EXHIBIT
10.7


MUELLER
WATER PRODUCTS, INC.


2006
EMPLOYEE STOCK PURCHASE PLAN


Approved
by the Board of Directors on May 24, 2006


Approved
by Stockholders on May 25, 2006


Amended
by the Board of Directors on September 27, 2006


Termination
Date: May 24, 2016


The following
constitute the provisions of the 2006 Employee Stock Purchase Plan of Mueller
Water Products, Inc.


1.          Purpose.   The purpose of the
Plan is to provide employees of the Company and its Designated Subsidiaries
with an opportunity to purchase Common Stock of the Company. The Company
intends that the Plan qualify as an “Employee Stock Purchase Plan” under Section 423
of the Code. The provisions of the Plan shall, accordingly, be construed so as
to extend and limit participation in a manner consistent with the requirements
of that section of the Code.


2.          Definitions.


(a)        “Applicable Law” means the
legal requirements relating to the administration of an employee stock purchase
plan under applicable U.S. state corporate and securities laws, U.S. federal
securities laws, the Code, any stock exchange rules or regulations, and
the applicable laws of any other country or jurisdiction, as such laws, rules,
regulations and requirements shall be in place from time to time.


(b)        “Board” means the board of
directors of the Company.


(c)        “Code” means the Internal
Revenue Code of 1986, as amended from time to time.


(d)        “Committee” means the Board or
a committee named by the Board.


(e)        “Common Stock” means the Series A
common stock of the Company, par value $0.01 per Share, or any securities into
which such stock may be converted.


(f)         “Company” means Mueller Water
Products, Inc., a Delaware corporation.


(g)        “Compensation” means base cash
compensation and commissions earned by an Employee from the Company or a
Designated Subsidiary, but excluding overtime, shift differentials, bonuses,
incentive compensation, relocation, expense reimbursements, tuition and other
reimbursements and income realized as a result of participation in any stock
option, stock purchase, or similar plan of the Company or any Designated
Subsidiary.


(h)        “Continuous Status as an Employee”
means the absence of any interruption or termination of service as an Employee.
Continuous Status as an Employee shall not be considered interrupted in the
case of (i) sick leave; (ii) military leave; (iii) any other
bona fide leave of absence approved by the Administrator, provided that such
leave is for a period of not more than three months, unless reemployment upon
the expiration of such leave is guaranteed by contract (including Company
policy) or statute; or (iv) transfers between the Company and its
Designated Subsidiaries.


(i)         “Contributions” means all
amounts credited to the account of a Participant pursuant to the Plan.


(j)         “Corporate Transaction” means
a sale of all or substantially all of the Company’s assets, a merger, a
consolidation, a tender offer, or other capital reorganization of the Company
with or into another corporation, including but not limited to:


(i)         The
sale, exchange, lease or other disposition, in one or a series of related
transactions, of all or substantially all of the assets of the Company to a
person or group of related 











persons, as such terms are
defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act;


(ii)       A
merger or consolidation or similar transaction involving the Company if the
stockholders of the Common Stock of the Company immediately prior to such
transaction do not own a majority of the outstanding common stock of the
surviving company or its parent immediately after the transaction in
substantially the same proportions relative to each other as immediately prior
to such transaction;


(iii)      Any
person or group becomes the “beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of more than 50%
of the total voting power of the voting stock of the Company, including by way
of merger, consolidation or otherwise (for the purposes of this
clause (iii), a member of a group will not be considered to be the “beneficial
owner” of the securities owned by other members of the group other than in
response to a contested proxy or other control battle); or


(iv)       During
any period of two (2) consecutive years, individuals who at the beginning
of such period constituted the Board (together with any new directors whose
election by such Board or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the directors of the
Company then still in office, who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board then in
office.


(k)        “Designated Subsidiary” means
a Subsidiary that has been designated by the Committee in its sole discretion,
from time to time, as eligible to participate in the Plan with respect to its
Employees.


(l)         “Effective Date” means the
date on which the registration statement on Form S-1 filed with the
Securities and Exchange Commission pursuant to Rule 424 under the
Securities Act for the initial public offering of the Company’s Common Stock
(the “Registration Statement”) becomes
effective; provided, however, except as otherwise determined by the Committee
to the extent permitted under the Plan, that no Offering Period shall commence
under the Plan until, and the first Offering Date under the Plan shall be, August 1,
2006.


