Document:

EXHIBIT 10.8

[Form of Corporate Agreement
by and between

Walter Industries, Inc. and Mueller
Water Products, Inc.]

CORPORATE
AGREEMENT

THIS CORPORATE AGREEMENT (“Agreement”)
is entered into as of [        ], 2006 by and
between WALTER INDUSTRIES, INC., a Delaware corporation (“Walter”), and
MUELLER WATER PRODUCTS, INC., a Delaware corporation (“Mueller”).

RECITALS

A.            Walter beneficially owns all of the issued and
outstanding shares of capital stock of Mueller, and Mueller is a member of
Walter’s “affiliated group” of corporations (the “Walter Group”) for
federal income tax purposes.

B.            The parties are contemplating the possibility that (i)
Mueller will sell shares of Series A Common Stock, par value $0.01 per share (“Series
A Common Stock”), in an initial public offering (the “Initial Public
Offering”) registered under the Securities Act of 1933, as amended, and
(ii) immediately following the Initial Public Offering, Walter will own all of
the outstanding shares of Series B Common Stock, par value $0.01 per share (“Series
B Common Stock”), of Mueller, which will have eight votes per share and
will be a series of common stock separate from the Series A Common Stock.

C.             The parties desire to enter into this Agreement to set
forth their agreement regarding (i) Walter’s rights to purchase additional
shares of Series B Common Stock upon any issuance of certain classes of capital
stock of Mueller to any person to permit Walter to maintain its percentage
ownership interest in Mueller, (ii) Walter’s rights to purchase shares of
non-voting classes of capital stock of Mueller to permit Walter to own eighty
percent (80%) of each class of such stock outstanding, (iii) certain
registration rights with respect to Series B Common Stock (and any other
securities issued in respect thereof or in exchange therefor) and (iv) certain
representations, warranties, covenants and agreements applicable so long as
Mueller is a subsidiary of Walter.

AGREEMENTS

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Walter and Mueller, for themselves, their successors and assigns,
hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1.          Definitions.  As used in this Agreement, the following
terms will have the following meanings, applicable both to the singular and the
plural forms of the terms described:

 

 

“Affiliate” means,
with respect to a given Person, any Person controlling, controlled by or under
common control with such Person.  For
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlled by” and “under common control with”), as applied to any
Person, means the possession, directly or indirectly, of the power to vote a
majority of the securities having voting power for the election of directors
(or other Persons acting in similar capacities) of such Person or otherwise to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.

“Agreement” has the
meaning ascribed thereto in the preamble hereto, as such agreement may be
amended and supplemented from time to time in accordance with its terms.

“Applicable Stock”
means at any time the (i) shares of Common Stock owned by the Walter Entities
that were owned on the date hereof, plus (ii) shares of Series B Common
Stock purchased by the Walter Entities pursuant to Article II of this
Agreement, plus (iii) shares of Common Stock that were issued to Walter
Entities in respect of shares described in either clause (i) or clause (ii) in
any reclassification, share combination, share subdivision, share dividend,
share exchange, merger, consolidation or similar transaction or event.

“Series A Common Stock”
has the meaning ascribed thereto in the recitals to this Agreement.

“Series B Common Stock”
has the meaning ascribed thereto in the recitals to this Agreement.

“Series B Common Stock
Option” has the meaning ascribed thereto in Section 2.1(a).

“Series B Common Stock
Option Notice” has the meaning ascribed thereto in Section 2.2.

“Series B Transferee”
shall have the meaning ascribed thereto in Mueller’s Restated Certificate of
Incorporation.

“Common Stock” means
the Series A Common Stock, the Series B Common Stock, any other class of
Mueller’s capital stock representing the right to vote generally for the
election of directors and, for so long as Mueller continues to be a subsidiary
corporation includable in a consolidated federal income tax return of the
Walter Group, any other security of Mueller treated as stock for purposes of
Section 1504 of the Internal Revenue Code of 1986, as amended.

 “Company Securities” has the meaning
ascribed thereto in Section 3.2(b).

“Disadvantageous
Condition” has the meaning ascribed thereto in Section 3.1(a).

 “Holder” means Walter, the other Walter
Entities and any Transferee.

“Holder Securities”
has the meaning ascribed thereto in Section 3.2(b).

 

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“Initial Public Offering”
has the meaning ascribed thereto in the recitals to this Agreement.

“Initial Public Offering
Date” means the date of completion of the initial sale of Series A Common
Stock in the Initial Public Offering.

“Issuance Event” has
the meaning ascribed thereto in Section 2.2.

“Issuance Event Date”
has the meaning ascribed thereto in Section 2.2.

“Market Price” of any
shares of Series A Common Stock on any date means (i) the average of the last
sale price of such shares on each of the five trading days immediately
preceding such date on the New York Stock Exchange, Inc. or, if such shares are
not listed thereon, on the principal national securities exchange or automated
interdealer quotation system on which such shares are traded or (ii) if such
sale prices are unavailable or such shares are not so traded, the value of such
shares on such date determined in accordance with agreed-upon procedures
reasonably satisfactory to Mueller and Walter.

“Mueller” has the
meaning ascribed thereto in the preamble hereto.

“Mueller Entities”
means Mueller and its Subsidiaries, and “Mueller Entity” shall mean any
of the Mueller Entities.

“Nonvoting Stock”
means any class of Mueller’s capital stock not representing the right to vote
generally for the election of directors.

“Nonvoting Stock Option”
has the meaning ascribed thereto in Section 2.1(c).

“Nonvoting Stock Option
Notice” has the meaning ascribed thereto in Section 2.2.

“Other Holders” has
the meaning ascribed thereto in Section 3.2(c).

“Other Securities”
has the meaning ascribed thereto in Section 3.2.

