangements or commitments payable to directors,
    officers, consultants, or current or former employees of the
    Company or any of its Subsidiaries and which are based upon the
    revenue, value, income or any other attribute of the Company or
    any Subsidiary of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (ix)   | Except as set forth in the Disclosure Letter, no
    Company Benefit Plan is subject to Title IV of ERISA and neither
    the Company nor any of its Subsidiaries (while directly or
    indirectly owned by the Company nor, to the knowledge of the
    Company, prior to being directly or indirectly owned by the
    Company) has at any time sponsored or contributed to, or has had
    any liability or obligation in respect of any such plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (x)    | Except as set forth in the Disclosure Letter and
    except as are properly accrued on the Financial Statements in
    accordance with Canadian generally accepted accounting
    principles, neither the Company nor any of its Subsidiaries has
    incurred or accrued any current or projected material liability
    (whether absolute or contingent) in respect of post-employment
    or post-retirement health, medical or life insurance benefits
    for current, former or retired employees of the Company or any
    of its Subsidiaries, except as required to avoid an excise tax
    under Section 4980B of the Code or otherwise except as may
    be required pursuant to any other applicable Law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (xi)   | Except as set forth in the Disclosure Letter, no
    Company Benefit Plan exists that, as a result of the execution
    of this Agreement, shareholder approval of this Agreement or the
    Transaction (whether alone or in connection with any subsequent
    event(s)) will entitle any current, former or retired employees,
    officers or directors of the Company or any of its Subsidiaries
    to (A) severance pay or any increase in severance pay upon
    any termination of employment after December 22, 2004,
    (B) accelerate the time of payment or vesting of, or result
    in any payment (through a grantor trust or otherwise) of
    compensation or benefits under, any of the Company Benefit
    Plans, (C) result in the acceleration of, or an increase
    in, funding obligations in respect of, any of the Company
    Benefit Plans, (D) limit or restrict the right of the
    Company to merge, amend or terminate any of the Company Benefit
    Plans (other than solely resulting from becoming a wholly-owned
    subsidiary of Acquisitionco) or (E) result in any payments
    under any of the Company Benefit Plans which would not be
    deductible under Section 280G of the Code.
|
| | (xii)  | Any payments, distributions or withdrawals from
    or transfers of assets to or from any Company Benefit Plan have
    been made in all material respects in accordance with the valid
    terms of such Company Benefits Plan, applicable collective
    agreements and all Laws and occurred with the consent of any
    applicable Governmental Authority (where required).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (xiii) | Except as set forth in the Disclosure Letter,
    none of the Company Benefit Plans is a multiemployer
    plan as defined in Section 3(37) of ERISA or any
    other applicable Laws and neither the Company nor any of its
    Subsidiaries has any liability or obligation in respect of, any
    multiemployer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (xiv)  | Each Company Benefit Plan intended to be
    qualified under Section 401(a) of the Code has heretofore
    been determined by the Internal Revenue Service to so qualify in
    all material respects, and each trust created thereunder has
    heretofore been determined by the Internal Revenue Service to be
    exempt from tax under the provisions of Section 501(a) of
    the Code and, nothing has occurred that would cause any such
    Company Benefit Plan or trust to fail to qualify under
    Section 401(a) or 501(a) of the Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (xv)   | Neither the Company nor any of its Subsidiaries
    has engaged in, or is a successor or parent corporation to an
    entity that has engaged in, a transaction described in
    Sections 4069 or 4214(c) of ERISA. No reportable
    event (as such term is defined                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

B-42



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##### 



| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       | in Section 4043 of ERISA) that could
    reasonably be expected to result in material liability or
    accumulated funding deficiency (as such term is
    defined in Section 302 of ERISA and Section 412 of the
    Code (whether or not waived)) has occurred with respect to any
    Company Benefit Plan.                                                                                                                                                                                             
|
| | (xvi) | With respect to any Company Benefit Plan,
    (A) no material actions, suits or claims (other than
    routine claims for benefits in the ordinary course) are pending
    or to the knowledge of the Company threatened (B) no
    liability to the Pension Benefit Guaranty Corporation has been
    incurred (other than routine premium payments) and (C) to
    the knowledge of the Company, no facts or circumstances exist
    that could give rise to any such action, suit, claim or
    liability.



|    |                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(p) | Tax Matters.Except
    as set out in the Disclosure Letter or as otherwise disclosed in
    writing by the Company to Acquisitionco prior to
    December 22, 2004:



| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | The Company and each of its Subsidiaries has duly
    filed, and timely made or prepared all Tax Returns required to
    be made or prepared by it or caused to be filed, all Tax Returns
    required to be filed by them in the form and within the time
    prescribed under applicable Laws for so doing (all of which Tax
    Returns were correct and complete in all material respects), and
    has paid all material amounts of Taxes due and payable, in each
    case except for any such Tax Returns or taxes the non-filing or
    non-payment of which would not, individually or in the
    aggregate, reasonably be expected to have a Material Adverse
    Effect on the Company and the Financial Statements contain an
    adequate provision in accordance with Canadian generally
    accepted accounting principles for all material amounts of Taxes
    payable in respect of each period covered by such Financial
    Statements and all prior periods to the extent such Taxes have
    not been paid, whether or not due and whether or not shown as
    being due on any Tax Returns. The Company and each of its
    Subsidiaries has duly and timely paid all instalments on account
    of Taxes for the current year that are due and payable by it
    whether or not assessed other than any non-payments that would
    not, individually or in the aggregate, reasonably be expected to
    have a Material Adverse Effect on the Company. On a consolidated
    basis, the Company has made adequate provision in accordance
    with Canadian generally accepted accounting principles in its
    books and records for amounts at least equal to the amount of
    all Taxes payable by the Company or any of its Subsidiaries that
    will not be due and payable by the Effective Date in respect of
    any period subsequent to the period covered by such Financial
    Statements and that relate to the periods ending on or prior to
    the Effective Date.                                                                                                                                                                                                                                                    
|
| | (ii)  | Neither the Company nor any Subsidiary of the
    Company has received any notification that any issues involving
    a material amount of Taxes have been raised (and are currently
    pending) by the Canada Revenue Agency, the United States
    Internal Revenue Service or any other taxing authority,
    including, without limitation, any sales tax authority, in
    connection with any of the Tax Returns filed or required to be
    filed, and no waivers of statutes of limitations, or objections
    to any assessments or reassessments, have been given or
    requested or made with respect to the Company or any Subsidiary
    of the Company. All liability of the Company and its
    Subsidiaries in Canada, the United States, the United Kingdom,
    Ireland and France for Taxes has been assessed for up to the
    fiscal years as set out in the Disclosure Letter. To the best of
    the knowledge of the Company, neither the Company nor any
    Subsidiary of the Company has received (A) written notice
    from any taxing authority to the effect that any Tax Return is
    being examined for assessment or (B) a written proposal to
    assess additional Taxes involving an amount of Taxes, and
    neither the Company nor any Subsidiary of the Company has
    knowledge or reason to believe that such examination or
    assessment will be threatened. No Tax liens exist for material
    amounts of Taxes of the Company or any of its Subsidiaries.
    Neither the Company nor any of its Subsidiaries is a party to
    any tax sharing or other similar agreement or arrangement with
    any Person (other than with the Company or any of its
    Subsidiaries) or any taxing authority pursuant to which the
    Company or any of its Subsidiaries has or could have any
    material liabilities in respect of Taxes. Neither the Company
    nor any Subsidiary of the Company has received a refund of any
    material amount of Taxes to which it was not entitled. Neither
    the Company nor any of its Subsidiaries has made an election
    under Section 897(i) of the Code to be treated as a
    domestic corporation for purposes of Section 897, 1445 and
    6039C of the Code.
|
| | (iii) | Each of the Company and its Subsidiaries has duly
    and timely withheld all Taxes and other amounts required by Law
    to be withheld by it (including Taxes and other amounts required
    to be withheld by it in respect of any amount paid or credited
    or deemed to be paid or credited by it to or for the account or
    benefit of any Person, including any employees, officers or
    directors and any non-resident Person), and has duly and timely
    remitted to the appropriate authority such Taxes and other
    amounts required by Law to be remitted by it, except to the
    extent that the failure to so withhold or remit has not and
    would not, individually or in the aggregate, reasonably be
    expected to have a Material Adverse Effect on the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (iv)  | Each of the Company and its Subsidiaries has duly
    and timely collected all amounts on account of any sales or
    transfer taxes, including goods and services, harmonized sales
    and provincial or territorial sales taxes, required by Law to be
    collected by it and has duly and timely remitted to the
    appropriate authority any such amounts required by Law to be                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