(m)      “Employee” means any person,
including an Officer, who is an employee of the Company or its Designated
Subsidiaries for tax purposes and who is customarily employed for at least
twenty (20) hours per week and more than five (5) months in a calendar
year by the Company or one of its Designated Subsidiaries; provided, however,
that the Committee may establish administrative rules requiring that
employment commence some minimum period (not to exceed 30 days) prior to an
Offering Date in order to be eligible to participate in the Offering Period
beginning on that Offering Date.


(n)        “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time.


(o)        “Fair Market Value” means, as
of a given date, the value of the Common Stock determined as follows: (1) if
the Common Stock is listed on any established stock exchange or national market
system, the Fair Market Value shall be the closing sales price per Share of the
Common Stock (or the closing bid, if no sales were reported) on the date of
determination as quoted on such exchange or system on which the Common Stock
has the highest average trading volume, as reported in the The Wall
Street Journal or such other source as the Committee deems reliable,
(2) if the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value shall be the
mean of the closing bid and asked prices for the Common Stock on the date of
such determination, as reported in The Wall Street Journal
or such other source as the Committee deems reliable, or (3) in the
absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Committee.


(p)        “Offering Date” means the
first Trading Day of each Offering Period of the Plan, except as further
described in Section 4.











(q)        “Offering Period” means a
period of approximately three (3) months generally commencing on February 1,
May 1, August 1 and November 1 of each year and generally ending
on the following April 30, July 31, October 31 and January 31,
respectively, except as further described in Section 4.


(r)        “Officer” means a person who
is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.


(s)        “Participant” shall mean an
Employee who is eligible to, and elects to, be a participant in the Plan as
provided in Section 5 and whose participation has not terminated in
accordance with the terms of the Plan.


(t)         “Plan” means this 2006 Employee
Stock Purchase Plan.


(u)        “Purchase Date” means the last
Trading Day of each Offering Period of the Plan.


(v)        “Purchase Price” means, with
respect to an Offering Period, an amount equal to a percentage (not less than
85%) established by the Committee (the “Designated Percentage”)
of the lesser of (i) the Fair Market Value of a Share of Common Stock on
the Offering Date or (ii) the Fair Market Value of a Share of Common Stock
on the Purchase Date, as adjusted by the Committee pursuant to Section 18
in accordance with Section 424(a) of the Code. The Committee may
change the Designated Percentage with respect to any future Offering Period,
and the Committee may determine with respect to any prospective Offering Period
that the option price shall be the Designated Percentage of the Fair Market
Value of a Share of the Common Stock on the Purchase Date (without reference to
the Fair Market Value of a Share of Common Stock on the Offering Date).


(w)       “Securities Act” shall mean
the U.S. Securities Act of 1933, as amended from time to time.


(x)        “Share” means a share of
Common Stock, as adjusted in accordance with Section 18 of the Plan.


(y)        “Subsidiary” means any entity
treated as a corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, within the meaning of Code Section 424(f),
whether or not such corporation now exists or is hereafter organized or
acquired by the Company or a Subsidiary.


(z)        “Trading Day” shall mean a day
on which U.S. national stock exchanges and the National Market System are open
for trading and the Common Stock is being publicly traded on one or more of
such markets.


3.          Eligibility.


(a)        Any
person who is an Employee as of the Offering Date of a given Offering Period
shall be eligible to participate in such Offering Period under the Plan,
subject to the requirements of this Section 3, Section 5(a) and
the limitations imposed by Section 423(b) of the Code.


(b)        Any
provisions of the Plan to the contrary notwithstanding, no Employee shall be
granted an option under the Plan (i) if, immediately after the grant, such
Employee (or any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or of any Subsidiary, or (ii) if such option would
permit his or her rights to purchase Common Stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company and
its Subsidiaries to accrue at a rate that exceeds Twenty-Five Thousand Dollars
($25,000) of the Fair Market Value of such Common Stock (determined at the time
such option is granted) for each calendar year in which such option is
outstanding at any time.