“Ownership Percentage”
means, at any time, the fraction, expressed as a percentage and rounded to the
next highest thousandth of a percent, whose numerator is the aggregate Value of
the Applicable Stock and whose denominator is the aggregate Value of the
then-outstanding shares of Common Stock of Mueller; provided, however,
that any shares of Common Stock issued by Mueller in violation of its
obligations under Article II of this Agreement shall not be deemed outstanding
for the purpose of determining the Ownership Percentage.  For purposes of this definition, “Value”
means, with respect to any share of stock, the value of such share determined
by Walter under principles applicable for purposes of Section 1504 of the
Internal Revenue Code of 1986, as amended.

“Person” means any
individual, partnership, limited liability company, joint venture, corporation,
trust, unincorporated organization, government (and any department or agency
thereof) or other entity.

 

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“Registrable Securities”
means shares of Series A Common Stock, shares of Series B Common Stock and any
stock or other securities into which or for which such Common Stock may
hereafter be changed, converted or exchanged and any other shares or securities
issued to Holders of such Common Stock (or such shares or other securities into
which or for which such shares are so changed, converted or exchanged) upon any
reclassification, share combination, share subdivision, share dividend, share
exchange, merger, consolidation or similar transaction or event or pursuant to
the Nonvoting Stock Option.  As to any
particular Registrable Securities, such Registrable Securities shall cease to
be Registrable Securities when (i) a registration statement with respect to the
sale by the Holder thereof shall have been declared effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) they shall have been distributed to the
public in accordance with Rule 144, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by Mueller and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act or any state securities or blue sky law then in effect or (iv)
they shall have ceased to be outstanding.

“Registration Expenses”
means any and all expenses incident to performance of or compliance with any
registration of securities pursuant to Article III, including, without
limitation, (i) the fees, disbursements and expenses of Mueller’s counsel and
accountants and the fees and expenses of counsel selected by the Holders in
accordance with this Agreement in connection with the registration of the
securities to be disposed of, such fees and expenses of such counsel selected
by the Holders to be reasonable in the reasonable discretion of Mueller; (ii)
all expenses, including filing fees, in connection with the preparation,
printing and filing of the registration statement, any preliminary prospectus
or final prospectus, any other offering document and amendments and supplements
thereto and the mailing and delivering of copies thereof to any underwriters
and dealers; (iii) the cost of printing or producing any underwriting
agreements and blue sky or legal investment memoranda and any other documents
in connection with the offering, sale or delivery of the securities to be
disposed of; (iv) all expenses in connection with the qualification of the
securities to be disposed of for offering and sale under state securities laws,
including the fees and disbursements of counsel for the underwriters or the
Holders of securities in connection with such qualification and in connection
with any blue sky and legal investment surveys; (v) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the securities to be disposed of; (vi)
transfer agents’ and registrars’ fees and expenses and the fees and expenses of
any other agent or trustee appointed in connection with such offering; (vii)
all security engraving and security printing expenses; (viii) all fees and
expenses payable in connection with the listing of the securities on any
securities exchange or automated interdealer quotation system or the rating of
such securities, (ix) any other fees and disbursements of underwriters
customarily paid by the sellers of securities, but excluding underwriting
discounts and commissions and transfer taxes, if any, and (x) other reasonable
out-of-pocket expenses of Holders other than legal fees and expenses referred
to in clause (i) above.

“Rule 144” means Rule
144 (or any successor rule to similar effect) promulgated under the Securities
Act.

 

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“Rule 415 Offering”
means an offering on a delayed or continuous basis pursuant to Rule 415 (or any
successor rule to similar effect) promulgated under the Securities Act.

“SEC” means the
United States Securities and Exchange Commission.

“Securities Act”
means the Securities Act of 1933, as amended, or any successor statute.

“Selling Holder” has
the meaning ascribed thereto in Section 3.4(e).

“Subsidiary” means,
as to any Person, any corporation, association, partnership, joint venture or
other business entity of which more than 50% of the voting capital stock or
other voting ownership interests is owned or controlled, directly or
indirectly, by such Person or by one or more of the Subsidiaries of such Person
or by a combination thereof.  “Subsidiary,”
when used with respect to Walter or Mueller, shall also include any other
entity affiliated with Walter or Mueller, as the case may be, that Walter and
Mueller may hereafter agree in writing shall be treated as a “Subsidiary” for
the purposes of this Agreement.

“Transferee” has the
meaning ascribed thereto in Section 3.9.

“Walter Entities”
means Walter and Subsidiaries of Walter (other than Subsidiaries that
constitute Mueller Entities), and “Walter Entity” shall mean any of the
Walter Entities.

“Walter Ownership
Reduction” means any decrease at any time in the Ownership Percentage to
less than forty-five percent (45%).

“Walter Transferee”
has the meaning ascribed thereto in Section 3.9.

“Walter” has the
meaning ascribed thereto in the preamble hereto.

“Walter Group” has
the meaning ascribed thereto in the recitals to this Agreement.

1.2.          Internal References.  Unless the context indicates otherwise,
references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement and
references to the parties shall mean the parties to this Agreement.

ARTICLE II

OPTIONS

2.1.          Options.  (a) 
Mueller hereby grants to Walter, on the terms and conditions set forth
herein, a continuing right (the “Series B Common Stock Option”) to
purchase from Mueller, at the times set forth herein, such number of shares of
Series B Common Stock as is necessary to allow the Walter Entities to maintain
the percentage of the then-outstanding

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Common Stock of Mueller
that is equal to the Ownership Percentage. 
The Series B Common Stock Option shall be assignable, in whole or in
part and from time to time, by Walter to any Walter Entity.  The exercise price for the shares of Series B
Common Stock purchased pursuant to the Series B Common Stock Option shall be
the Market Price of the Series A Common Stock as of the date of first delivery
of notice of exercise of the Series B Common Stock Option by Walter (or its
permitted assignee hereunder) to Mueller; provided, however, that the exercise
price shall be at least equal to the aggregate par value of the shares of
Series B Common Stock purchased thereby.