B-43



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##### 



| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        | remitted by it, except to the extent that such
    failure has or would not, individually or in the aggregate,
    reasonably be expected to have a Material Adverse Effect.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (v)    | Neither the Company nor any Subsidiary has been a
    member of an affiliated or consolidated group (other than the
    United States federal affiliated group to which certain United
    States Subsidiaries are members and to which Masonite Holdings,
    Inc. is the common parent) filing a United States consolidated
    Tax Return or has any liability for the Taxes of any Person
    other than the Company and its Subsidiaries under Treasury
    Regulation Section 1.1502-6 (or any similar provision
    of state, local or foreign law), as a transferee or successor,
    by contract or otherwise. The Company has delivered to
    Acquisitionco or made available to Acquisitionco for inspection
    (A) copies of such of its income Tax Returns, complete and
    correct in all material respects, and the income Tax Returns of
    its Subsidiaries, as have been requested by Acquisitionco and
    (B) copies of all private letter rulings, revenue agent
    reports, closing agreements, settlement agreements, deficiency
    notices and any similar documents requested by Acquisitionco
    submitted by, received by or agreed to by or on behalf of the
    Company or its Subsidiaries and relating to material Taxes for
    such taxable periods, complete and correct in all material
    respects.
|
| | (vi)   | The Company has commenced a comprehensive
    transfer pricing study. If the transfer pricing methodology
    resulting from such transfer pricing study had been used by the
    Company and its Subsidiaries for the 2003 fiscal period, no
    material aggregate increase in the amount of Taxes payable in
    respect of such period would have resulted. There are no
    proceedings, assessments, reassessments, investigations, audits
    or claims now pending or, to the knowledge of the Company,
    threatened against the Company or any of the Subsidiaries in
    respect of any transfer pricing matters and there are no matters
    under discussion, audit or appeal with any Governmental
    Authority relating to transfer pricing that would reasonably be
    expected to result in a material amount of Taxes being payable
    by the Company or any of its Subsidiaries in respect of any
    period ending on or prior to the Effective Date.                                                                                                                                                                                                                                                                                                                                                                  
|
| | (vii)  | Taxand
    Taxesmeans, with respect to any entity, all
    income taxes (including any tax on or based upon net income,
    gross income, income as specially defined, earnings, profits or
    selected items of income, earnings or profits) and all capital
    taxes, gross receipts taxes, environmental taxes, sales taxes,
    use taxes, ad valorem taxes, value added taxes, transfer taxes,
    franchise taxes, license taxes, withholding taxes or other
    withholding obligations, payroll taxes, employment taxes, Canada
    or Quebec Pension Plan premiums, excise, severance, social
    security premiums, workers compensation premiums,
    employment insurance or compensation premiums, stamp taxes,
    occupation taxes, premium taxes, property taxes, windfall
    profits taxes, alternative or add-on minimum taxes, goods and
    services tax, customs duties or other taxes of any kind
    whatsoever, together with any interest and any penalties or
    additional amounts imposed by any taxing authority (domestic or
    foreign) on such entity or for which such entity is responsible,
    and any interest, penalties, additional taxes, additions to tax
    or other amounts imposed with respect to the foregoing.                                                                       
|
| | (viii) | For purposes of this Section (p), the term
    material amount of Taxesshall mean an amount
    of Taxes that is material to the Company and its Subsidiaries
    taken as a whole.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(q) | Compliance with Laws.Except as set forth in the Disclosure
    Letter, or as Publicly Disclosed by the Company, the Company and
    its Subsidiaries have complied with and are not in violation of
    any applicable Laws in all material respects, other than Laws
    addressed in clauses (n), (o) and (p) foregoing
    and (s) following. Without limiting the generality of the
    foregoing, all securities of the Company (including, all
    options, rights or other convertible or exchangeable securities)
    have been issued in compliance with all applicable securities
    Laws and all securities to be issued upon exercise of any such
    options, rights and other convertible or exchangeable securities
    will be issued in compliance with all applicable securities Laws.
|   
|(r) | Licences, Etc.Except as set forth in the Disclosure
    Letter, or as Publicly Disclosed by the Company, the Company and
    each Subsidiary of the Company owns, possesses, or has obtained
    and is in compliance with, all licences, permits, certificates,
    approvals, orders, grants and other authorizations of or from
    any Governmental Authority necessary to conduct its businesses
    substantially as now conducted, other than such failures to own,
    possess, obtain or be in compliance with as would not,
    individually or in the aggregate, reasonably be expected to have
    a Material Adverse Effect on the Company.                                                                                                                                                 
|   
|(s) | Environmental.Except as set forth in the Disclosure Letter:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



| |      |                                                                                                                                              
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------
| | (i)  | The Company, its Subsidiaries and their
    respective operations are, and have been, in material compliance
    with all Environmental Laws;
|
| | (ii) | Neither the Company nor any Subsidiary of the
    Company:                                                                                   



| |     |                                                                                                                                                                                                                                    
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) | is subject to any Environmental Laws, or to the
    knowledge of the Company any pending or proposed future
    Environmental Laws, or terms of any current, or to the knowledge
    of the Company any pending or proposed future,