(c)        All Employees who participate in the Plan shall have the same
rights and privileges under the Plan, except for differences that may be
mandated by local law and that are consistent with Code Section 423(b)(5);
provided that individuals participations in a sub-plan adopted pursuant to Section 24












which
is not designed to qualify under Code Section 423 need not have the same
rights and privileges as Employees participating in the Code Section 423
Plan.


4.          Offering Periods.   The Plan
shall be implemented by a series of Offering Periods of approximately three (3) months’
duration, with new Offering Periods commencing on February 1, May 1, August 1
and November 1 of each year and ending on the following April 30, July 31,
October 31 and January 31, respectively. Except as otherwise
determined by the Committee to the extent permitted under the Plan, the first
Offering Period shall commence on August 1, 2006. The Committee shall have
the power to change the duration and/or the frequency of Offering Periods with
respect to future Offering Periods if such change is announced at least five (5) days
prior to the scheduled beginning of the first Offering Period to be affected,
subject to compliance with Applicable Laws.


5.          Participation.


(a)        An
eligible Employee may become a Participant in the Plan by completing a
subscription agreement and any other required documents (“Enrollment
Documents”) provided by the Company and submitting them to the
Company or, as applicable, the stock brokerage or other financial services firm
designated by the Company (“Designated Broker”)
within the period set by the Committee with respect to a given Offering Period.
The Enrollment Documents and their submission may be electronic, as directed by
the Company.


(b)        Payroll
deductions shall commence on the date of the first paycheck paid on or after
the Offering Date and shall end on the date of the last paycheck paid on or
prior to the Purchase Date of the Offering Period to which the Enrollment
Documents are applicable, unless sooner terminated by the Participant as
provided in Section 10.


(c)        Once
an eligible Employee becomes a Participant in the Plan, he or she will
automatically participate in all subsequent Offering Periods at the same
Contribution rate, unless he or she (i) submits new Enrollment Documents
or (ii) withdraws from participation in the Plan as provided in Section 10
of the Plan.


6.          Method of Payment of Contributions.


(a)        A
Participant shall elect to have payroll deductions made on each payday during
the Offering Period at the rate of any whole percentage of the Participant’s
Compensation not less than one percent (1%) and not more than ten percent
(10%) (or such greater percentage as the Committee may establish from time to
time before an Offering Date). All Contributions made by a Participant will be
credited to a bookkeeping account in his or her name under the Plan. A
Participant may not make any additional payments into the Plan. Notwithstanding
the foregoing, in locations in which Applicable Law prohibits payroll
deductions, an eligible Employee may elect to participate through contributions
to his or her account under the Plan in a form acceptable to the Committee, and
such Employees shall be deemed to be participating in a sub-plan, unless the
Committee otherwise expressly provides that such Employees shall be treated as
participating in the Plan.


(b)        The
Committee may establish rules pertaining to the changes to the rate of a
Participant’s Contributions, limiting the frequency with which Participants may
change his or her rate of participation, the timing of the elections for such
changes, and whether or not changes may effectuate an increase in Contributions
or only a decrease in Contributions. A Participant may change his or her rate
of Contributions with respect to current or future Offering Periods by filing
new Enrollment Documents at such times and on such terms as specified by the
Committee.
















(c)        To the
extent necessary to comply with Section 423(b)(8) of the Code and Section
3(b) herein, a Participant’s payroll deductions may be decreased by the Company
to 0% during any Offering Period scheduled to end during the current calendar
year. Payroll deductions shall re-commence at the rate provided in such
Participant’s then-effective Enrollment Documents at the beginning of the first
Offering Period that is scheduled to end in the following calendar year. In
addition, a Participant’s payroll deductions may be decreased by the Company to
0% at any time during an Offering Period in order to avoid unnecessary payroll
contributions as a result of application of the maximum share limit set forth
in Section 8, in which case payroll deductions shall re-commence at the
rate provided in such Participant’s then-effective Enrollment Documents at the
beginning of the next Offering Period.


7.          Grant of Option.   On the
Offering Date of each Offering Period, each eligible Employee shall be granted
an option to purchase on each Purchase Date a number of Shares of the Company’s
Common Stock determined by dividing the accumulated Contributions credited to
the Participant’s account as of the Purchase Date by the applicable Purchase
Price. An option will expire upon the earliest to occur of (i) the failure
of a newly eligible Employee to complete and submit the Enrollment Documents by
the date determined by the Committee with respect to that Offering Period, (ii) the
termination of a Participant’s participation in the Plan, (iii) the
exercise of the option on the Purchase Date or (iv) the termination of the
Offering Period as provided in the Plan.


