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EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT
THIS EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT is made, entered into, and
is effective as of the 15th day of September, 2008 (hereinafter referred to as
the “Effective Date”), by and between Mueller Water Products, Inc. (the
“Company”), a Delaware corporation, and Marietta Edmunds Zakas (the
“Executive”). Executive acknowledges and represents that any and all prior
agreements for change in control severance including, without limitation the
agreement dated March 29, 2007 between Executive and the Company, are terminated
and replaced entirely by this Agreement.
WHEREAS, the Executive is currently employed by the Company and possesses
considerable experience and knowledge of the business and affairs of the Company
concerning its policies, methods, personnel, and operations; and
WHEREAS, the Company is desirous of assuring insofar as possible, that it will
continue to have the benefit of the Executive’s services; and the Executive is
desirous of having such assurances; and
WHEREAS, the Company recognizes that circumstances may arise in which a Change
in Control of the Company occurs, through acquisition or otherwise, thereby
causing uncertainty of employment without regard to the Executive’s competence
or past contributions. Such uncertainty may result in the loss of the valuable
services of the Executive to the detriment of the Company and its shareholders;
and
WHEREAS, both the Company and the Executive are desirous that any proposal for a
Change in Control or acquisition will be considered by the Executive objectively
and with reference only to the business interests of the Company and its
shareholders; and
WHEREAS, the Executive will be in a better position to consider the Company’s
best interests if the Executive is afforded reasonable security, as provided in
this Agreement, against altered conditions of employment which could result from
any such Change in Control or acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements of the parties set forth in this Agreement, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
Article 1. Definitions
Wherever used in this Agreement, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:
(a)
“Agreement” means this Executive Change-in-Control Severance Agreement.

(b)
“Base Salary” means, at any time, the then regular annual rate of pay which the
Executive is receiving as annual salary, excluding amounts: (i) received under
short-term or long-term incentive or other bonus plans, regardless of whether or
not the amounts are deferred, or (ii) designated by the Company as payment
toward reimbursement of expenses.

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(c)
“Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of
the General Rules and Regulations under the Exchange Act.

(d)
“Board” means the Board of Directors of the Company.

(e)
“Cause” shall be determined solely by the Committee in the exercise of good
faith and reasonable judgment, and shall mean the occurrence of any one or more
of the following:

(i)
The Executive’s conviction or guilty plea of a felony or conviction or guilty
plea of any crime involving fraud or dishonesty;

(ii)
The Executive’s willful and continued refusal to perform the duties of his or
her position in all material respects (other than any such failure resulting
from the Executive’s incapacity due to physical or mental illness), that
continues for more than 15 business days after the Company gives the Executive
written notice of the failure, specifying what duties the Executive failed to
perform and an opportunity to cure;

(iii)
fraudulent preparation of financial information of the Company; or

(iv)
The Executive’s willful engagement in conduct that is demonstrably and
materially injurious to the Company, monetarily or otherwise, provided that no
act or failure to act on the Executive’s part shall be deemed “willful” unless
done, or omitted to be done, by the Executive not in good faith and without
reasonable belief that the action or omission was in the best interests of the
Company.

(f)
“Change in Control” of the Company shall mean the occurrence of any one (1) or
more of the following events:

(i)
Any Person (other than the Company or any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, and any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
such proportionately owned corporation) is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing more than
thirty percent (30%) of the combined voting power of the Company’s then
outstanding securities;

(ii)
During any period of not more than thirty-six (36) consecutive months,
individuals who at the beginning of such period constitute the Board of
Directors of the Company, and any new director whose election by the Board or
nomination for election by the Company’s stockholders was approved by a vote of
at least a majority (rounded up to the nearest whole number) of the directors
then still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof;

(iii)
The consummation of a merger or consolidation of the Company with any
other corporation, other than: (i) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than sixty-six and
two-thirds percent (66-2/3%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar

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transaction) in which no Person acquires more than thirty percent (30%) of the
combined voting power of the Company’s then outstanding securities; or
(iv)
The Company’s stockholders approve a plan or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets
(or any transaction or series of transactions having a similar effect).

(g)
“Code” means the Internal Revenue Code of 1986, as amended.

(h)
“Committee” means the Compensation Committee of the Board of Directors of the
Company, or, if no Compensation Committee exists, then the full Board of
Directors of the Company, or a committee of Board members, as appointed by the
full Board to administer this Agreement.

(i)
“Company” means Mueller Water Products, Inc., a Delaware corporation (including
any and all subsidiaries), or any successor thereto as provided in Article 9
herein.