B-44



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##### 



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | environmental authorization, permit or licence
    which requires or may require any material work, repairs,
    construction, change in business practices or operations, or
    expenditures;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (B) | is subject to any written claim, action,
    proceeding, investigation, demand, notice or order with respect
    to a material breach of or material liability under any
    Environmental Laws applicable to the Company or any Subsidiary
    of the Company or under any indemnity granted by the Company or
    any Subsidiary to any other Person;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (C) | has any liability or responsibility with respect
    to, or has knowledge of, any Hazardous Substance that has been
    generated, transported, treated, stored, installed, deposited,
    disposed of, arranged to be deposited or disposed of, released,
    discharged or emitted, or threatened to be released discharged
    or emitted, at, on, from or under any property or facility
    currently or formerly owned, leased, used or otherwise
    controlled by the Company or any of its Subsidiaries, in
    violation of, or in a manner or to a location that could give
    rise to liability to the Company or any of its Subsidiaries
    under or relating to, any Environmental Laws or is present at,
    on, in, or under such currently owned, leased, used or
    controlled property or facility in a condition or at a level or
    concentration exceeding any remediation or decommissioning
    standard set forth under Environmental Laws, in any case, that
    would reasonably be expected to be material; or
|
| | (D) | has any material liability or responsibility with
    respect to, or has knowledge of, any Hazardous Substance that is
    migrating toward any Real Property; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



| |       |                                                                                                                                                                                                                                                                                                                                                                        
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iii) | None of the Company or any of its Subsidiaries
    has assumed, contractually or by operation of Laws, any
    liabilities or obligations of any other Person under or relating
    to any Environmental Laws, in any case that would, reasonably be
    expected to be material.                                                                                      
|
| | (iv)  | None of the products manufactured by the Company
    or any of its Subsidiaries (or any of their respective
    predecessors) or manufactured by a third party the assets or
    stock of which were sold to the Company or any of its
    Subsidiaries (or any of their respective predecessors) contained
    asbestos, except as set forth on the Disclosure Letter.



| |                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The representations and warranties in this
    paragraph (s) are the only representations and warranties
    in this Agreement dealing with Environmental Laws or
    environmental matters.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(t) | Property.The
    Disclosure Letter contains a true and complete list of
    (i) all the real property owned in fee by the Company and
    its Subsidiaries (the Owned Real Property)
    and (ii) all leases, subleases and other agreements under
    which the Company or any of its Subsidiaries leases, subleases,
    uses or occupies or has the right to use or occupy, any real
    property with annual rent in excess of $100,000 (collectively
    the Real Property Leasesand the property
    subject thereto the Leased Real Property, and
    together with the Owned Real Property, the Real
    Property). Except as set forth in the Disclosure
    Letter, or except for failures of title that do not materially
    adversely affect the operations of the business or the ability
    to sell such property, the Company and each Subsidiary of the
    Company have good and sufficient title to their respective
    material Real Property interests, to either as owner in fee
    simple of Owned Real Property or as holder of a valid leasehold
    interest of Leased Real Property, in each case free and clear of
    all liens, charges, claims or encumbrances (except for liens,
    charges, claims or encumbrances permitted under the
    Companys loan documents), and otherwise hold valid
    easements, rights of way, permits or licences from land owners
    or authorities required to permit the operation of their
    businesses as presently conducted. Each Real Property Lease
    constitutes the valid and legally binding obligation of the
    Company or its Subsidiaries, enforceable against the Company or
    its Subsidiaries, as applicable, in accordance with its terms.
    With respect to each Real Property Lease there is no default or
    event which, with notice or lapse of time or both, would
    constitute a default on the part of Company or its Subsidiaries,
    or, to the knowledge of the Company any other party thereto,
    except for such defaults that would not reasonably be expected
    to be material to the Company.
|   
|(u) | Non-Arms Length
    Transactions.Except as set forth in
    the Disclosure Letter, or as Publicly Disclosed by the Company,
    there are no Material Contracts or other transactions currently
    in place between the Company or any of its Subsidiaries, on the
    one hand, and (i) any officer or director of the Company or
    any of its Subsidiaries, (ii) any holder of record or
    beneficial owner of 5% or more of the voting securities of the
    Company, or (iii) any Affiliate or associate of any such
    officer, director or beneficial owner, on the other hand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(v) | Reports.Since
    December 31, 2001, the Company has filed with: (i) the
    OSC, by posting upon the SEDAR system, if required, true and
    complete copies of all forms, reports, schedules, statements and
    other documents required in accordance with applicable
    securities Laws to be filed by it; and (ii) the U.S.
    Securities and Exchange Commission, true and complete copies of
    all forms, reports, schedules, statements and other documents,
    required in accordance with applicable securities Laws to be
    filed by it. (Such forms, reports, schedules, statements and
    other documents, including any financial statements or other
    documents, including any schedules included therein, are
    referred to as the Company Documents.) The
    Company Documents, at the time                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

B-45



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##### 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | filed, (i) did not contain any
    misrepresentation of a material fact or omit to state a material
    fact required to be stated therein or necessary to make the
    statements therein, in the light of the circumstances under
    which they were made, not misleading, and (ii) complied in
    all material respects with the requirements of applicable
    securities Laws. The Company has not filed any confidential
    material change report with the OSC or any other securities
    authority or regulator or any stock exchange or other
    self-regulatory authority which at the date hereof remains
    confidential.                          
|   
|(w) | Fees.Other than
    agreements with soliciting dealers or proxy solicitation firms
    that may be engaged by the Company in connection with the
    Transaction on usual commercial terms, the Company has delivered
    to Acquisitionco complete copies of all agreements that could
    give rise to any claim for an advisory fee, success fee,
    brokerage commission, finders fee or other like payment
    against the Company or any of its Subsidiaries in connection
    with the Transaction.                                                                                                                                                         
|   
|(x) | Absence of Certain Business Practices.The Company, has not, directly or
    indirectly within the past five years, given or agreed to give
    any gift or similar benefit to any customer, supplier,
    government employee or other person who is or may be in a
    position to help or hinder the business of the Company (or to
    assist the Company with any actual or proposed transaction)
    which might subject the Company to any damage or penalty in any
    civil, criminal or governmental litigation or proceeding that
    would, individually or in the aggregate, reasonably be expected
    to have a Material Adverse Effect on the Company.
|   
|(y) | Insurance.The
    Company and its Subsidiaries maintain insurance coverage with
    reputable insurers in such amounts and covering such risks as
    the Company reasonably believes is in accordance with normal
    industry practice for companies engaged in businesses similar to
    that of the Company and its Subsidiaries (taking into account
    the cost and availability of such insurance, and the
    Companys ability to self-insure).                                                                                                                                                                                                            