8.          Exercise of Option.


(a)        Unless
a Participant withdraws from the Plan as provided in Section 10, and
except as otherwise provided in Sections 7, 18 or 19, the Participant’s option
for the purchase of Shares will be exercised automatically on the Purchase Date
of the Offering Period for the purchase of the maximum number of whole and
fractional Shares that can be purchased under the option with the accumulated
Contributions credited to the Participant’s account at the applicable Purchase
Price. Notwithstanding the foregoing, and in addition to any other limitations
set forth in the Plan and under Applicable Law, the maximum number of Shares a
Participant may purchase during each Offering Period shall be 1,000 Shares and
the maximum number of Shares that all Participant may purchase in the aggregate
during each Offering Period shall be 100,000 Shares, in each case subject to
any adjustment pursuant to Section 18 below. The Company shall retain the
full amount of Contributions used to purchase Common Stock as payment for the
Common Stock.


(b)        For
tax purposes, the Shares purchased upon exercise of an option hereunder shall
be deemed to be sold to the Participant on the Purchase Date. The Company or
its designee may make such provisions and take such action as it deems
necessary or appropriate for the withholding of taxes and/or social insurance
as required by Applicable Law. Each Participant is responsible for the payment
of all individual tax liabilities arising under the Plan, including with
respect to the sale or other disposition of Shares acquired under the Plan.


9.          Delivery.


(a)        The
Company will deliver Shares purchased under the Plan (or a record thereof) as
promptly as possible. The Committee may permit or require that Shares purchased
under the Plan be deposited directly with the Designated Broker, and the
Committee may utilize electronic or automated methods of Share transfer. The
Committee may require that Shares be retained with the Designated Broker for a
designated period of time and/or may establish other procedures to permit
tracking of “disqualifying dispositions” of such Shares. A “disqualifying
disposition” is any sale or other disposition which is made within two years
after the Offering Date or within one year after the Purchase Date. A “qualifying
disposition” will occur if the sale or other disposition of the Shares is made
after the Shares have been held for more than two years after the Offering Date
and more than one year after the Purchase Date. Participants are urged to
consult their personal tax advisors regarding the specific U.S. federal, state,
local and foreign income and other tax consequences applicable to dispositions.
A Participant who
withdraws all of his or her whole Shares from the Plan shall have the Fair
Market Value of any fractional Share held under the Plan for such person paid
to him or her in cash.











(b)        The
Committee may in its discretion direct the Company to retain in a Participant’s
account for the subsequent Offering Period or return to the Participant any
amounts left over in a Participant’s account after a Purchase Date for any
reason.


(c)        No
Participant shall have any voting, dividend, or other stockholder rights with
respect to Shares subject to any option granted under the Plan until the Shares
subject to the option have been purchased and delivered to the Participant as
provided in this Section 9.


10.        Voluntary Withdrawal; Termination of Employment.


(a)        A
Participant may terminate his or her participation in the Plan and withdraw all
of the Contributions credited to his or her account under the Plan prior to a
Purchase Date by submitting a completed “Notice of Withdrawal” form to the
Company (or, as applicable, the Designated Broker). As soon as practicable
following the Company’s receipt of the Notice of Withdrawal, all of the
Participant’s Contributions credited to his or her account will be returned
without any interest thereon, and no further Contributions for the purchase of
Shares will be made during the Offering Period. The Committee may establish rules (i) pertaining
to the timing of withdrawals, (ii) limiting the frequency with which
Participants may withdraw and re-enroll and (iii) imposing a waiting
period on Participants wishing to re-enroll following withdrawal.


(b)        Upon
termination of the Participant’s Continuous Status as an Employee prior to the
Purchase Date of an Offering Period for any reason, the Contributions credited
to his or her account will be returned to him or her or, in the case of his or
her death, to the person or persons entitled thereto, and his or her option will
be automatically terminated.