(b)           The provisions of Section 2.1(a) hereof notwithstanding,
the Series B Common Stock Option granted pursuant to Section 2.1(a) shall not
apply and shall not be exercisable in connection with the issuance by Mueller
of any shares of Common Stock pursuant to any stock option or other executive
or employee benefit or compensation plan maintained by Mueller, so long as,
from and after the date hereof and prior to the issuance of such shares,
Mueller has repurchased from shareholders and not subsequently reissued a
number of shares equal or greater to the number of shares to be issued in any
such issuance.

(c)           Mueller hereby grants to Walter, on the terms and
conditions set forth herein, a continuing right (the “Nonvoting Stock Option”
and, together with the Series B Common Stock Option, the “Options”) to
purchase from Mueller, at the times set forth herein, such number of shares of
Nonvoting Stock as is necessary to allow the Walter Entities to own eighty
percent (80%) of each class of outstanding Nonvoting Stock.  The Nonvoting Stock Option shall be
assignable, in whole or in part and from time to time, by Walter to any Walter
Entity.  The exercise price for the
shares of Nonvoting Stock purchased pursuant to the Nonvoting Stock Option
shall be the price at which such Nonvoting Stock is then being sold to third
parties, or, if no Nonvoting Stock is being sold, the fair market value thereof
as determined in good faith by the Board of Directors of Mueller; provided,
however, that the exercise price shall be at least equal to the aggregate par
value of the shares of Nonvoting Stock purchased thereby.

2.2.          Notice.  At least 20 business days prior to the
issuance of any shares of Common Stock (other than in connection with the
Initial Public Offering, including the full exercise of all underwriters’
over-allotment options granted in connection therewith and other than issuances
of Common Stock to any Walter Entity) or the first date on which any event
could occur that, in the absence of a full or partial exercise of the Series B
Common Stock Option, would result in a reduction in the Ownership Percentage,
Mueller will notify Walter in writing (a “Series B Common Stock Option
Notice”) of any plans it has to issue such shares or the date on which such
event could first occur.  At least 20
business days prior to the issuance of any shares of Nonvoting Stock (other
than issuances of Nonvoting Stock to any Walter entity) or the first date on
which any event could occur that, in the absence of a full or partial exercise
of the Nonvoting Stock Option, would result in the Walter Entities owning less
than eighty percent (80%) of each class of outstanding Nonvoting Stock, Mueller
will notify Walter in writing (a “Nonvoting Stock Option Notice” and,
together with a Series B Common Stock Option Notice, an “Option Notice”)
of any plans it has to issue such shares or the date on which such event could
first occur.  Each Option Notice must
specify the date on which Mueller intends to issue such additional shares or on
which such event could first occur (such issuance or event being referred to
herein as an “Issuance Event” and the date of such issuance or event as
an “Issuance 

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Event Date”), the number of shares Mueller intends
to issue or may issue and the other terms and conditions of such Issuance
Event.

2.3.          Option Exercise and Payment .  The Series B Common Stock Option may be
exercised by Walter (or any Walter Entity to which all or any part of the
Series B Common Stock Option has been assigned) for a number of shares equal to
or less than the number of shares that are necessary for the Walter Entities to
maintain, in the aggregate, the percentage of the then-outstanding shares of
Common Stock of Mueller that is equal to the then-current Ownership Percentage.  The Nonvoting Stock Option may be exercised
by Walter (or any Walter Entity to which all or any part of the Nonvoting Stock
Option has been assigned) for a number of shares equal to or less than the
number of shares that are necessary for the Walter Entities to own, in the
aggregate, eighty percent (80%) of each class of outstanding Nonvoting
Stock.  Each Option may be exercised at
any time after receipt of an applicable Option Notice and prior to the
applicable Issuance Event Date by the delivery to Mueller of a written notice
to such effect specifying (i) the number of shares of Series B Common Stock or
Nonvoting Stock, as the case may be, to be purchased by Walter, or any of the
Walter Entities and (ii) a calculation of the exercise price for such shares; provided,
however, that if Mueller shall have issued any shares of Common Stock in
violation of its obligations under this Article II, the Option may be exercised
at any time by the delivery to Mueller of a written notice to such effect
specifying the information described in clauses (i) and (ii) above.  Upon any exercise of an Option, Mueller will
promptly (and in any event on or prior to the applicable Issuance Event Date)
(i) deliver to Walter (or any Walter Entity designated by Walter), against
payment therefor, certificates (issued in the name of Walter or its permitted
assignee hereunder or as directed by Walter) representing the shares of Series
B Common Stock or Nonvoting Stock, as the case may be, being purchased upon
such exercise, and (ii) record the issuance of such shares, upon payment
therefor, in Mueller’s stock ledger. 
Payment for such shares shall be made by wire transfer or intrabank
transfer of immediately-available funds to such account as shall be specified
by Mueller, for the full purchase price for such shares.

2.4.          Effect of Failure to Exercise.  Except as provided in Section 2.6, any
failure by Walter to exercise either Option, or any exercise for less than all
shares purchasable under either Option, in connection with any particular Issuance
Event shall not affect Walter’s right to exercise the relevant Option in
connection with any subsequent Issuance Event.

2.5.          Initial Public Offering.  Notwithstanding the foregoing, Walter shall
not be entitled to exercise the Series B Common Stock Option in connection with
the Initial Public Offering of the Series A Common Stock if, upon the
completion of the Initial Public Offering, including the full exercise of all
underwriters’ over-allotment options granted in connection therewith, the
Ownership Percentage would be no less than eighty percent (80%).

2.6.          Termination of Options.  The Options shall terminate upon the
occurrence of any Issuance Event that, after considering Walter’s response
thereto and to any other Issuance Events, results in the Ownership Percentage
being less than twenty percent (20%), other than any Issuance Event in
violation of this Agreement.  Each
Option, or any portion thereof assigned to any Walter Entity other than Walter,
also shall terminate in the event that the Person to whom such Option, or such
portion thereof has been transferred, ceases to be a Walter Entity for any
reason whatsoever.