(j)
“Disability” or “Disabled” means that Executive has been physically or mentally
incapacitated so as to render Executive incapable of performing the essential
functions of any substantial gainful activity, or Executive has received income
replacement benefits under a Company plan for at least three months, and, in
either instance, that incapacity is expected to result in death or to last for a
continuous period of at least 12 months. Executive’s receipt of disability
benefits under the Company’s long-term disability plan or receipt of Social
Security disability benefits shall be deemed conclusive evidence of Disability
for purposes of this Agreement.

(k)
“Effective Date” means the date this Agreement is approved by the Board, or such
other date as the Board shall designate in its resolution approving this
Agreement, and as specified in the opening sentence of this Agreement.

(l)
“Effective Date of Termination” means the date on which a Qualifying Termination
occurs, as provided in Section 2.2 herein, which triggers the payment of
Severance Benefits hereunder.

(m)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(n)
“Federal Funds Rate” shall mean the “Federal Funds Rate” as issued in the Money
Rates column of The Wall Street Journal.

(o)
“Good Reason” means, without the Executive’s express written consent, the
occurrence after a Change in Control of the Company of any one (1) or more of
the following to the extent that there is, or would be if not corrected, a
material negative change in the Executive’s employment relationship with the
Company:

(i)
The assignment of the Executive to duties materially inconsistent with the
Executive’s authorities, duties, responsibilities, and status as an executive
and/or officer of the Company, or a material reduction or alteration in the
nature or status of the Executive’s authorities, duties, or responsibilities
from those in effect as of ninety (90) calendar days prior to the Change in
Control, other than an insubstantial and inadvertent act that is remedied by the
Company promptly after receipt of notice thereof given by the Executive;

(ii)
The Company’s requiring the Executive to be based at a location in excess of
fifty (50) miles from the location of the Executive’s principal job location or
office immediately prior to the Change in Control; except for required travel on
the Company’s business to

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an extent substantially consistent with the Executive’s then present business
travel obligations;
(iii)
A reduction by the Company of the Executive’s Base Salary in effect on the
Effective Date hereof, or as the same shall be increased from time to time;

(iv)
The failure of the Company to continue in effect any of the Company’s short- and
long-term incentive compensation plans, or employee benefit or retirement plans,
policies, practices, or other compensation arrangements in which the Executive
participates unless such failure to continue the plan, policy, practice, or
arrangement pertains to all plan participants generally; or the failure by the
Company to continue the Executive’s participation therein on substantially the
same basis, both in terms of the amount of benefits provided and the level of
the Executive’s participation relative to other participants, as existed
immediately prior to the Change in Control of the Company;

(v)
The failure of the Company to obtain a satisfactory agreement from any successor
to the Company to assume and agree to perform the Company’s obligations under
this Agreement, as contemplated in Article 9 herein; and

(vi)
A material breach of this Agreement by the Company which is not remedied by the
Company within ten (10) business days of receipt of written notice of such
breach delivered by the Executive to the Company.

Unless the Executive becomes Disabled, the Executive’s right to terminate
employment for Good Reason shall not be affected by the Executive’s incapacity
due to physical or mental illness. The Executive’s continued employment shall
not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason herein.
(p)
“Notice of Termination” shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon, and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated.

(q)
“Notice of Termination for Good Reason” shall mean a notice that (i) indicates
the specific termination provision or provisions relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
Termination for Good Reason and (iii) indicates a date of termination of
employment. The failure by Executive to set forth in the Notice of Termination
for Good Reason any facts or circumstances which contribute to the showing of
Good Reason shall not waive any right of Executive hereunder or preclude
Executive from asserting such fact or circumstance in enforcing his rights
hereunder. The Notice of Termination for Good Reason shall provide for a date of
termination of employment not less than thirty (30) nor more than sixty (60)
days after the date such Notice of Termination for Good Reason is given,
provided that in the case of the events set forth in Article I, Section (o)
6(b)(i) or (ii), the date may be not less than twenty (20) days after the giving
of such notice.

(r)
“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group”
as defined in Section 13(d).

(s)
“Qualifying Termination” means the Executive’s “separation from service” (as
such term is used in Code Section 409A) upon any of the events described in
Section 2.2 herein, the occurrence of which triggers the payment of Severance
Benefits hereunder.

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(t)
“Severance Benefits” mean the payment of severance compensation as provided in
Section 2.3 herein.