(c)        The
Committee may establish rules regarding when leaves of absence or changes
of employment status will be considered to be a termination of employment, and
the Committee may establish termination-of-employment procedures for this Plan
that are independent of similar rules established under other benefit
plans of the Company and its Designated Subsidiaries; provided that such
procedures are not in conflict with the requirements of Section 423 of the
Code.


11.        Interest.   No interest shall
accrue on the Contributions of a Participant in the Plan.


12.        Stock.


(a)        Subject
to adjustment as provided in Section 18, the maximum number of Shares that
may be made available for sale and which may be issued under the Plan shall be
4,000,000 Shares. The Shares may consist, in whole or in part, of unissued
Shares, treasury Shares, or Shares purchased by the Company on the open market.
The issuance of Shares pursuant to the Plan shall reduce the total number of
Shares that may be made available for sale and which may be issued under the
Plan.


(b)        If the
Committee determines that, on a given Purchase Date, the number of Shares with
respect to which options are to be exercised may exceed (1) the number of
Shares of Common Stock that were available for sale under the Plan as of the
Offering Date, or (2) the number of Shares available for sale under the
Plan with respect to that Offering Period, the Committee may in its sole
discretion provide for a pro rata allocation of the Shares of Common Stock
available for purchase in that Offering Period in as uniform a manner as shall
be practicable and equitable among all Participants in that Offering Period and
either (i) continue the Plan or (ii) terminate the Plan pursuant to Section 19
below.


13.        Administration.


(a)        The
Committee will have the authority and responsibility for the day-to-day
administration of the Plan as well as the authority and responsibility
specifically provided in this Plan, in addition to any other duties,
responsibilities and authority delegated to the Committee by the Board. The
Committee may delegate to one or more individuals the day-to-day administration
of the Plan. The Committee shall have full power and authority to (i) adopt,
amend and rescind any Plan rules which it deems desirable and appropriate
for the proper administration of the Plan, (ii) construe and interpret the
provisions of the Plan, (iii) supervise the administration of the Plan, (iv) make
factual determinations relevant to Plan 











entitlements and (v) take
all other actions in connection with administration of the Plan as it deems
necessary or advisable, consistent with any delegation from the Board. Decisions
of the Board and the Committee shall be final and binding upon all
participants.


(b)        Without
stockholder consent and without regard to whether any Participant rights may be
considered to have been adversely affected, the Committee shall be entitled to
change the timing of future Offering Periods, limit the frequency and/or number
of changes in the amount withheld during an Offering Period, establish the
exchange ratio applicable to amounts withheld in a currency other than U.S.
dollars, permit payroll withholding in excess of the amount designated by a
Participant in order to adjust for delays or mistakes in the Company’s
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
Participant properly correspond with amounts withheld from the Participant’s
Compensation, and establish such other limitations or procedures as the
Committee determines in its sole discretion advisable that are consistent with
the Plan.


14.        Designation of Beneficiary.   The
Committee may establish rules pertaining to the designation by the
Participant of a beneficiary who is to receive any Shares and cash, if any,
from the Participant’s account under the Plan in the event of such Participant’s
death subsequent to the end of an Offering Period.


15.        Transferability.   During his or
her lifetime, a Participant’s option to purchase Shares hereunder is
exercisable only by him or her. Neither Contributions credited to a Participant’s
account nor any rights with regard to the exercise of an option or the receipt
of Shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
from the Plan in accordance with Section 10.


16.        Use of Funds.   All
Contributions received or held by the Company under the Plan may be used by the
Company for any corporate purpose, and the Company shall not be obligated to
segregate such Contributions.


17.        Reports.   Individual accounts
will be maintained for each Participant in the Plan. Statements of account will
be provided to Participants by the Company or the Designated Broker at least
annually, which statements will set forth the amounts of Contributions, the per
Share Purchase Price, the number of Shares purchased and the remaining cash
balance, if any.