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ARTICLE III

REGISTRATION RIGHTS

3.1.          Demand
Registration - Registrable Securities. 
(a)  Upon written notice provided
at any time after the Initial Public Offering Date from any Holder of
Registrable Securities requesting that Mueller effect the registration under
the Securities Act of any or all of the Registrable Securities held by such
Holder, which notice shall specify the intended method or methods of
disposition of such Registrable Securities, Mueller shall use its best efforts
to effect the registration under the Securities Act and applicable state
securities laws of such Registrable Securities for disposition in accordance with
the intended method or methods of disposition stated in such request (including
in a Rule 415 Offering, if Mueller is then eligible to register such
Registrable Securities on Form S-3 (or a successor form) for such offering);
provided, that:

(i)            with respect to any registration
statement filed, or to be filed, pursuant to this Section 3.1, if Mueller shall
furnish to the Holders of Registrable Securities that have made such request a
certified resolution of the Board of Directors of Mueller (adopted by the
affirmative vote of a majority of the total number of directors, without any
vacancies) stating that in the Board of Directors’ good faith judgment it would
(because of the existence of, or in anticipation of, any acquisition or
financing activity, or the unavailability for reasons beyond Mueller’s
reasonable control of any required financial statements, or any other event or
condition of similar significance to Mueller) be significantly disadvantageous
(a “Disadvantageous Condition”) to Mueller for such a registration
statement to be maintained effective, or to be filed and become effective, and
setting forth the general reasons for such judgment, Mueller shall be entitled
to cause such registration statement to be withdrawn and the effectiveness of
such registration statement terminated, or, in the event no registration
statement has yet been filed, shall be entitled not to file any such
registration statement, until such Disadvantageous Condition no longer exists
(notice of which Mueller shall promptly deliver to such Holders).  Upon receipt of any such notice of a
Disadvantageous Condition, such Holders shall forthwith discontinue use of the
prospectus contained in such registration statement and, if so directed by
Mueller, each such Holder will deliver to Mueller all copies, other than
permanent file copies then in such Holder’s possession, of the prospectus then
covering such Registrable Securities current at the time of receipt of such
notice; provided, that the filing of any such registration statement may
not be delayed for a period in excess of six months due to the occurrence of
any particular Disadvantageous Condition;

(ii)           after any Walter Ownership Reduction,
the Holders of Registrable Securities may collectively exercise their rights
under this Section 3.1 (through notice delivered by Holders owning in the
aggregate a majority in economic interest of the Registrable Securities then
held by Holders) on not more than three occasions (it being acknowledged that
prior to any Walter Ownership Reduction, there shall be no limit to the number
of occasions on which such Holders (other than any Walter Transferees and their
Affiliates (other than Walter Entities)) may exercise such rights);

(iii)          Except as otherwise provided herein,
the Holders of Registrable Securities shall not have the right to exercise
registration rights pursuant to this Section

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3.1 within the 180-day
period following the registration and sale of Registrable Securities effected
pursuant to a prior exercise of the registration rights provided in this
Section 3.1; and

(iv)          the Holders of Registrable Securities
shall not have the right to exercise registration rights pursuant to this
Section 3.1 within the 180-day period
following the effective date of the Registration Statement in connection with
the Initial Public Offering.

(b)           Notwithstanding any other provision of this Agreement to
the contrary, a registration requested by a Holder of Registrable Securities
pursuant to this Section 3.1 shall not be deemed to have been effected (and,
therefore, not requested for purposes of paragraph (a) above), (i) unless it
has become effective, (ii) if, after it has become effective, such registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by such Holder and, as a result thereof, the
Registrable Securities requested to be registered cannot be completely
distributed in accordance with the plan of distribution set forth in the
related registration statement or (iii) if the conditions to closing specified
in the purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied or waived other than by reason of some
act or omission by such Holder of Registrable Securities.

(c)           In the event that any registration pursuant to this
Section 3.1 shall involve, in whole or in part, an underwritten offering, the
Holders of a majority of the Registrable Securities to be registered shall have
the right to designate an underwriter or underwriters reasonably acceptable to
Mueller as the lead or managing underwriters of such underwritten offering and,
in connection with each registration pursuant to this Section 3.1, such Holders
may select one counsel reasonably acceptable to Mueller to represent all such
Holders.

(d)           Mueller shall have the right to cause the registration of
additional equity securities for sale for its account, the account of any
Mueller Entity or any existing or former directors, officers or employees of
the Mueller Entities in any registration of Registrable Securities requested by
the Holders pursuant to paragraph (a) above; provided, however,
that if the registration and sale of such additional equity securities would
require Walter or any Walter Entity to exercise the Options to maintain the
then-current Ownership Percentage or ownership of eighty percent (80%) of each
class of outstanding Nonvoting Stock, then the number of such additional equity
securities shall be reduced so that exercise of the Options would not be
necessary for Walter or any Walter Entity to maintain such ownership levels
and, provided, further, that if such Holders are advised in
writing (with a copy to Mueller) by a nationally recognized investment banking
firm selected by such Holders reasonably acceptable to Mueller (which shall be
the lead underwriter or a managing underwriter in the case of an underwritten
offering) that, in such firm’s good faith view, all or a part of such additional
equity securities cannot be sold and the inclusion of such additional equity
securities in such registration would be likely to have an adverse effect on
the price, timing or distribution of the offering and sale of the Registrable
Securities then contemplated by any Holder, the registration of such additional
equity securities or part thereof shall not be permitted.  The Holders of the Registrable Securities to
be offered may require that any such additional equity securities be included
in the offering proposed by such Holders on the same conditions as the
Registrable Securities that are included

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therein.  In the event that the number of Registrable
Securities requested to be included in a registration statement by the Holders
thereof exceeds the number which, in the good faith view of such investment
banking firm, can be sold without adversely affecting the price, timing,
distribution or sale of securities in the offering, the number shall be
allocated pro rata among the requesting Holders on the basis of the relative
number of Registrable Securities then held by each such Holder (provided that
any number in excess of a Holder’s request may be reallocated among the
remaining requesting Holders in a like manner).