Article 2. Severance Benefits
2.1
Right to Severance Benefits. The Executive shall be entitled to receive from the
Company Severance Benefits as described in Section 2.3 herein, if there has been
a Change in Control of the Company and if, within twenty-four (24) calendar
months thereafter, the Executive’s employment with the Company shall end for any
reason specified in Section 2.2 herein as being a Qualifying Termination.

The Executive shall not be entitled to receive Severance Benefits if he is
terminated for Cause, or if his employment with the Company ends due to death,
Disability, voluntary normal retirement (as defined under the then established
rules of the Company’s tax-qualified retirement plan), or due to a voluntary
termination of employment for reasons other than as specified in Section 2.2(b)
herein.
If benefits are triggered hereunder, and under another Company-related severance
plan or program, the benefits under this Agreement shall be paid under the terms
hereof, and any duplicative benefits under such other plan or program shall be
forfeited.
2.2
Qualifying Termination. The occurrence of any one of the following events within
twenty-four (24) calendar months after a Change in Control of the Company shall
trigger the payment of Severance Benefits to the Executive under this Agreement:

(a)
The Company’s involuntary termination of the Executive’s employment without
Cause; and

(b)
The Executive’s voluntary employment termination for Good Reason.

For purposes of this Agreement, a Qualifying Termination shall not include a
termination of employment by reason of death, Disability, or voluntary normal
retirement (as such term is defined under the then established rules of the
Company’s tax-qualified retirement plan), the Executive’s voluntary termination
for reasons other than as specified in Section 2.2(b) herein, or the Company’s
involuntary termination for Cause.
2.3
Description of Severance Benefits. In the event the Executive becomes entitled
to receive Severance Benefits, as provided in Sections 2.1 and 2.2 herein, the
Company shall pay to the Executive and provide him with the following Severance
Benefits:

(a)
A lump-sum amount equal to the Executive’s unpaid Base Salary, accrued vacation
pay, unreimbursed business expenses, and all other items earned by and owed to
the Executive through and including the Effective Date of Termination.

(b)
A lump-sum amount equal to the Executive’s annual bonus award earned as of the
Effective Date of Termination, based on actual year-to-date performance, as
determined at the Committee’s discretion (excluding any special bonus payments).
This payment will be in lieu of any other payment to be made to the Executive
under the annual bonus plan in which the Executive is then participating for the
plan year.

(c)
An aggregate amount equal to one and one-half (1.5) multiplied by the sum of the
following: (i) the higher of: (A) the Executive’s annual rate of Base Salary in
effect upon

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the Effective Date of Termination, or (B) the Executive’s annual rate of Base
Salary in effect on the date of the Change in Control; and (ii) the average of
the actual annual bonus earned (whether or not deferred) by the Executive under
the annual bonus plan (excluding any special bonus payments) in which the
Executive participated in the three (3) years preceding the year in which the
Executive’s Effective Date of Termination occurs. If the Executive has less than
three (3) years of annual bonus participation preceding the year in which the
Executive’s Effective Date of Termination occurs, then the Executive’s annual
target bonus established under the annual bonus plan in which the Executive is
then participating for the bonus plan year in which the Executive’s Effective
Date of Termination occurs shall be used for each year that the Executive did
not participate in the annual bonus plan, up to a maximum of three (3) years, to
calculate the three (3) year average bonus payment. Payments shall be made in
eighteen (18) monthly installments. The first installment shall be equal to
1/18th of the aggregate amount, and shall be paid within sixty (60) days
following the Effective Date of Termination, and subsequent installments shall
be paid on the last business day of each succeeding month; provided that
Executive’s entitlement to each such installment shall be contingent upon
execution (and non-revocation) by Executive of a release as described in Section
10.1 before the payment date under this Agreement for each such installment.
[Each monthly installment thereafter shall increase by a percentage equal to
1/12th of the Federal Funds rate in effect on the last day of the month
preceding payment.] All payments are subject to applicable taxes.
(d)
A lump-sum amount equal to one-half (.5) multiplied by the sum of the following:
(i) the higher of: (A) the Executive’s annual rate of Base Salary in effect upon
the Effective Date of Termination, or (B) the Executive’s annual rate of Base
Salary in effect on the date of the Change in Control; and (ii) the average of
the actual annual bonus earned (whether or not deferred) by the Executive under
the annual bonus plan (excluding any special bonus payments) in which the
Executive participated in the three (3) years preceding the year in which the
Executive’s Effective Date of Termination occurs. If the Executive has less than
three (3) years of annual bonus participation preceding the year in which the
Executive’s Effective Date of Termination occurs, then the Executive’s annual
target bonus established under the annual bonus plan in which the Executive is
then participating for the bonus plan year in which the Executive’s Effective
Date of Termination occurs shall be used for each year that the Executive did
not participate in the annual bonus plan, up to a maximum of three (3) years, to
calculate the three (3) year average bonus payment. Such amount shall be in
consideration for the Executive entering into a noncompete agreement as
described in Article 4 herein.