18.        Adjustments Upon Changes in Capitalization;
Corporate Transactions.


(a)        Adjustment.   Subject to any
required action by the stockholders of the Company, in the event of any change
in the Common Stock subject to the Plan or subject to or underlying any
outstanding option, by reason of any stock dividend, stock split, reverse stock
split, reorganization, recapitalization, merger, consolidation, spin-off,
combination, exchange of Shares of Common Stock or other corporate exchange, or
any distribution or dividend to stockholders of Common Stock (whether paid in
cash or otherwise) or any transaction similar to the foregoing, the Board in
its sole discretion and without liability to any person may make such
substitution or adjustment, if any, as it deems to be equitable to (i) the
number and kind of Shares or other securities that have been authorized for
issuance under the Plan but have not yet been placed under option, including
the number of Shares of Common Stock set forth in Section 12(a) above
(collectively, the “Reserves”), (ii) the
maximum number of Shares of Common Stock that may be purchased by a Participant
and/or by all Participants in an Offering Period as set forth in Section 8,
(iii) the number and kind of Shares or other securities covered by each
option under the Plan that has not yet been exercised, (iv) the Purchase
Price per Share of Common Stock covered by each option under the Plan that has
not yet been exercised and (v) any other affected terms of the Plan or any
outstanding option. Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issue by the Company of shares of 











stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an option.


(b)        Corporate Transactions.


(i)         In
the event of a dissolution or liquidation of the Company, and unless otherwise
provided by the Board, (i) any Offering Period then in progress, and any
options outstanding thereunder will terminate prior to the consummation of such
transaction and (ii) all Contributions will be refunded to the
Participants.


(ii)       In the
event of a Corporate Transaction, then in the sole discretion of the Board, (1) each
option shall be assumed or an equivalent option shall be substituted by the
successor corporation or parent or subsidiary of such successor entity, (2) a
date established by the Board on or before the date of consummation of such
Corporate Transaction shall be treated as a Purchase Date, and all outstanding
options shall be exercised on such date, (3) all outstanding options shall
terminate and all Contributions will be refunded to the Participants, or (4) all
outstanding options shall continue unchanged.


19.        Amendment or Termination.   The
Board may, at any time and for any reason, terminate, suspend or amend the
Plan; provided, however, that no such actions may adversely affect outstanding
options except as provided in Section 18 and this Section 19. Notwithstanding
the foregoing, the Board may terminate or suspend the Plan and/or an on-going
Offering Period if the Board determines that such action is in the best
interests of the Company and the stockholders. Upon a termination or suspension
of the Plan, the Board may in its discretion (i) return without interest,
the Contributions credited to Participants’ accounts to such Participants or (ii) set
an earlier Purchase Date with respect to an Offering Period then in progress.
The Company shall obtain stockholder approval of any amendments or terminations
in such a manner and to such a degree as required by Applicable Law.


20.        Notices.   All notices or other
communications by an Employee to the Company under or in connection with the
Plan shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person, designated by the
Company for the receipt thereof.


21.        Conditions Upon Issuance of Shares.   Shares
shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such Shares pursuant thereto shall
comply with all Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance. In connection with the
granting or exercise of an option, the Company may require a Participant to
make such representations and warranties which, in the opinion of counsel for
the Company, are required by Applicable Law.


22.        Term of Plan; Effective Date.   This
Plan shall be effective on the Effective Date, subject to approval of the
stockholders of the Company within twelve (12) months before or after its date
of adoption by the Board. It shall continue in effect for a term of ten (10) years
from the Effective Date unless sooner terminated under Section 19.


23.        Additional Restrictions of Rule 16b-3.   The
terms and conditions of options granted hereunder to, and the purchase of
Shares by, persons subject to Section 16 of the Exchange Act shall comply
with the applicable provisions of Rule 16b-3. This Plan shall be
deemed to contain, and such options shall contain, and the Shares issued upon
exercise thereof shall be subject to, such additional conditions and
restrictions as may be required by Rule 16b-3 to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.


24.        Rules for Foreign Jurisdictions.   The
Committee may adopt rules or procedures relating to the operation and
administration of the Plan to accommodate the specific requirements of
Applicable Laws. Without limiting the generality of the foregoing, the
Committee is specifically authorized to adopt rules and procedures
regarding handling of payroll deductions or other contributions by
Participants, payment of interest, conversion of local currency, payroll tax,
withholding procedures and handling of stock certificates which vary with local
requirements; however, if such varying provisions are not in 











accordance with the
provisions of Section 423(b) of the Code, including but not limited
to the requirement of Section 423(b)(5) of the Code that all options
granted under the Plan shall have the same rights and privileges unless
otherwise provided under the Code and the regulations promulgated thereunder,
then the individuals affected by such varying provisions shall be deemed to be
participating under a sub-plan and not the Plan. The Committee may also adopt
sub-plans applicable to particular Designated Subsidiaries or locations, which
sub-plans may be designed to be outside the scope of Code section 423. The rules of
such sub-plans may take precedence over other provisions of this Plan, with the
exception of Section 12, but unless otherwise superseded by the terms of
such sub-plan, the provisions of this Plan shall govern the operation of such
sub-plan.