3.2.          Piggyback Registration.  In the event that Mueller at any time after
the Initial Public Offering Date proposes to register any of its Common Stock,
any other of its equity securities or securities convertible into or
exchangeable for its equity securities (collectively, including Common Stock, “Other
Securities”) under the Securities Act, whether or not for sale for its own
account, in a manner that would permit registration of Registrable Securities
for sale for cash to the public under the Securities Act, it shall at each such
time give prompt written notice to each Holder of Registrable Securities of its
intention to do so and of the rights of such Holder under this Section
3.2.  Subject to the terms and conditions
hereof, such notice shall offer each such Holder the opportunity to include in
such registration statement such number of Registrable Securities as such
Holder may request.  Upon the written
request of any such Holder made within 15 days after the receipt of Mueller’s
notice (which request shall specify the number of Registrable Securities
intended to be disposed of and the intended method of disposition thereof),
Mueller shall use its best efforts to effect, in connection with the
registration of the Other Securities, the registration under the Securities Act
of all Registrable Securities which Mueller has been so requested to register,
to the extent required to permit the disposition (in accordance with such
intended method of disposition thereof) of the Registrable Securities so
requested to be registered; provided, that:

(a)           if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective date of
the registration statement filed in connection with such registration, Mueller
shall determine for any reason not to register the Other Securities, Mueller
may, at its election, give written notice of such determination to such Holders
and thereupon Mueller shall be relieved of its obligation to register such
Registrable Securities in connection with the registration of such Other
Securities, without prejudice, however, to the rights of the Holders of
Registrable Securities immediately to request that such registration be
effected as a registration under Section 3.1 to the extent permitted
thereunder;

(b)           if the registration referred to in the first sentence of
this Section 3.2 is to be an underwritten registration on behalf of Mueller,
and a nationally recognized investment banking firm selected by Mueller advises
Mueller in writing that, in such firm’s good faith view, all or a part of such
Registrable Securities cannot be sold and the inclusion of all or a part of
such Registrable Securities in such registration would be likely to have an
adverse effect upon the price, timing or distribution of the offering and sale
of the Other Securities then contemplated, Mueller shall include in such
registration:  (i) first, all Other
Securities Mueller proposes to sell for its own account (“Company Securities”),
(ii) second, up to the full number of Registrable Securities held by Holders
constituting Walter Entities that are requested to be included in such
registration (Registrable Securities that are so held being sometimes referred
to herein as “Holder Securities”) in excess of the number of Company
Securities to be sold in such offering which, in the good faith view of such
investment banking firm, can be sold without adversely affecting 

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such offering (and (x) if such number is less than
the full number of such Holder Securities, such number shall be allocated by
Walter among such Walter Entities and (y) in the event that such investment
banking firm advises that less than all of such Holder Securities may be
included in such offering, such Walter Entities may withdraw their request for
registration of their Registrable Securities under this Section 3.2 and 90 days
subsequent to the effective date of the registration statement for the
registration of such Other Securities request that such registration be
effected as a registration under Section 3.1 to the extent permitted thereunder),
(iii) third, up to the full number of Registrable Securities held by Holders
(other than Walter Entities) of Registrable Securities that are requested to be
included in such registration in excess of the number of Company Securities and
Holder Securities to be sold in such offering which, in the good faith view of
such investment banking firm, can be so sold without so adversely affecting
such offering (and (x) if such number is less than the full number of such
Registrable Securities, such number shall be allocated pro rata among such
Holders on the basis of the number of Registrable Securities requested to be
included therein by each such Holder and (y) in the event that such investment
banking firm advises that less than all of such Registrable Securities may be
included in such offering, such Holders may withdraw their request for
registration of their Registrable Securities under this Section 3.2 and 90 days
subsequent to the effective date of the registration statement for the
registration of such Other Securities request that such registration be
effected as a registration under Section 3.1 to the extent permitted
thereunder) and (iv) fourth, up to the full number of the Other Securities
(other than Company Securities), if any, in excess of the number of Company
Securities and Registrable Securities to be sold in such offering which, in the
good faith view of such investment banking firm, can be so sold without so
adversely affecting such offering (and, if such number is less than the full
number of such Other Securities, such number shall be allocated pro rata among
the holders of such Other Securities (other than Company Securities) on the
basis of the number of securities requested to be included therein by each such
Holder);

(c)           if the registration referred to in the first sentence of
this Section 3.2 is to be an underwritten secondary registration on behalf of
holders of Other Securities (the “Other Holders”), and the lead
underwriter or managing underwriter advises Mueller in writing that in their
good faith view, all or a part of such additional securities cannot be sold and
the inclusion of such additional securities in such registration would be
likely to have an adverse effect on the price, timing or distribution of the
offering and sale of the Other Securities then contemplated, Mueller shall
include in such registration the number of securities (including Registrable
Securities) that such underwriters advise can be so sold without adversely
affecting such offering, allocated pro rata among the Other Holders and the
Holders of Registrable Securities on the basis of the number of securities
(including Registrable Securities) requested to be included therein by each
Other Holder and each Holder of Registrable Securities; provided, that
if such registration statement is to be filed at any time after a Walter
Ownership Reduction, if such Other Holders have requested that such
registration statement be filed pursuant to demand registration rights granted
to them by Mueller, Mueller shall include in such registration (i) first, Other
Securities sought to be included therein by the Other Holders pursuant to the
exercise of such demand registration rights, (ii) second, the number of Holder
Securities sought to be included in such registration in excess of the number
of Other Securities sought to be included in such registration by the Other
Holders which in the good faith view of such investment banking firm, can be so
sold without so adversely affecting such offering (and (x) if such number is
less than the full number of such Holder Securities, such number shall be
allocated by Walter among