B-46



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##### 



SCHEDULE 3.2

REPRESENTATIONS AND WARRANTIES OF ACQUISITIONCO



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Organization.Acquisitionco has been duly
    incorporated or formed under all applicable Laws, is validly
    existing and has all necessary corporate power, authority and
    capacity to own its property and assets and to conduct its
    businesses as currently owned and conducted. Acquisitionco was
    incorporated for the purpose of acquiring the Company Shares
    pursuant to the Transaction and has carried on no other
    business. As of the Effective Date a majority of the board of
    directors of Acquisitionco will have been nominated by an
    investment vehicle formed at the direction of Kohlberg Kravis
    Roberts & Co., L.P.
|   
|(b) | Authority and No Violation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | Acquisitionco has the necessary corporate power,
    authority and capacity to enter into this Agreement and to
    perform its obligations under this Agreement. The execution and
    delivery of this Agreement by Acquisitionco and the consummation
    by Acquisitionco of the Transaction have been duly authorized by
    its board of directors and no other corporate proceedings on
    part of Acquisitionco are necessary to authorize this Agreement
    or the Transaction.
|
| | (ii)  | This Agreement has been duly executed and
    delivered by Acquisitionco and constitutes a legal, valid and
    binding obligation, enforceable against it in accordance with
    its terms, subject to bankruptcy, insolvency and other
    applicable Laws affecting creditors rights generally, and
    to general principles of equity.                                                                                                                                              
|
| | (iii) | The authorization of this Agreement, the
    execution and delivery by Acquisitionco of this Agreement, the
    performance by it of its obligations under this Agreement and
    the completion of the Transaction will not in respect of
    Acquisitionco:                                                                                                                                                                                                                             



| |     |                                                                                                                                                                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) | result (with or without notice or the passage of
    time) in a violation or breach of, constitute a default under,
    require any consent to be obtained under or give rise to any
    third party right of termination, cancellation, acceleration,
    penalty or payment obligation or right of purchase or sale
    under, any provision of:



| |     |                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | its certificate of incorporation, articles,
    by-laws or other charter documents;                                                                         
|
| | (2) | any Laws (subject to obtaining the Regulatory
    Approvals); or                                                                                            
|
| | (3) | any material Contract, license, permit or
    government grant to which Acquisitionco is party or by which it
    is bound or subject or is the beneficiary;



| |     |                                                                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (B) | give rise to any right of termination or
    acceleration of indebtedness of Acquisitionco, or cause any such
    indebtedness to come due before its stated maturity or cause any
    available credit of Acquisitionco to cease to be available;
|
| | (C) | result in the imposition of any encumbrance,
    charge or lien upon any of its assets; or                                                                                                                                                        
|
| | (D) | restrict, hinder, impair or limit the ability of
    Acquisitionco to carry on the business of Acquisitionco as and
    where it is now being carried on.                                                                                         



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | No consent, approval, order or authorization of,
    or declaration or filing with, any Governmental Authority is
    required to be obtained by Acquisitionco in connection with the
    execution and delivery of this Agreement or the consummation by
    Acquisitionco of the Transaction other than (A) the
    Regulatory Approvals; and (B) filings under the Securities
    Act, stock exchange rules or similar laws as contemplated by
    this Agreement.



|    |                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|(c) | Financing.On
    December 22, 2004, Acquisitionco delivered to the Company a
    true and correct copy of the Commitment Letters.

B-47



---



##### 



SCHEDULE 5.2

SENIOR EXECUTIVES

|                                                                                       |  |                 |             | 
|-------------------------------------------------------------------------------------- |  | --------------- | ----------- | 
|                                                                                       |  | Amount Invested |            
|                                                                                       |  |                 |            
|1.  Philip S. Orsino 
    President and Chief Executive Officer                       |  | US$             | 7.5 million | 
|2.  John F. Ambruz 
    Executive Vice President, Strategic Development               |  | US$             | 4.0 million | 
|3.  James U. Morrison 
    Executive Vice President and Group Chief Operating Officer |  | US$             | 4.0 million | 
|4.  Lawrence P. Repar 
    Executive Vice President and Group Chief Operating Officer |  | US$             | 4.0 million | 

B-48



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##### 



APPENDIX C  INTERIM ORDER

Commercial List File No. 05-CL-5701

ONTARIO

SUPERIOR COURT OF JUSTICE


Commercial List


|               |  |  |  |                      
|-------------- |  |  |  | ---------------------
|THE HONOURABLE |  |  |  | TUESDAY, THE 18TH DAY
|JUSTICE        |  |  |  | OF JANUARY, 2005     



| |                                                                                                                                                | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------- | 
| | IN THE MATTER OF the Business Corporations
    Act, R.S.O. 1990, c. B.16, as amended, Section 182                                              | 
|
| | AND IN THE MATTER OF Rule 14.05(2) of the
    Rules of Civil Procedure                                                                         | 
|
| | AND IN THE MATTER OF a proposed arrangement
    involving Masonite International Corporation, its shareholders
    and Stile Acquisition Corp. | 

ORDER

THIS MOTION, made without notice by the
Applicant, Masonite International Corporation
(Masonite), for an interim order pursuant to
section 182 of the Business Corporations Act
(Ontario), R.S.O. 1990, c. B.16, as amended (the
OBCA), was heard this day at 393 University Avenue,
Toronto, Ontario.

ON READING the Notice of Motion herein, the
Affidavit of Harley Ulster sworn January 17, 2005 and the
exhibits thereto, and upon hearing the submissions of counsel
for Masonite.

The Meeting

1.    THIS COURT ORDERS that
Masonite call, hold and conduct a special meeting (the
Meeting) of the holders of its common shares (the
Shareholders) on February 18, 2005 in Toronto,
Ontario to consider and, if deemed advisable, to pass, with or
without variation, a special resolution (the Arrangement
Resolution) to approve the arrangement described in the
Plan of Arrangement (the Plan of Arrangement)
attached as Schedule 1.1A to Appendix B to the
Management Proxy Circular of Masonite (the Circular)
attached as Exhibit A to the Affidavit of
Harley Ulster.

2.    THIS COURT ORDERS that
the Meeting shall be called, held and conducted in accordance
with the provisions of the OBCA, the by-laws of Masonite, the
Circular, and this Order.

3.    THIS COURT ORDERS that
the quorum for the Meeting shall be the attendance in person of
not less than two persons holding or representing by proxy at
least 25 percent of the common shares.

4.    THIS COURT ORDERS that
the record date for determining the registered Shareholders
entitled to receive the Meeting Materials (as defined in
paragraph 10 below) and vote at the Meeting shall be the
close of business on January 17, 2005 (the
Record Date).

5.    THIS COURT ORDERS that
each Shareholder shall be entitled at the Meeting to one vote
for each common share held.

6.    THIS COURT ORDERS that
the procedure for the use of proxies at the Meeting shall be as
set out in the Circular.

7.    THIS COURT ORDERS that
the only persons entitled to attend or speak at the Meeting
shall be the Shareholders, their proxy holders, the holders of
options to acquire common shares, the directors of Masonite, the
auditors of Masonite, and the professional legal and financial
advisors to Masonite, and such other persons with the permission
of the Chair of the Meeting.