(e)
[Intentionally Omitted]

(f)
Upon the occurrence of a change in control, an immediate full vesting and lapse
of all restrictions on any and all outstanding equity-based long-term
incentives, including but not limited to stock options and restricted stock
awards held by the Executive. This provision shall override any conflicting
language contained in the Executive’s respective Award Agreements.

(g)
To the extent that Executive’s employer contribution account, other than for
matching contributions, in the Mueller Water Products, Inc. Retirement Savings
Plan (“RSP”) is forfeited upon termination of employment, a lump sum amount
equal to the amounts forfeited under the RSP will be paid, subject to applicable
taxes, during the sixty (60) day period following the Effective Date of
Termination.

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(h)
Continuation for twenty-four (24) months of the Executive’s medical insurance
and life insurance coverage. These benefits shall be provided by the Company to
the Executive beginning immediately upon the Effective Date of Termination. Such
benefits shall be provided to the Executive at the same coverage level and cost
to the Executive as in effect immediately prior to the Executive’s Effective
Date of Termination.

The Executive shall qualify for full COBRA health benefit continuation coverage
beginning upon the expiration of the aforementioned twenty-four (24) month
period.
Notwithstanding the above, these medical and life insurance benefits shall be
discontinued prior to the end of the stated continuation period in the event the
Executive receives substantially similar benefits from a subsequent employer, as
determined solely by the Committee in good faith. For purposes of enforcing this
offset provision, the Executive shall be deemed to have a duty to keep the
Company informed as to the terms and conditions of any subsequent employment and
the corresponding benefits earned from such employment, and shall provide, or
cause to provide, to the Company in writing correct, complete, and timely
information concerning the same.
(i)
From Executive’s date of termination of employment until the earlier of (i) 24
months following such date of termination or (ii) the date immediately prior to
the date of Executive’s employment with a subsequent employer, the Company will
provide Executive with outplacement services from a nationally recognized
outplacement firm selected by Executive, subject to the limits described in this
subsection. The aggregate amount paid by the Company for outplacement services
will not exceed an amount equal to 35% of Executive’s annual rate of base salary
as of the date of termination of employment (the “Total Outplacement Value”).
Further, the cost for such services paid by the Company during any calendar year
will not exceed the number of months in that calendar year during which the
Executive is entitled to this benefit multiplied by 1/24 of the Total
Outplacement Value.

2.4
Termination for Total and Permanent Disability. Following a Change in Control,
if the Executive’s employment is terminated with the Company due to Disability,
the Executive’s benefits shall be determined in accordance with the Company’s
retirement, insurance, and other applicable plans and programs then in effect.

2.5
Termination for Retirement or Death. Following a Change in Control, if the
Executive’s employment with the Company is terminated by reason of his voluntary
normal retirement (as defined under the then established rules of the Company’s
tax-qualified retirement plan), or death, the Executive’s benefits shall be
determined in accordance with the Company’s retirement, survivor’s benefits,
insurance, and other applicable programs then in effect.

2.6
Termination for Cause or by the Executive Other Than for Good Reason. Following
a Change in Control, if the Executive’s employment is terminated either: (i) by
the Company for Cause; or (ii) voluntarily by the Executive for reasons other
than as specified in Section 2.2(b) herein, the Company shall pay the Executive
his full Base Salary at the rate then in effect, accrued vacation, and other
items earned by and owed to the Executive through the Effective Date of
Termination, plus all other amounts to which the Executive is entitled under any
compensation plans of the Company at the time such payments are due, and the
Company shall have no further obligations to the Executive under this Agreement.