11

such Walter Entities and (y) in the event that such
investment banking firm advises that less than all of such Holder Securities
may be included in such offering, such Walter Entities may withdraw their
request for registration of their Registrable Securities under this Section 3.2
and 90 days subsequent to the effective date of the registration statement for
the registration of such Other Securities request that such registration be
effected as a registration under Section 3.1 to the extent permitted
thereunder) and (iii) third, the number of Registrable Securities sought to be
included in such registration by Holders (other than Walter Entities) of
Registrable Securities in excess of the number of Other Securities and the
number of Holder Securities sought to be included in such registration which,
in the good faith view of such investment banking firm, can be so sold without
so adversely affecting such offering (and (x) if such number is less than the
full number of such Registrable Securities, such number shall be allocated pro
rata among such Holders on the basis of the number of Registrable Securities
requested to be included therein by each such Holder and (y) in the event that
such investment banking firm advises that less than all of such Registrable
Securities may be included in such offering, such Holders may withdraw their
request for registration of their Registrable Securities under this Section 3.2
and 90 days subsequent to the effective date of the registration statement for
the registration of such Other Securities request that such registration be
effected as a registration under Section 3.1 to the extent permitted
thereunder);

(d)           Mueller shall not be required to effect any registration
of Registrable Securities under this Section 3.2 incidental to the registration
of any of its securities in connection with mergers, acquisitions, exchange
offers, subscription offers, dividend reinvestment plans or stock option or
other executive or employee benefit or compensation plans; and

(e)           no registration of Registrable Securities effected under
this Section 3.2 shall relieve Mueller of its obligation to effect a
registration of Registrable Securities pursuant to Section 3.1.

3.3.          Expenses.  Except as provided herein, Mueller shall pay
all Registration Expenses with respect to a particular offering (or proposed
offering).  Notwithstanding the
foregoing, each Holder and Mueller shall be responsible for its own internal
administrative and similar costs, which shall not constitute Registration
Expenses.

3.4.          Registration
and Qualification.  If and whenever
Mueller is required to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 3.1 or 3.2, Mueller shall as
promptly as practicable:

(a)           prepare, file and use its reasonable best efforts to cause
to become effective a registration statement under the Securities Act relating
to the Registrable Securities to be offered;

(b)           prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities until the earlier of (A) such
time as all of such Registrable Securities have been disposed of in accordance
with the intended methods of 

12

disposition set forth in such registration statement
and (B) the expiration of six months after such registration statement becomes
effective; provided, that such six-month period shall be extended for
such number of days that equals the number of days elapsing from (x) the date
the written notice contemplated by paragraph (f) of this Section 3.4 is given
by Mueller to (y) the date on which Mueller delivers to the Holders of
Registrable Securities the supplement or amendment contemplated by paragraph
(f) of this Section 3.4;

(c)           furnish to the Holders of Registrable Securities and to
any underwriter of such Registrable Securities such number of conformed copies
of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity with the requirements of
the Securities Act, such documents incorporated by reference in such
registration statement or prospectus, and such other documents, as the Holders
of Registrable Securities or such underwriter may reasonably request, and upon
request a copy of any and all transmittal letters or other correspondence to or
received from, the SEC or any other governmental agency or self-regulatory body
or other body having jurisdiction (including any domestic or foreign securities
exchange) relating to such offering;

(d)           use its reasonable best efforts to register or qualify all
Registrable Securities covered by such registration statement under the
securities or blue sky laws of such U.S. jurisdictions as the Holders of such
Registrable Securities or any underwriter to such Registrable Securities shall
request, and use its reasonable best efforts to obtain all appropriate
registrations, permits and consents in connection therewith, and do any and all
other acts and things which may be necessary or advisable to enable the Holders
of Registrable Securities or any such underwriter to consummate the disposition
in such jurisdictions of its Registrable Securities covered by such
registration statement; provided, that Mueller shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any such jurisdiction wherein it is not so qualified or to
consent to general service of process in any such jurisdiction;

(e)           (i) use its best efforts to furnish to each Holder of
Registrable Securities included in such registration (each, a “Selling
Holder”) and to any underwriter of such Registrable Securities an opinion
of counsel for Mueller addressed to each Selling Holder and dated the date of
the closing under the underwriting agreement (if any) (or if such offering is
not underwritten, dated the effective date of the registration statement) and
(ii) use its best efforts to furnish to each Selling Holder a “cold comfort”
letter addressed to each Selling Holder and signed by the independent public
accountants who have audited the financial statements of Mueller included in
such registration statement, in each such case covering substantially the same
matters with respect to such registration statement (and the prospectus
included therein) as are customarily covered in opinions of issuer’s counsel
and in accountants’ letters delivered to underwriters in underwritten public
offerings of securities and such other matters as the Selling Holders may
reasonably request and, in the case of such accountants’ letter, with respect
to events subsequent to the date of such financial statements;

(f)            as promptly as practicable, notify the Selling Holders in
writing (i) at any time when a prospectus relating to a registration pursuant
to Sections 3.1 or 3.2 is required to be

13

delivered under the Securities Act of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading and (ii) of any request by the SEC or any other
regulatory body or other body having jurisdiction for any amendment of or
supplement to any registration statement or other document relating to such
offering, and in either such case, at the request of the Selling Holders
prepare and furnish to the Selling Holders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading;

(g)           if reasonably requested by the lead or managing
underwriters, use its best efforts to list all such Registrable Securities
covered by such registration on each securities exchange and automated inter-dealer
quotation system on which a class of common equity securities of Mueller is
then listed;

(h)           to the extent reasonably requested by the lead or managing
underwriters, cause appropriate officers of Mueller to participate in any “road
shows” scheduled in connection with any such registration, with all
out-of-pocket costs and expense incurred by Mueller or such officers in
connection with such participation to be paid by Mueller; and

(i)            furnish for delivery in connection with the closing of
any offering of Registrable Securities pursuant to a registration effected
pursuant to Sections 3.1 or 3.2 unlegended certificates representing ownership
of the Registrable Securities being sold in such denominations as shall be
requested by the Selling Holders or the underwriters.