8.    THIS COURT ORDERS that
Masonite may in its discretion waive generally the time limits
for the deposit of proxies by Shareholders, if Masonite deems it
advisable to do so.

C-1



---



##### 



Adjournments

9.    THIS COURT ORDERS that
Masonite, if it deems advisable, may adjourn or postpone the
Meeting on one or more occasions, without the necessity of first
convening the Meeting or first obtaining any vote of
Shareholders respecting the adjournment or postponement and
notice of any such adjournment or postponement shall be given by
press release, newspaper advertisement, or by notice to the
Shareholders by one of the methods specified in
paragraph 10 herein, as determined to be the most
appropriate method of communication by the Board of Directors
of Masonite.

Notice

10.   THIS COURT ORDERS that the
Circular, including the Notice of Meeting and Notice of
Application attached to the Circular (collectively, the
Meeting Materials), in substantially the same form
as contained in Exhibit A to the Affidavit of
Harley Ulster (with such amendments thereto as counsel for
Masonite may advise are necessary or desirable, provided that
such amendments are not inconsistent with this Order and are
subsequently filed with this Court) shall be sent at least
21 days prior to February 18, 2005 to the Shareholders
of record as at the close of business on January 17, 2005,
the holders of options to acquire common shares, and the
directors and auditors of Masonite, by personal delivery or by
mailing the same by prepaid ordinary or first class mail to such
persons at their recorded addresses as they appear on the books
of Masonite at the close of business on January 17, 2005,
or if no address is shown therein, then to the last address of
the person known to the Secretary of Masonite, and substantial
compliance with this paragraph shall constitute good and
sufficient notice of the Meeting.

11.   THIS COURT ORDERS that the
accidental failure or omission on a de minimis basis to
give notice of the Meeting to any one or more Shareholders or
any other person, or any failure or omission to give notice as a
result of events beyond the reasonable control of Masonite
(including without limitation any inability to utilize postal
services) shall not constitute a breach of this Order or a
defect in the calling of the Meeting and shall not invalidate
any resolution passed or proceedings taken at the Meeting.

Amendments

12.   THIS COURT ORDERS that, with
the consent of Stile Acquisition Corp. (Stile),
Masonite may make such amendments, revisions or supplements to
the Plan of Arrangement as it may determine provided that they
are not detrimental to the interests of Shareholders, without
any additional notice to the Shareholders, and the Plan of
Arrangement as so amended, revised or supplemented shall be the
Plan of Arrangement submitted to the Meeting and the subject of
the Arrangement Resolution.

Voting

13.   THIS COURT ORDERS that votes
shall be taken at the Meeting on the basis of one (1) vote
per common share and that, subject to further order of this
court, the Arrangement Resolution will be considered to have
been adopted by the Shareholders upon approval by: (i) at
least 66 2/3% of the votes cast by the Shareholders present in
person or represented by proxy at the Meeting; and (ii) a
majority of the votes cast by Shareholders present in person or
by proxy, excluding common shares held by Senior Management (as
defined in the Circular).

14.   THIS COURT ORDERS that only
those Shareholders present or represented by proxy at the
Meeting who are entitled to vote at the Meeting pursuant to the
provisions of the OBCA shall be entitled to vote at the Meeting
and, for the purposes of the Meeting, any spoiled votes,
illegible votes, defective votes and abstentions shall be deemed
to be votes not cast.

Dissent Rights

15.   THIS COURT ORDERS that, in
accordance with the terms of the Plan of Arrangement and
section 185 of the OBCA, registered Shareholders shall be
permitted to dissent from the Plan of Arrangement and to seek
fair value for their common shares, so long as they provide to
Masonite their written objection to the Plan of Arrangement at
or prior to 5:00 p.m. (Toronto time) on the day (excluding
Saturdays, Sundays and statutory or civic holidays in Toronto,
Ontario) preceding the Meeting and they otherwise strictly
comply with the requirements of section 185 of the OBCA and
the Plan of Arrangement.

Application for Approval of Plan

16.   THIS COURT ORDERS that,
following the approval of the Arrangement Resolution at the
Meeting in the manner set forth in this Order, Masonite may
apply before this Court on February 21, 2005 at 393
University Avenue, Toronto, Ontario for approval of the Plan of
Arrangement and that service of the Notice of Application
herein, in accordance with paragraph 10 of this Order,
shall constitute good and sufficient service of such Notice of
Application upon all persons who are entitled to receive such
Notice of

C-2



---



##### 



Application pursuant to the Order and no other
form of service need be made and no other material need be
served on such persons in respect of these proceedings, unless a
Notice of Appearance is served on Masonites solicitors
before February 14, 2005, in which case Masonite shall
serve such person with notice of the date of the application for
approval, together with a copy of any additional materials to be
used in support of such application.


17.   THIS COURT ORDERS that any
person who wishes to oppose the application for approval of the
Plan of Arrangement shall serve upon Masonites solicitors
and the solicitors for Stile and upon other parties who have
filed a Notice of Appearance a notice setting out the basis for
such opposition and a copy of the materials to be used to oppose
the application at least five (5) days before the date set
for the hearing to approve the Plan of Arrangement or such
shorter time as the Court, by order, may allow.

18.   THIS COURT ORDERS that
Masonite shall be entitled, at any time, to seek leave to vary
this Order.

C-3



---



##### 



APPENDIX D  NOTICE OF APPLICATION FOR
FINAL ORDER

Commercial List File No.

05-CL-5701


|             |  |                                                       
|------------ |  | ------------------------------------------------------
|(COURT SEAL) |  | ONTARIOSUPERIOR COURT OF JUSTICE
    (COMMERCIAL LIST)



| |                                                                                                                                                | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------- | 
| | IN THE MATTER OF the Business Corporations
    Act, R.S.O. 1990, c. B.16, as amended, Section 182                                              | 
|
| | AND IN THE MATTER OF Rule 14.05(2) of the
    Rules of Civil Procedure                                                                         | 
|
| | AND IN THE MATTER OF a proposed arrangement
    involving Masonite International Corporation, its shareholders
    and Stile Acquisition Corp. | 

NOTICE OF APPLICATION

TO: THE RESPONDENTS

A LEGAL PROCEEDING HAS BEEN COMMENCED BY THE
APPLICANT. The claim made by the Applicant appears on the
following pages.

THIS APPLICATION will come on for a hearing
before a Judge presiding over the Commercial List at
393 University Avenue, Toronto on February 21, 2005 at
10:00 a.m. or as soon after that time as the matter can be
heard.

IF YOU WISH TO OPPOSE THIS APPLICATION, to
receive notice of any step in the Application, or to be served
with any documents in the Application, you or an Ontario lawyer
acting for you must forthwith prepare a Notice of Appearance in
Form 38A prescribed by the Rules of Civil Procedure,
serve it on the Applicants lawyer and file it, with proof
of service, in this court office, and you or your lawyer must
appear at the hearing.