2.7
Notice of Termination. Any termination of the Executive’s employment by the
Company for Cause shall be communicated by Notice of Termination to the other
party. Termination by the

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Executive for Good Reason requires delivery of a Notice of Termination by
Executive for Good Reason given to the Company’s Senior Vice President of Human
Resources within ninety (90) days of the occurrence of the event giving rise to
the Notice, unless such circumstances are substantially corrected prior to the
date of termination specified in the Notice of Termination for Good Reason.
Article 3. Form and Timing of Severance Benefits
3.1
Form and Timing of Severance Benefits. The Severance Benefits described in
Sections 2.3(a), 2.3(b), and 2.3(d) herein shall be paid in cash to the
Executive in a single lump sum as soon as practicable following the Effective
Date of Termination, but in no event beyond ten (10) calendar days from such
date. Notwithstanding anything to the contrary herein, if Executive is a
“specified employee” under Section 409A of the Code, then any payment(s) to the
Executive described under Section 2.3 herein upon his or her termination of
employment that (A) constitute “deferred compensation to an Executive under
Section 409A; (B) are not exempt from Section 409A on account of separation of
service (within the meaning of Section 409A) and (C) are otherwise payable
within 6 months after Executive’s termination of employment shall instead be
made on the date 6 months and 1 day after such termination of employment, and
such payment(s) shall be increased by an amount equal to interest on such
payment(s) at a rate of interest equal to the Federal Funds Rate in effect as of
the date of termination of employment from the date on which such payment(s)
would have been made in the absence of this provision and the payment date
described in this sentence.

3.2
Withholding of Taxes. The Company shall withhold from any amounts payable under
this Agreement all federal, state, city, or other taxes as legally shall be
required.

Article 4. Noncompetition and Confidentiality
In the event the Executive becomes entitled to receive Severance Benefits as
provided in Section 2.3 herein, the following shall apply:
(a)
Noncompetition. During the term of employment and for a period of twelve (12)
months after the Effective Date of Termination, the Executive shall not: (i)
directly or indirectly act in concert or conspire with any person employed by
the Company in order to engage in or prepare to engage in or to have a financial
or other interest in any business or any activity which he knows (or reasonably
should have known) to be directly competitive with the business of the Company
as then being carried on; or (ii) serve as an employee, agent, partner,
shareholder, director or consultant for, or in any other capacity participate,
engage, or have a financial or other interest in any business or any activity
which he knows (or reasonably should have known) to be directly competitive with
the business of the Company as then being carried on (provided, however, that
notwithstanding anything to the contrary contained in this Agreement, the
Executive may own up to two percent (2%) of the outstanding shares of the
capital stock of a company whose securities are registered under Section 12 of
the Securities Exchange Act of 1934).

(b)
Confidentiality. The Company has advised the Executive and the Executive
acknowledges that it is the policy of the Company to maintain as secret and
confidential all Protected Information (as defined below), and that Protected
Information has been and will be developed at substantial cost and effort to the
Company. All Protected Information shall remain confidential permanently and no
Executive shall at any time, directly or indirectly, divulge, furnish, or make
accessible to any person, firm, corporation, association, or other entity
(otherwise than as may be required in the regular course of the Executive’s
employment with the Company), nor use in any manner, either during the term of
employment or after termination, at any time, for any reason, any Protected
Information, or cause any such information of the Company to enter the public
domain.

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For purposes of this Agreement, “Protected Information” means trade secrets,
confidential and proprietary business information of the Company, and any other
information of the Company, including, but not limited to, customer lists
(including potential customers), sources of supply, processes, plans, materials,
pricing information, internal memoranda, marketing plans, internal policies, and
products and services which may be developed from time to time by the Company
and its agents or employees, including the Executive; provided, however, that
information that is in the public domain (other than as a result of a breach of
this Agreement), approved for release by the Company or lawfully obtained from
third parties who are not bound by a confidentiality agreement with the Company,
is not Protected Information.
(c)
Nonsolicitation. During the term of employment and for a period of twelve (12)
months after the Effective Date of Termination, the Executive shall not employ
or retain or solicit for employment or arrange to have any other person, firm,
or other entity employ or retain or solicit for employment or otherwise
participate in the employment or retention of any person who is an employee or
consultant of the Company.

(d)
Cooperation. Executive agrees to cooperate with the Company and its attorneys in
connection with any and all lawsuits, claims, investigations, or similar
proceedings that have been or could be asserted at any time arising out of or
related in any way to Executive’s employment by the Company or any of its
subsidiaries.

(e)
Nondisparagement. At all times, the Executive agrees not to disparage the
Company or otherwise make comments harmful to the Company’s reputation.