3.5.          Conversion
of Other Securities, Etc.  In the
event that any Holder offers any options, rights, warrants or other securities
issued by it or any other Person that are offered with, convertible into or
exercisable or exchangeable for any Registrable Securities, the Registrable
Securities underlying such options, rights, warrants or other securities shall
continue to be eligible for registration pursuant to Sections 3.1 and 3.2.

3.6.          Underwriting;
Due Diligence.  (a)  If requested by the underwriters for any
underwritten offering of Registrable Securities pursuant to a registration
requested under this Article III, Mueller shall enter into an underwriting
agreement with such underwriters for such offering, which agreement will
contain such representations and warranties by Mueller and such other terms and
provisions as are customarily contained in underwriting agreements of Mueller
to the extent relevant and as are customarily contained in underwriting
agreements generally with respect to secondary distributions to the extent
relevant, including, without limitation, indemnification and contribution
provisions substantially to the effect and to the extent provided in Section
3.7, and agreements as to the provision of opinions of counsel and accountants’
letters to the effect and to the extent provided in Section 3.4(e).  The Selling Holders on whose behalf the
Registrable Securities are to be distributed by such underwriters shall be
parties to any such underwriting agreement and the representations and
warranties by, and the other agreements on

14

the part of, Mueller to
and for the benefit of such underwriters, shall also be made to and for the
benefit of such Selling Holders.  Such
underwriting agreement shall also contain such representations and warranties
by such Selling Holders and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary distributions,
when relevant, including, without limitation, indemnification and contribution provisions
substantially to the effect and to the extent provided in Section 3.7.

(b)           In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act pursuant to this Article III, Mueller shall give the Holders of such
Registrable Securities and the underwriters, if any, and their respective
counsel and accountants, such reasonable and customary access to its books and
records and such opportunities to discuss the business of Mueller with its
officers and the independent public accountants who have certified the
financial statements of Mueller as shall be necessary, in the opinion of such
Holders and such underwriters or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.

3.7.          Indemnification and Contribution.  (a)  In
the case of each offering of Registrable Securities made pursuant to this
Article III, Mueller agrees to indemnify and hold harmless, to the extent
permitted by law, each Selling Holder, each underwriter of Registrable
Securities so offered and each Person, if any, who controls any of the
foregoing Persons within the meaning of the Securities Act and the officers,
directors, affiliates, employees and agents of each of the foregoing, against
any and all losses, liabilities, costs (including reasonable attorney’s fees
and disbursements), claims and damages, joint or several, to which they or any
of them may become subject, under the Securities Act or otherwise, including
any amount paid in settlement of any litigation commenced or threatened,
insofar as such losses, liabilities, costs, claims and damages (or actions or
proceedings in respect thereof, whether or not such indemnified Person is a
party thereto) arise out of or are based upon any untrue statement by Mueller
or alleged untrue statement by Mueller of a material fact contained in the
registration statement (or in any preliminary or final prospectus included
therein) or in any offering memorandum or other offering document relating to
the offering and sale of such Registrable Securities prepared by Mueller or at
its direction, or any amendment thereof or supplement thereto, or in any
document incorporated by reference therein, or any omission by Mueller or
alleged omission by Mueller to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that Mueller shall not be liable to any Person in any such
case to the extent that any such loss, liability, cost, claim or damage arises
out of or relates to any untrue statement or alleged untrue statement, or any
omission, if such statement or omission shall have been made in reliance upon
and in conformity with information relating to a Selling Holder, another holder
of securities included in such registration statement or underwriter furnished
to Mueller by or on behalf of such Selling Holder, other holder or underwriter
specifically for use in the registration statement (or in any preliminary or final
prospectus included therein), offering memorandum or other offering document,
or any amendment thereof or supplement thereto. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
any Selling Holder, any other holder or any underwriter and shall survive the
transfer of such securities.  The
foregoing indemnity agreement is in addition to any liability that Mueller may
otherwise have to each Selling Holder, other holder or underwriter of the
Registrable Securities or any controlling person of the foregoing and the
officers, directors, affiliates, employees and agents of each of the foregoing;
provided, further,

15

that, in the case of an
offering with respect to which a Selling Holder has designated the lead or
managing underwriters (or a Selling Holder is offering Registrable Securities
directly, without an underwriter), this indemnity does not apply to any loss,
liability, cost, claim or damage arising out of or relating to any untrue
statement or alleged untrue statement or omission or alleged omission in any
preliminary prospectus or offering memorandum if a copy of a final prospectus
or offering memorandum was not sent or given by or on behalf of any underwriter
(or such Selling Holder or other holder, as the case may be) to such Person
asserting such loss, liability, cost, claim or damage at or prior to the
written confirmation of the sale of the Registrable Securities as required by
the Securities Act and such untrue statement or omission had been corrected in
such final prospectus or offering memorandum.