IF YOU WISH TO PRESENT AFFIDAVIT OR OTHER
DOCUMENTARY EVIDENCE TO THE COURT OR TO EXAMINE OR CROSS-EXAMINE
WITNESSES ON THE APPLICATION, you or your lawyer must, in
addition to serving your Notice of Appearance, serve a copy of
the evidence on the Applicants lawyer and file it, with
proof of service, in the court office where the Application is
to be heard as soon as possible, but not later than
2:00 p.m. on the day before the hearing.

D-1



---



##### 



IF YOU FAIL TO APPEAR AT THE HEARING, JUDGMENT
MAY BE GIVEN IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU.
IF YOU WISH TO OPPOSE THIS APPLICATION BUT ARE UNABLE TO PAY
LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A
LOCAL LEGAL AID OFFICE.

|                       |  |            |  |                                                                                    
|---------------------- |  | ---------- |  | -----------------------------------------------------------------------------------
|Date: January 13, 2005 |  | Issued by: |  | (-s- Court Officer)                                                                
|                       |  |            |  | Address of Court Office:
    393 University Avenue
    Toronto, Ontario
    M5G 1E6



|        |                                                                                                
|------- | -----------------------------------------------------------------------------------------------
|TO:     | All Holder of Common Shares of 
     Masonite International Corporation                        
|       
|AND TO: | All Holders of Options to Acquire Common Shares
    
     of Masonite International Corporation

D-2



---



##### 



APPLICATION

1.   The Applicant, Masonite
International Corporation (the Corporation), makes
application for:



| |     |                                                                                                                                                                                                                                                                                                                                                                      
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | an Interim Order for directions pursuant to
    section 182(5) of the Business Corporations Act,
    R.S.O. 1990, c. B. 16, as amended (OBCA);                                                                                                                                                                                                                     
|
| | (b) | an order approving the plan of arrangement (the
    Plan of Arrangement) proposed by the Corporation
    substantially in the form described in the Management Proxy
    Circular to be distributed to the holders of Common Shares of
    the Corporation, which is marked as Exhibit A
    to the affidavit of Harley Ulster, filed in this
    proceeding; and
|
| | (c) | such further and other relief as this Honourable
    Court deems just.                                                                                                                                                                                                                                                                                               

2.   THE GROUNDS for the
Application are:



| |     |                                                                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | all statutory requirements under the OBCA have
    been fulfilled;                                                                                                                        
|
| | (b) | the proposed Plan of Arrangement is in the best
    interests of the Corporation, is fair and reasonable to the
    shareholders of the Corporation, and is put forward in good
    faith;
|
| | (c) | section 182 of the OBCA;                                                                                                                                                                  
|
| | (d) | rules 14.05(2) and 38 of the Rules
    of Civil Procedure; and                                                                                                                            
|
| | (e) | such further and other grounds as counsel may
    advise and this Honourable Court may permit.                                                                                            

3.   THE FOLLOWING DOCUMENTARY
EVIDENCE will be used at the hearing of the Application:



| |     |                                                                                                                                        
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------
| | (a) | such Interim Order as may be granted by this
    Honourable Court;                                                                     
|
| | (b) | the Affidavit of Harley Ulster, to be sworn
    January 14, 2005, and the exhibits thereto and other
    materials referred to therein;
|
| | (c) | the supplementary affidavit material, to be
    sworn, and the exhibits thereto and other materials referred to
    therein; and       
|
| | (d) | such further and other materials as counsel may
    advise and this Honourable Court may permit.                                       

|                                |  |                                                                                                                                        
|------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|Date of Issue: January 13, 2005 |  | Davies Ward Phillips &
    Vineberg LLP
    Barristers and Solicitors
    1 First Canadian Place
    44th Floor
    Toronto, ON M5X 1B1
|                               
|                                |  | James Doris (LSUC #33236P)
    James Bunting (LSUC #48244K)                                                                            
|                               
|                                |  | Tel: 416.863.0900
    Fax: 416.863.0871                                                                                                
|                               
|                                |  | Solicitors for Masonite International Corporation                                                                                      

D-3



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##### 



APPENDIX E   RIGHTS OF DISSENTING
SHAREHOLDERS

SECTION 185 OF THE BUSINESS CORPORATIONS
ACT (ONTARIO)

185.(1) Rights of dissenting
shareholders Subject to
subsection (3) and to sections 186 and 248, if a
corporation resolves to,



| |     |                                                                                                                                                                                                                  
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | amend its articles under section 168 to add,
    remove or change restrictions on the issue, transfer or
    ownership of shares of a class or series of the shares of the
    corporation;                      
|
| | (b) | amend its articles under section 168 to add,
    remove or change any restriction upon the business or businesses
    that the corporation may carry on or upon the powers that the
    corporation may exercise;
|
| | (c) | amalgamate with another corporation under
    sections 175 and 176;                                                                                                                                              
|
| | (d) | be continued under the laws of another
    jurisdiction under section 181; or                                                                                                                                    
|
| | (e) | sell, lease or exchange all or substantially all
    its property under subsection 184(3),                                                                                                                       

a holder of shares of any class or series
entitled to vote on the resolution may dissent.

(2) Idem If a corporation resolves to amend its
articles in a manner referred to in subsection 170(1), a holder
of shares of any class or series entitled to vote on the
amendment under section 168 or 170 may dissent, except in
respect of an amendment referred to in,



| |     |                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | clause 170(1)(a), (b) or (e) where the
    articles provide that the holders of shares of such class or
    series are not entitled to dissent; or
|
| | (b) | subsection 170(5) or (6).                                                                                                                         

(3) Exception A shareholder of a corporation
incorporated before the 29th day of July, 1983 is not entitled
to dissent under this section in respect of an amendment of the
articles of the corporation to the extent that the amendment,



| |     |                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | amends the express terms of any provision of the
    articles of the corporation to conform to the terms of the
    provision as deemed to be amended by section 277; or             
|
| | (b) | deletes from the articles of the corporation all
    of the objects of the corporation set out in its articles,
    provided that the deletion is made by the 29th day of July, 1986.

(4) Shareholders right to be paid
fair value In addition to
any other right the shareholder may have, but subject to
subsection (30), a shareholder who complies with this section is
entitled, when the action approved by the resolution from which
the shareholder dissents becomes effective, to be paid by the
corporation the fair value of the shares held by the shareholder
in respect of which the shareholder dissents, determined as of
the close of business on the day before the resolution was
adopted.

(5) No partial dissent A dissenting shareholder may only
claim under this section with respect to all the shares of a
class held by the dissenting shareholder on behalf of any one
beneficial owner and registered in the name of the dissenting
shareholder.