Article 5. Excise Tax Equalization Payment
5.1
Excise Tax Equalization Payment. If any portion of the Severance Benefits or any
other payment under this Agreement, or under any other agreement with, or plan
of the Company (in the aggregate, “Total Payments”) would constitute an “excess
parachute payment,” such that a golden parachute excise tax is due under
Internal Revenue code Sections 280G and 4999, the Company shall provide to the
Executive, in cash, an additional payment in an amount sufficient to cover the
full cost of any excise tax and all of the Executive’s additional federal,
state, and local income, excise, and employment taxes that arise on this
additional payment (cumulatively, the “Full Gross-Up Payment”), such that the
Executive is in the same after-tax position as if he had not been subject to the
excise tax. For this purpose, the Executive shall be deemed to be in the highest
marginal rate of federal, state, and local income taxes in the state and
locality of the Executive’s residence on the Effective Date of Termination. This
payment shall be made as soon as possible following the date of the Executive’s
Qualifying Termination, but in no event later than ten (10) calendar days from
such date. Notwithstanding the foregoing, this payment must be paid to Executive
by the end of the calendar year next following the calendar year in which the
Executive remits the related taxes.

For purposes of this Agreement, the term “excess parachute payment” shall have
the meaning assigned to such term in Section 280G of the Internal Revenue Code,
as amended (the “Code”), and the term “excise tax” shall mean the tax imposed on
such excess parachute payment pursuant to Sections 280G and 4999 of the Code.
5.2
Subsequent Recalculation. In the event the Internal Revenue Service subsequently
adjusts the excise tax computation herein described, the Company shall reimburse
the Executive for the full amount necessary to make the Executive whole on an
after-tax basis (less any amounts received by the Executive that the Executive
would not have received had the computations initially been computed as
subsequently adjusted), including the value of any underpaid excise tax, and any

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related interest and/or penalties due to the Internal Revenue Service. This
payment shall be made as soon as possible after such amount is determined.
Notwithstanding the foregoing, this payment must be paid to Executive by the end
of the calendar year next following the calendar year in which the Executive
remits the related taxes.
Article 6. The Company’s Payment Obligation
6.1
Payment Obligations Absolute. The Company’s obligation to make the payments and
the arrangements provided for herein shall be absolute and unconditional, and
shall not be affected by any circumstances including, without limitation, any
offset, counterclaim, recoupment, defense, or other right which the Company may
have against the Executive or anyone else. All amounts payable by the Company
hereunder shall be paid without notice or demand. Each and every payment made
hereunder by the Company shall be final, and the Company shall not seek to
recover all or any part of such payment from the Executive or from whomsoever
may be entitled thereto, for any reasons whatsoever.

The Executive shall not be obligated to seek other employment in mitigation of
the amounts payable or arrangements made under any provision of this Agreement,
and the obtaining of any such other employment shall in no event effect any
reduction of the Company’s obligations to make the payments and arrangements
required to be made under this Agreement, except to the extent provided in
Sections 2.3(g) and 2.3(h) herein.
6.2
Contractual Rights to Benefits. This Agreement establishes and vests in the
Executive a contractual right to the benefits to which he is entitled hereunder.
However, nothing herein contained shall require or be deemed to require, or
prohibit or be deemed to prohibit, the Company to segregate, earmark, or
otherwise set aside any funds or other assets, in trust or otherwise, to provide
for any payments to be made or required hereunder.

Article 7. Term of Agreement
This Agreement will commence on the Effective Date and shall continue in effect
for two (2) full years. However, at the end of such two (2) year period and, if
extended, at the end of each additional year thereafter, the term of this
Agreement shall be extended automatically for one (1) additional year, unless
either party delivers written notice six (6) months prior to the end of such
term, or extended term, stating that the Agreement will not be extended. In such
case, the Agreement will terminate at the end of the term, or extended term,
then in progress.
However, in the event of a Change in Control of the Company, the term of this
Agreement shall automatically be extended for two (2) years from the date of the
Change in Control.
Article 8. Legal Remedies
8.1
Payment of Legal Fees. If Executive incurs reasonable legal fees or other
expenses (including expert witness and accounting fees) on or after the date of
the Company’s announcement of a Change in Control and within a reasonable time
after the Change in Control occurs, in an effort to interpret this Agreement or
to secure, preserve, establish entitlement to, or obtain benefits under this
Agreement (including the fees and other expenses of Executive’s legal counsel),
the Company shall, regardless of the outcome of such effort, reimburse Executive
on a current basis for such fees and expenses. Reimbursement of legal fees and
expenses shall be made monthly within ten (10) days after Executive’s written
submission of a request for reimbursement together with evidence that such fees
and expenses were incurred. If Executive does not prevail (after exhaustion of
all available judicial remedies) in respect of a claim by Executive or by the

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Company hereunder, and the Company establishes before a court of competent
jurisdiction, by clear and convincing evidence, that Executive had no reasonable
basis for his claim hereunder, or for his response to the Company’s claim
hereunder, or acted in bad faith, no further reimbursement for legal fees and
expenses shall be due to Executive in respect of such claim and Executive shall
refund any amounts previously reimbursed hereunder with respect to such claim.
Notwithstanding the foregoing, any reimbursement payment must be paid to
Executive by the end of the calendar year next following the calendar year in
which the Executive incurs the related fees or expenses.
8.2.
Dispute Resolution; Mutual Agreement to Arbitrate.

