Exhibit 10.1

 

February 23, 2006

 

Walter Industries, Inc.

4211 West Boy Scout Boulevard

Tampa, Florida 33607

Attention:  General Counsel

 

Mueller Water Products, Inc.

4211 West Boy Scout Boulevard

Tampa, Florida 33607

Attention: Jeffery W. Sprick

 

Ladies and Gentlemen:

 

Reference is made to the Agreement and Plan of Merger dated as of June 17, 2005
(as amended, the “Merger Agreement”) among Mueller Water Products, Inc., Walter
Industries, Inc., JW MergerCo, Inc. and DLJ Merchant Banking II, Inc., as the
Stockholders’ Representative. Capitalized terms used but not defined herein
shall have the meanings specified in the Merger Agreement.

 

Following the delivery of the Closing Statements by the Surviving Corporation,
and delivery of a notice of disagreement therewith by the Stockholders’
Representative, the parties hereto have resolved all disputed items and amounts
required to determine Final Closing Cash and Final Working Capital and have
agreed that the Shortfall Amount is $10,527,000. Accordingly, the parties hereto
have agreed that in accordance with the Escrow Agreement, an officer of Buyer
and an officer of the Stockholders’ Representative shall, contemporaneously with
the execution of this letter agreement, execute and deliver the notice attached
as Annex A hereto to the Escrow Agent, to direct the Escrow Agent to release and
distribute all funds remaining in the Escrow Account in accordance with the
instructions set forth on such notice.

 

Upon the completion of the payments set forth above, the parties confirm that
all obligations of the parties under Sections 2.12 and 2.13 of the Merger
Agreement shall have been performed and satisfied in full.

 

This letter agreement shall not constitute an amendment or waiver of any term or
condition of the Merger Agreement or any other Transaction Agreement, and all of
such terms and conditions shall remain in full force and effect. This letter
agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts entered into and performed entirely in
such state. This letter agreement may be signed in any number of counterparts,
each of which shall be deemed an original, and all such counterparts shall
together constitute one and the same instrument.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this letter agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

 

 

 

DLJ MERCHANT BANKING II, INC.,

 

as the Stockholders’ Representative

 

 

 

 

 

By:

  /s/ MICHAEL S. ISIKOW

 

 

 

Name: Michael S. Isikow

 

 

Title:   Vice President

 

 

Agreed and Acknowledged

 

WALTER INDUSTRIES, INC.

 

 

By:

  /s/  JOSEPH J. TROY

 

 

Name: Joseph J. Troy

 

Title:   Senior Vice President

 

 

MUELLER WATER PRODUCTS, INC.

 

 

By:

  /s/  VICTOR P. PATRICK

 

 

Name: Victor P. Patrick

 

Title:   Vice President

 

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Annex A

 

February 23, 2006

 

The Bank of New York

101 Barclay Street - 8W/Escrow

New York, NY 10286

Attention:  Carlos Luciano

 

Ladies and Gentlemen:

 

Reference is made to the Escrow Agreement dated as of October 3, 2005 among
Mueller Water Products, Inc., Walter Industries, Inc., DLJ Merchant Banking II,
Inc., as the Stockholders’ Representative, and The Bank of New York (the “Escrow
Agreement”). Capitalized terms used but not defined herein shall have the
meanings specified in the Escrow Agreement. This certificate is executed by
Buyer and the Stockholders’ Representative pursuant to Section 5(a) of the
Escrow Agreement.

 

The Escrow Agent is hereby directed to promptly release and deliver all funds
remaining in the Escrow Account as follows:

 

a)                                     $11,223,543.07, plus 26.975% of all
interest earned on the Escrow Amount to the date of payment, to the
Stockholders’ Representative, who shall distribute such amount to the DLJ
Entities in accordance with the provisions of the Merger Agreement:

 

Bank:

 

Citibank, N.A.

 

 

399 Park Avenue

 

 

New York, NY 10036

ABA:  021000089

Account Name:  DLJ Merchant Banking II, Inc.

Account Number:  30554143

Reference:  Mueller Water Products

 

b)                                    $3,228,793.03, plus 7.760% of all interest
earned on the Escrow Amount to the date of payment, to the Company, which shall
distribute such amount to the Stockholders and holders of Company Warrants (in
each case, other than the DLJ Entities), subject to the deduction of the
applicable withholding taxes, in accordance with the provisions of the Merger
Agreement:

 

Bank:

 

Mellon Bank

 

 

Pittsburgh, PA

ABA:

 

043000261

Account Name:  Mueller Water Products, Inc.

Account Number: 077-1243

 

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c)                                     $20,663.90 to Davis Polk & Wardwell in
respect of Transaction Expenses incurred after the Effective Time (in each case,
as defined in the Merger Agreement); and

 

Bank:

 

JPMorgan Chase Bank

 

 

500 Stanton Christiana Rd.

 

 

Newark, DE  19713

ABA:  021 000021

Account Name:  Davis Polk & Wardwell

Account Number:  001533316

Reference:  Mueller Water Products 14530/006

 

d)                                    $10,527,000, plus 65.265% of all interest
earned on the Escrow Amount to the date of payment, to:

 

Bank:

 

Bank of America

 

 

Charlotte, NC

ABA:

 

111000012

Account Name:  Walter Industries, Inc.

Account Number:  3750658039

 

The Escrow Agreement shall terminate in accordance with its terms when the
Escrow Agent shall have released all amounts in the Escrow Account pursuant to
the instructions set forth above.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this certificate to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

 

DLJ MERCHANT BANKING II, INC.,

 

as the Stockholders’ Representative

 

 

 

By:

  /s/ MICHAEL S. ISIKOW

 

 

 

Name:

Michael S. Isikow

 

 

Title:

Vice President

 

 

 

 

 

WALTER INDUSTRIES, INC.

 

 

 

By:

  /s/ JOSEPH J. TROY

 

 

 

Name:

Joseph J. Troy

 

 

Title:

Senior Vice President

 

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