(6) Objection A dissenting shareholder shall send to
the corporation, at or before any meeting of shareholders at
which a resolution referred to in subsection (1) or
(2) is to be voted on, a written objection to the
resolution, unless the corporation did not give notice to the
shareholder of the purpose of the meeting or of the
shareholders right to dissent.

(7) Idem The execution or exercise of a proxy
does not constitute a written objection for purposes of
subsection (6).

(8) Notice of adoption of
resolution The corporation
shall, within ten days after the shareholders adopt the
resolution, send to each shareholder who has filed the objection
referred to in subsection (6) notice that the resolution
has been adopted, but such notice is not required to be sent to
any shareholder who voted for the resolution or who has
withdrawn the objection.

(9) Idem A notice sent under subsection
(8) shall set out the rights of the dissenting shareholder
and the procedures to be followed to exercise those rights.

(10) Demand for payment of fair
value A dissenting
shareholder entitled to receive notice under subsection
(8) shall, within twenty days after receiving such notice,
or, if the shareholder does not receive such notice, within
twenty days after learning that the resolution has been adopted,
send to the corporation a written notice containing,



| |     |                                                                                     
| | --- | ------------------------------------------------------------------------------------
| | (a) | the shareholders name and address;                                                 
|
| | (b) | the number and class of shares in respect of
    which the shareholder dissents; and
|
| | (c) | a demand for payment of the fair value of such
    shares.                          

E-1



---



##### 



(11) Certificates to be sent
in Not later than the
thirtieth day after the sending of a notice under subsection
(10), a dissenting shareholder shall send the certificates
representing the shares in respect of which the shareholder
dissents to the corporation or its transfer agent.

(12) Idem A dissenting shareholder who fails to
comply with subsections (6), (10) and (11) has no
right to make a claim under this section.

(13) Endorsement on
certificate A corporation
or its transfer agent shall endorse on any share certificate
received under subsection (11) a notice that the holder is
a dissenting shareholder under this section and shall return
forthwith the share certificates to the dissenting shareholder.

(14) Rights of dissenting
shareholder On sending a
notice under subsection (10), a dissenting shareholder ceases to
have any rights as a shareholder other than the right to be paid
the fair value of the shares as determined under this section
except where,



| |     |                                                                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | the dissenting shareholder withdraws notice
    before the corporation makes an offer under subsection (15);                                                                                                                                                                         
|
| | (b) | the corporation fails to make an offer in
    accordance with subsection (15) and the dissenting
    shareholder withdraws notice; or                                                                                                                                                
|
| | (c) | the directors revoke a resolution to amend the
    articles under subsection 168(3), terminate an amalgamation
    agreement under subsection 176(5) or an application for
    continuance under subsection 181(5), or abandon a sale, lease or
    exchange under subsection 184(8),

in which case the dissenting shareholders rights
are reinstated as of the date the dissenting shareholder sent
the notice referred to in subsection (10), and the dissenting
shareholder is entitled, upon presentation and surrender to the
corporation or its transfer agent of any certificate
representing the shares that has been endorsed in accordance
with subsection (13), to be issued a new certificate
representing the same number of shares as the certificate so
presented, without payment of any fee.

(15) Offer to pay A corporation shall, not later than
seven days after the later of the day on which the action
approved by the resolution is effective or the day the
corporation received the notice referred to in subsection (10),
send to each dissenting shareholder who has sent such notice,



| |     |                                                                                                                                                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | a written offer to pay for the dissenting
    shareholders shares in an amount considered by the
    directors of the corporation to be the fair value thereof,
    accompanied by a statement showing how the fair value was
    determined; or



| |     |                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------
| | (b) | if subsection (30) applies, a notification
    that it is unable lawfully to pay dissenting shareholders for
    their shares.

(16) Idem Every offer made under subsection
(15) for shares of the same class or series shall be on the
same terms.

(17) Idem Subject to subsection (30), a
corporation shall pay for the shares of a dissenting shareholder
within ten days after an offer made under subsection
(15) has been accepted, but any such offer lapses if the
corporation does not receive an acceptance thereof within thirty
days after the offer has been made.

(18) Application to court to fix fair
value Where a corporation
fails to make an offer under subsection (15) or if a
dissenting shareholder fails to accept an offer, the corporation
may, within fifty days after the action approved by the
resolution is effective or within such further period as the
court may allow, apply to the court to fix a fair value for the
shares of any dissenting shareholder.

(19) Idem If a corporation fails to apply to the
court under subsection (18), a dissenting shareholder may apply
to the court for the same purpose within a further period of
twenty days or within such further period as the court may allow.

(20) Idem A dissenting shareholder is not
required to give security for costs in an application made under
subsection (18) or (19).

(21) Costs If a corporation fails to comply with
subsection (15), then the costs of a shareholder application
under subsection (19) are to be borne by the corporation
unless the court otherwise orders.

(22) Notice to shareholders Before making application to the court
under subsection (18) or not later than seven days after
receiving notice of an application to the court under subsection
(19), as the case may be, a corporation shall give notice to
each dissenting shareholder who, at the date upon which the
notice is given,



| |     |                                                                               
| | --- | ------------------------------------------------------------------------------
| | (a) | has sent to the corporation the notice referred
    to in subsection (10); and



| |     |                                                                                                        
| | --- | -------------------------------------------------------------------------------------------------------
| | (b) | has not accepted an offer made by the corporation
    under subsection (15), if such an offer was made,

of the date, place and consequences of the
application and of the dissenting shareholders right to
appear and be heard in person or by counsel, and a similar
notice shall be given to each dissenting shareholder who, after
the date of such first mentioned notice and before

E-2



---



##### 



termination of the proceedings commenced by the
application, satisfies the conditions set out in clauses (a) and
(b) within three days after the dissenting shareholder
satisfies such conditions.


(23) Parties joined All dissenting shareholders who
satisfy the conditions set out in clauses (22)(a) and
(b) shall be deemed to be joined as parties to an
application under subsection (18) or (19) on the later
of the date upon which the application is brought and the date
upon which they satisfy the conditions, and shall be bound by
the decision rendered by the court in the proceedings commenced
by the application.

(24) Idem Upon an application to the court under
subsection (18) or (19), the court may determine whether
any other person is a dissenting shareholder who should be
joined as a party, and the court shall fix a fair value for the
shares of all dissenting shareholders.

(25) Appraisers The court may in its discretion
appoint one or more appraisers to assist the court to fix a fair
value for the shares of the dissenting shareholders.

(26) Final order The final order of the court in the
proceedings commenced by an application under subsection
(18) or (19) shall be rendered against the corporation
and in favour of each dissenting shareholder who, whether before
or after the date of the order, complies with the conditions set
out in clauses (22)(a) and (b).

(27) Interest The court may in its discretion allow
a reasonable rate of interest on the amount payable to each
dissenting shareholder from the date the action approved by the
resolution is effective until the date of payment.