(a)
Executive and Employer agree that, except as otherwise provided in this
Agreement, final and binding arbitration shall be the exclusive remedy for any
controversy, dispute, or claim arising out of or relating to this Agreement or
Executive’s employment with Employer, including Executive’s hire, treatment in
the workplace, or termination of employment. For example, if Executive’s
employment with Employer is terminated and he contends that the termination
violates any statute, contract or public policy, then Executive will submit the
matter to arbitration for resolution, in lieu of any court or jury trial to
which Executive would otherwise might be entitled.

(b)
This Section covers all common law and statutory claims, including, but not
limited to, any claim for breach of contract (including this Agreement) and for
violation of laws forbidding discrimination on the basis of race, sex, color,
religion, age, national origin, disability, or any other basis covered by
applicable federal, state, or local law, and includes claims against Employer
and/or any parents, affiliates, owners, officers, directors, employees, agents,
general partners or limited partners of Employer, to the extent such claims
involve, in any way, this Agreement or Executive’s employment with Employer.
This Section covers all judicial claims that could be brought by either party to
this Agreement, but does not cover administrative claims for workers’
compensation or unemployment compensation benefits or the filing of charges with
government agencies that prohibit waiver of the right to file a charge.

(c)
The arbitration shall be governed by JAMS Employment Arbitration Rules and
Procedure except as modified herein. If the party chooses to have the
arbitration proceeding administered by a third party, then the arbitration shall
be administered by JAMS. If the party chooses to have the arbitration
administered by JAMS, then the arbitration will “commence” in accordance with
the JAMS Employment Arbitration Rules and Procedure. If the party chooses to
have this matter arbitrated privately, then the arbitration will be deemed to
“commence” on the date that the party provides a demand for arbitration and
notice of claims and remedies sought outlining the facts relied upon, legal
theories, and statement of claimed relief (“Demand”). The responding party shall
serve a response to the claims and any counterclaims within fifteen (15)
business days from the date of receipt of the Demand.

(d)
Any arbitration shall be held in Washington, D.C. (unless the parties mutually
agree in writing to another location within the United States) within 120 days
of the commencement of the arbitration.

(e)
The arbitration shall take place before a single arbitrator to be appointed by
mutual agreement of counsel for each party or, if counsel cannot agree, then
pursuant to the procedures set forth by JAMS. The parties may not have any ex
parte communications with the arbitrator.

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(f)
The arbitrator may award any relief otherwise available to the parties by law or
equity.

(g)
The parties are limited to two (2) depositions per side, and limited written
discovery as may be required by the arbitrator, not to exceed that allowed under
the Federal Rules of Civil Procedure.

(h)
Any hearing in this matter shall be completed within 120 days of the date of
commencement of the arbitration, as the term “commencement” is defined by JAMS.
The arbitrator shall issue its award within thirty (30) days of the last hearing
day.

(i)
Unless Executive objects, Employer will pay the arbitrator’s fees. Each party
shall pay its own costs and attorneys’ fees, if any, unless the arbitrator rules
otherwise. A court may enter judgment upon the arbitrator’s award, either by
confirming the award, or vacating, modifying or correcting the award, on any
ground referred to in the Federal Arbitration Act, or where the findings of fact
are not supported by substantial evidence, or where the conclusions of law are
erroneous.

(j)
The provisions of this Section are severable, meaning that if any provision in
this Section 8.2 (“Dispute Resolution: Mutual Agreement to Arbitrate”) is
determined to be unenforceable and cannot be reformed under applicable law, the
remaining provisions shall remain in full effect, provided however, that any
amendment of an unenforceable provision shall only be to the extent necessary
and shall preserve the intent of the parties hereto. It is agreed and understood
that the scope of this Section, including questions of arbitrability of any
dispute, shall be determined by the arbitrator.

(k)
Executive acknowledges that prior to accepting the provisions of this Section
8.2 and signing this Agreement, Executive has been given an opportunity to
consult with an attorney and to review the JAMS Employment Arbitration Rules and
Procedure that would govern the dispute resolution process under this Section.
In signing this Agreement, the parties acknowledge that the right to a court
trial and trial by jury is of value, and knowingly and voluntarily waive such
right for any dispute subject to the terms of this Section.