25.        No Enlargement of Rights.   Nothing
contained in this Plan shall be deemed to give any Employee or other individual
the right to be retained in the employ or service of the Company or any
Subsidiary or to interfere with the right of the Company or any Subsidiary to
discharge any Employee or other individual at any time, for any reason or no
reason, with or without notice.


26.        Lock-Up.   By electing to
participate in the Plan, the Participant agrees that the Company (or a
representative of the underwriter(s)) may, in connection with any underwritten
registration of the offering of any securities of the Company under the
Securities Act, require that the Participant not sell, dispose of, transfer,
make any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a sale, any
shares of Common Stock or other securities of the Company held by the
Participant (including but not limited to any Shares purchased under the Plan),
for a period of time specified by the underwriter(s) (not to exceed one
hundred eighty (180) days) following the effective date of the registration
statement of the Company filed under the Securities Act. The Participant
further agrees to execute and deliver such other agreements as may be
reasonably requested by the Company and/or the underwriter(s) that are
consistent with the foregoing or that are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the Company may impose
stop transfer instructions with respect to Shares of Common Stock until the end
of such period. The underwriters of the Company’s stock are intended third
party beneficiaries of this section and shall have the right, power and
authority to enforce the provisions hereof as though they were a party hereto.


27.        Governing Law.   This Plan shall
be governed by applicable laws of the State of Delaware.
















MUELLER
WATER PRODUCTS, INC.


2006 EMPLOYEE STOCK PURCHASE PLAN


SUBSCRIPTION AGREEMENT


New Election              


Change of Election              


1.          I,                                                   ,
hereby elect to participate in the Mueller Water Products, Inc. 2006
Employee Stock Purchase Plan (the “Plan”)
effective as of the Offering Period commencing on                           
       ,          ,
and subscribe to purchase Shares of the Company’s Common Stock in accordance
with this Subscription Agreement and the Plan.


2.          I
elect to have Contributions in the amount of        %
of my Compensation, as those terms are defined in the Plan, applied to this
purchase. I understand that this amount must not be less than 1% and not more
than 10% of my Compensation during the Offering Period. (Please note that no
fractional percentages are permitted).


3.          I
hereby authorize payroll deductions from each paycheck during each Offering
Period at the rate stated in Item 2 of this Subscription Agreement. I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into
such account. I understand that all Contributions made by me shall be
accumulated for the purchase of Shares of Common Stock at the applicable
Purchase Price determined in accordance with the Plan. I further understand
that, except as otherwise set forth in the Plan, Shares will be purchased for
me automatically on the Purchase Date of each Offering Period unless my employment
is terminated prior to the Purchase Date or I otherwise withdraw from the Plan
by giving written notice to the Company for such purpose.


4.          I
understand that I may discontinue at any time prior to the Purchase Date my
participation in the Plan as provided in Section 10 of the Plan. I also
understand that I can decrease the rate of my Contributions on one occasion
only during any Offering Period by completing and filing a new Subscription
Agreement with such decrease taking effect as of the beginning of the payroll
period following the date of filing of the new Subscription Agreement, if filed
at least five (5) business days prior to the beginning of such payroll
period. Further, I may change the rate of deductions for future Offering
Periods by filing a new Subscription Agreement, and any such change will be
effective as of the beginning of the next Offering Period. In addition, I
acknowledge that, unless I discontinue my participation in the Plan as provided
in Section 10 of the Plan, my election will continue to be effective for
each successive Offering Period.


5.          I
have received a copy of the Company’s most recent Plan summary and prospectus
and a copy of the complete “Mueller Water Products, Inc. 2006 Employee
Stock Purchase Plan.”  I understand that
my participation in the Plan is in all respects subject to the terms of the
Plan.