(28) Where corporation unable to
pay Where subsection
(30) applies, the corporation shall, within ten days after
the pronouncement of an order under subsection (26), notify each
dissenting shareholder that [it] [sic] is unable lawfully to pay
dissenting shareholders for their shares.

(29) Idem Where subsection (30) applies, a
dissenting shareholder, by written notice sent to the
corporation within thirty days after receiving notice under
subsection (28), may,



| |     |                                                                                                                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | withdraw a notice of dissent, in which case the
    corporation is deemed to consent to the withdrawal and the
    shareholders full rights are reinstated; or



| |     |                                                                                                                                                                                                                                                                         
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | retain a status as a claimant against the
    corporation, to be paid as soon as the corporation is lawfully
    able to do so or, in a liquidation, to be ranked subordinate to
    the rights of creditors of the corporation but in priority to
    its shareholders.

(30) Idem A corporation shall not make a payment
to a dissenting shareholder under this section if there are
reasonable grounds for believing that,



| |     |                                                                                                            
| | --- | -----------------------------------------------------------------------------------------------------------
| | (a) | the corporation is or, after the payment, would
    be unable to pay its liabilities as they become due; or



| |     |                                                                                                                      
| | --- | ---------------------------------------------------------------------------------------------------------------------
| | (b) | the realizable value of the corporations
    assets would thereby be less than the aggregate of its
    liabilities.

(31) Court order Upon application by a corporation that
proposes to take any of the actions referred to in subsection
(1) or (2), the court may, if satisfied that the proposed
action is not in all the circumstances one that should give rise
to rights arising under subsection (4), by order declare that
those rights will not arise upon the taking of the proposed
action, and the order may be subject to compliance upon such
terms and conditions as the court thinks fit and, if the
corporation is an offering corporation, notice of any such
application and a copy of any order made by the court upon such
application shall be served upon the Commission.

(32) Commission may appear The Commission may appoint counsel to
assist the court upon the hearing of an application under
subsection (31), if the corporation is an offering corporation.

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Appendix F

(MERRILL LYNCH LOGO)

December 22, 2004

Special Committee of the Board of Directors

Masonite International Corporation


1600 Britannia Road East


Mississauga, ON


L4W 1J2


Members of the Special Committee of the Board:

Masonite International Corporation (the
Company) and Kohlberg Kravis Roberts & Co. (the
Acquiror) propose to enter into a definitive
combination agreement (the Combination Agreement)
pursuant to which the Acquiror would acquire all of the
outstanding common shares of the Company (the Company
Shares) for CDN$40.20 per share in cash (the
Consideration) through a plan of arrangement (the
Transaction).

You have asked us whether, in our opinion, the
Consideration to be received by the holders of the Company
Shares pursuant to the Transaction is fair from a financial
point of view to such holders.

In arriving at the opinion set forth below, we
have, among other things:



| |     |                                                                                                                                                                                                              
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Reviewed certain publicly available business and
    financial information relating to the Company that we deemed to
    be relevant;                                                                        
|
| | (2) | Reviewed certain information, including financial
    forecasts, relating to the business, earnings, cash flow,
    assets, liabilities and prospects of the Company furnished to us
    by the Company;     
|
| | (3) | Conducted discussions with members of senior
    management and representatives of the Company concerning the
    matters described in clauses 1 and 2 above;                                                
|
| | (4) | Reviewed the market prices and valuation
    multiples for the Company Shares and compared them with those of
    certain publicly traded companies that we deemed to be relevant;                           
|
| | (5) | Reviewed the results of operations of the Company
    and compared them with those of certain publicly traded
    companies that we deemed to be relevant;                                                   
|
| | (6) | Compared the proposed financial terms of the
    Transaction with the financial terms of certain other
    transactions that we deemed to be relevant;                                                       
|
| | (7) | Participated in certain discussions with
    representatives of the Special Committee with regard to the
    Transaction;                                                                                    
|
| | (8) | Reviewed a draft dated December 22, 2004 of
    the Combination Agreement; and                                                                                                                               
|
| | (9) | Reviewed such other financial studies and
    analyses and took into account such other matters as we deemed
    necessary, including our assessment of general economic, market
    and monetary conditions.

In preparing our opinion, we have assumed and
relied on the accuracy and completeness of all information
supplied or otherwise made available to us, discussed with or
reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such
information or undertaken an independent evaluation or appraisal
of any of the assets or liabilities of the Company or been
furnished with any such evaluation or appraisal, nor have we
evaluated the solvency or fair value of the Company under any
state or federal laws relating to bankruptcy, insolvency or
similar matters. In addition, we have not assumed any obligation
to conduct, nor have we conducted, any physical inspection of
the properties or facilities of the Company. With respect to the
financial forecast information furnished to or discussed with us
by the Company, we have assumed that they have been reasonably
prepared and

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##### 



reflect the best currently available estimates
and judgment of the Companys management as to the expected
future financial performance of the Company. We have also
assumed that the final form of the Agreement will be
substantially similar to the last draft reviewed by us.


Our opinion is necessarily based upon market,
economic and other conditions as they exist and can be evaluated
on, and on the information made available to us as of, the date
hereof.

In connection with the preparation of this
opinion, we have not solicited third-party indications of
interest for the acquisition of all or any part of the Company.

We are acting as financial advisor to the Special
Committee in connection with the Transaction and will receive a
fee from the Company for our services. In addition, the Company
has agreed to indemnify us for certain liabilities arising out
of our engagement. We are currently and have, in the past,
provided financial advisory and financing services to the
Company and/or its affiliates and may continue to do so and have
received, and may receive, fees for the rendering of such
services. We have, in the past, provided financial advisory and
financing services to the Acquiror and/or its affiliates and
have received fees for the rendering of such services. In
addition, in the ordinary course of our business, we may
actively trade the Company Shares and other securities of the
Company for our own account and for the accounts of customers
and, accordingly, may at any time hold a long or short position
in such securities.

This opinion is for the use and benefit of the
Special Committee and the Board of Directors of the Company. Our
opinion does not address the merits of the underlying decision
by the Company to engage in the Transaction and does not
constitute a recommendation to any shareholder as to how such
shareholder should vote with respect to the Transaction or any
matter related thereto. In addition, you have not asked us to
address, and this opinion does not address, the fairness to, or
any other consideration of, the holders of any class of
securities, creditors or other constituencies of the Company,
other than the holders of the Company Shares.

We are not expressing any opinion herein as to
the prices at which the Company Shares will trade following the
announcement of the Transaction.

On the basis of and subject to the foregoing, we
are of the opinion that, as of the date hereof, the
Consideration to be received by the holders of the Company
Shares pursuant to the Transaction is fair from a financial
point of view to the holders of such shares.



| |                                                       
| | ------------------------------------------------------
| | Very truly yours,                                     
|
| | Merrill Lynch, Pierce, Fenner & Smith
    Incorporated
| |                                                       
| | MERRILL LYNCH, PIERCE, FENNER & SMITH                 
| | INCORPORATED                                          

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