Initials: Executive  MEZ  Employer  GEH 
Article 9. Successors
9.1
Successors to the Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) of all or a
significant portion of the assets of the Company by agreement, in form and
substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
Regardless of whether such agreement is executed, this Agreement shall be
binding upon any successor in accordance with the operation of law and such
successor shall be deemed the “Company” for purposes of this Agreement.

9.2
Assignment by the Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If the
Executive dies while any amount would still be payable to him hereunder had he
continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to the Executive’s
devisee, legatee, or other designee, or if there is no such designee, to the
Executive’s estate.

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Article 10. Miscellaneous
10.1
Release. As a condition of receiving any severance payments under this
Agreement, Executive must sign and not revoke, within the deadlines provided by
the Company and in compliance with applicable federal and/or state laws, a
written release of all employment claims against the Company and its related
entities, including, without limitation, employment discrimination of any kind,
wage payment, breach of contract, claims for workers compensation, unemployment,
disability and severance claims that Executive has or may have at the
termination of employment. In addition, Executive will agree not to sue the
Company or any other entities or persons released.

10.2
Employment Status. This Agreement is not, and nothing herein shall be deemed to
create, an employment contract between the Executive and the Company or any of
its subsidiaries. The Executive acknowledges that the rights of the Company
remain wholly intact to change or reduce at any time and from time to time his
compensation, title, responsibilities, location, and all other aspects of the
employment relationship, or to discharge him prior to a Change in Control
(subject to such discharge possibly being considered a Qualifying Termination
pursuant to Section 2.2).

10.3
Entire Agreement. This Agreement contains the entire understanding of the
Company and the Executive with respect to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations, representations
and statements, whether oral, written, implied or expressed, relating to such
subject matter. In addition, the payments provided for under this Agreement in
the event of the Executive’s termination of employment shall be in lieu of any
severance benefits payable under any severance plan, program, or policy of the
Company to which he might otherwise be entitled.

10.4
Notices. All notices, requests, demands, and other communications hereunder
shall be sufficient if in writing and shall be deemed to have been duly given if
delivered by hand or if sent by registered or certified mail to the Executive at
the last address he has filed in writing with the Company or, in the case of the
Company, at its principal offices.

10.5
Execution in Counterparts. This Agreement may be executed by the parties hereto
in counterparts, each of which shall be deemed to be original, but all such
counterparts shall constitute one and the same instrument, and all signatures
need not appear on any one counterpart.

10.6
Conflicting Agreements. The Executive hereby represents and warrants to the
Company that his entering into this Agreement, and the obligations and duties
undertaken by him hereunder, will not conflict with, constitute a breach of, or
otherwise violate the terms of, any other employment or other agreement to which
he is a party, except to the extent any such conflict, breach, or violation
under any such agreement has been disclosed to the Board in writing in advance
of the signing of this Agreement.

Notwithstanding any other provisions of this Agreement to the contrary, if there
is any inconsistency between the terms and provisions of this Agreement and the
terms and provisions of Company-sponsored compensation and welfare plans and
programs, the Agreement’s terms and provisions shall completely supersede and
replace the conflicting terms of the Company-sponsored compensation and welfare
plans and programs, where applicable.
10.7
Severability. In the event any provision of this Agreement shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Agreement, and the Agreement shall be construed and
enforced as if the illegal or invalid provision had not been included. Further,
the captions of this Agreement are not part of the provisions hereof and shall
have no force and effect.

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Notwithstanding any other provisions of this Agreement to the contrary, the
Company shall have no obligation to make any payment to the Executive hereunder
to the extent, but only to the extent, that such payment is prohibited by the
terms of any final order of a federal or state court or regulatory agency of
competent jurisdiction; provided, however, that such an order shall not affect,
impair, or invalidate any provision of this Agreement not expressly subject to
such order.
10.8
Modification. No provision of this Agreement may be modified, waived, or
discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and by a member of the Board, as applicable,
or by the respective parties’ legal representatives or successors.

10.9
Applicable Law. To the extent not preempted by the laws of the United States,
the laws of Delaware shall be the controlling law in all matters relating to
this Agreement without giving effect to principles of conflicts of laws.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ATTEST    Mueller Water Products, Inc.

By:________________________    By: /s/ GREGORY E. HYLAND    
Chairman of the Board, President and
Chief Executive Officer

By: /s/ MARIETTA EDMUNDS ZAKAS    
Executive