6.          Shares purchased for me under the Plan
should be issued in the name(s) of (name of employee or employee and
spouse only):


	
  

  	
   

  
	
   

  	
   

  



 











7.          In the event of my death, and to the extent permitted by
Applicable Law, I hereby designate the following as my beneficiary(ies) to
receive all payments and Shares due to me under the Plan:




	
  

  
	
  (First)

  	
   

  	
  (Middle)

  	
   

  	
  (Last)

  
	
   

  
	
  (Relationship)

  
	
   

  
	
   

  
	
  (Address)

  






 


8.          I understand that Shares purchased under the Plan are to be
deposited directly with the Designated Broker (currently, Computershare
Limited, holding through one or more brokerage accounts) for my benefit as a
Plan Participant. I understand that if I withdraw all of my whole Shares from
the Plan, I shall receive cash equal to the Fair Market Value of any fractional
Share held under the Plan for my account.


9.          I understand that if I withdraw any Shares received by me
pursuant to the Plan from the account maintained for me under the Plan through
the Designated Broker within 2 years after the Offering Date (the first day of
the Offering Period during which I purchased such Shares) or within 1 year
after the Purchase Date for such Shares, I will be deemed by the Company to
have disposed of such Shares and that, 
for US federal income tax purposes, the Company will treat me as having
received ordinary compensation income at the time of such disposition in an
amount equal to the excess of the fair market value of the Shares on the
Purchase Date over the price that I paid for the Shares, regardless of whether
I disposed of the Shares at a price less than their fair market value at the
Purchase Date. The remainder of the gain or loss, if any, recognized on such
disposition will be treated as capital gain or loss.


I hereby
agree to notify the Company in writing within 30 days after the date of any
such disposition, and I will make adequate provision for federal, state or
other tax withholding obligations, if any, that arise upon the disposition of
the Common Stock. The Company may, but will not be obligated
to, withhold from my compensation the amount necessary to meet any applicable withholding
obligation including with respect to taxes attributable to the sale or early
disposition of Common Stock by me.


I
understand that this tax summary is only a summary and is subject to change.
I acknowledge that I have received a copy of the Plan prospectus, and that
additional information regarding the tax consequences of my participation in
the Plan can be found in the prospectus. I further understand that I should
consult a tax advisor concerning the tax implications of the purchase and sale of
stock under the Plan.


10.        I hereby agree to be bound by the terms
of the Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Plan.


	
  SIGNATURE:

  	
   

  	
   

  
	
  EMPLOYEE ID#:

  	
   

  	
   

  
	
  DATE:

  	
   

  	
   

  
	
  SPOUSE’S
  SIGNATURE (necessary

  if beneficiary is not spouse):

  	
   

  
	
   

  	
   

  
	
  (Signature)

  	
   

  
	
   

  	
   

  
	
  (Print name)

  	
   

  
					



 











 


MUELLER
WATER PRODUCTS, INC.


2006 EMPLOYEE
STOCK PURCHASE PLAN


NOTICE
OF WITHDRAWAL


I,                                                   ,
hereby elect to:


o
WITHDRAWAL AS OF CURRENT OFFERING PERIOD:  Withdraw my participation in the Mueller
Water Products, Inc. 2006 Employee Stock Purchase Plan for the Offering
Period that began on                           
       ,          .
This withdrawal covers all Contributions credited to my account for this
Offering Period and is effective on the date designated below. I understand
that all Contributions credited to my account for this Offering Period will be
paid to me as soon as practicable following the Company’s receipt of this
Notice of Withdrawal and that my option for this Offering Period will
automatically terminate, and that no further Contributions for the purchase of
Shares can be made by me during the Offering Period.


o
WITHDRAWAL AS OF NEXT OFFERING PERIOD:  Withdraw my participation in the Mueller
Water Products, Inc. 2006 Employee Stock Purchase Plan as of the Offering
Period that will begin on                           
       ,          .
I understand that no further Contributions will be credited to my account after
the Purchase Date of the Offering Period immediately preceding this Offering
Period.


The
undersigned further understands and agrees that he or she shall be eligible to
participate in succeeding Offering Periods only by delivering to the Company a
new Subscription Agreement.


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  Signature of
  Employee

  
	
   

  	
   

  
	
   

  	
  Employee ID
  Number