(b)           In the case of each offering made pursuant to this
Agreement, each Selling Holder, by exercising its registration rights
hereunder, agrees to indemnify and hold harmless, and to cause each underwriter
of Registrable Securities included in such offering (in the same manner and to
the same extent as set forth in Section 3.7(a)) to agree to indemnify and hold
harmless, Mueller, each other underwriter who participates in such offering,
each other Selling Holder or other holder with securities included in such
offering and in the case of an underwriter, such Selling Holder or other
holder, and each Person, if any, who controls any of the foregoing within the
meaning of the Securities Act and the officers, directors, affiliates,
employees and agents of each of the foregoing, against any and all losses,
liabilities, costs (including reasonable attorney’s fees and disbursements),
claims and damages to which they or any of them may become subject, under the
Securities Act or otherwise, including any amount paid in settlement of any
litigation commenced or threatened, insofar as such losses, liabilities, costs,
claims and damages (or actions or proceedings in respect thereof, whether or
not such indemnified Person is a party thereto) arise out of or are based upon
any untrue statement or alleged untrue statement by such Selling Holder or
underwriter, as the case may be, of a material fact contained in the
registration statement (or in any preliminary or final prospectus included
therein) or in any offering memorandum or other offering document relating to
the offering and sale of such Registrable Securities prepared by Mueller or at
its direction, or any amendment thereof or supplement thereto, or any omission
by such Selling Holder or underwriter, as the case may be, or alleged omission
by such Selling Holder or underwriter, as the case may be, of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that such untrue statement of a
material fact is contained in, or such material fact is omitted from
information relating to such Selling Holder or underwriter, as the case may be,
furnished to Mueller by or on behalf of such Selling Holder or underwriter, as
the case may be, specifically for use in such registration statement (or in any
preliminary or final prospectus included therein), offering memorandum or other
offering document, or any amendment thereof or supplement thereto.  The foregoing indemnity is in addition to any
liability which such Selling Holder or underwriter, as the case may be, may
otherwise have to Mueller, or controlling persons and the officers, directors,
affiliates, employees, and agents of each of the foregoing; provided, however,
that, in the case of an offering made pursuant to this Agreement with respect
to which Mueller has designated the lead or managing underwriters (or Mueller
is offering securities directly, without an underwriter), this indemnity does
not apply to any loss, liability, cost, claim, or damage arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission in any preliminary prospectus or offering memorandum if a copy
of a final prospectus or offering memorandum was not sent or given by or on
behalf of any underwriter (or Mueller, as the case may be) to such Person

16

asserting such loss, liability, cost, claim or
damage at or prior to the written confirmation of the sale of the Registrable
Securities as required by the Securities Act and such untrue statement or
omission had been corrected in such final prospectus or offering memorandum.

(c)           Each party indemnified under paragraph (a) or (b) of this
Section 3.7 shall, promptly after receipt of notice of a claim or action
against such indemnified party in respect of which indemnity may be sought
hereunder, notify the indemnifying party in writing of the claim or action;
provided, that the failure to notify the indemnifying party shall not relieve
it from any liability that it may have to an indemnified party on account of
the indemnity agreement contained in paragraph (a) or (b) of this Section 3.7
otherwise than under such paragraphs.  If
any such claim or action shall be brought against an indemnified party, and it
shall have notified the indemnifying party thereof, unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified
party and indemnifying parties may exist in respect of such claim, the indemnifying
party shall be entitled to participate therein, and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel satisfactory to the indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party).  After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 3.7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.  If the indemnifying party does not assume the
defense of such claim or action, it is understood that the indemnifying party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
one separate firm of local attorneys in each such jurisdiction) at any time for
all such indemnified parties.  Any indemnifying
party against whom indemnity may be sought under this Section 3.7 shall not be
liable to indemnify an indemnified party if such indemnified party settles such
claim or action without the consent of the indemnifying party, which consent
shall not be unreasonably withheld.

(d)           If the indemnification provided for in this Section 3.7
shall for any reason be unavailable (other than in accordance with its terms)
to an indemnified party in respect of any loss, liability, cost, claim or
damage referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability, cost, claim or
damage in such proportion as shall be appropriate to reflect (i) the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other hand or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law or if the indemnified party failed to give
the notice required under paragraph (c) of this Section 3.7, the relative
benefits and the relative fault of the indemnifying party on the one hand and
the indemnified party on the other with respect to the statements or omissions
which resulted in such loss, liability, cost, claim or damage as well as any
other relevant equitable considerations. 
The relative benefits received by the indemnifying party and the
indemnified party shall be deemed to be in the same respective proportion as
the net proceeds (before deducting expenses) of the offering received by such
party (or, in the case of an underwriter, such underwriter’s discounts and
commissions) bear to the aggregate offering price of the Registrable Securities
or Other Securities.  The relative fault
shall be determined by

17

reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party on the
one hand or the indemnified party on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission, but not by reference to any indemnified
party’s stock ownership in Mueller.  The
amount paid or payable by an indemnified party as a result of the loss, cost,
claim, damage or liability, or action in respect thereof, referred to above in
this paragraph (d) shall be deemed to include, for purposes of this paragraph
(d), any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

(e)           Indemnification and contribution similar to that specified
in the preceding paragraphs of this Section 3.7 (with appropriate
modifications) shall be given by Mueller, the Selling Holders and underwriters
with respect to any required registration or other qualification of securities
under any state law or regulation or governmental authority.

(f)            The obligations of the parties under this Section 3.7
shall be in addition to any liability which any party may otherwise have to any
other party.

3.8.          Rule 144 and Form S-3.  Commencing 90 days after the Initial Public
Offering Date, Mueller shall use its best efforts to ensure that the conditions
to the availability of Rule 144 set forth in paragraph (c) thereof shall be
satisfied.  Upon the request of any
Holder of Registrable Securities, Mueller will deliver to such Holder a written
statement as to whether it has complied with such requirements.  Mueller further agrees to use its reasonable
efforts to cause all conditions to the availability of Form S-3 (or any
successor form) under the Securities Act of the filing of registration
statements under this Agreement to be met as soon as practicable after the
Initial Public Offering Date. 
Notwithstanding anything contained in this Section 3.8, Mueller may
deregister under Section 12 of the Securities Exchange Act of 1934, as amended,
if it then is permitted to do so pursuant to said Act and the rules and
regulations thereunder.

3.9.          Transfer of Registration Rights.  Any Holder may transfer all or any portion of
its rights under Article III to any transferee of a number of Registrable
Securities owned by such Holder exceeding three percent (3%) of the outstanding
class or series of such securities at the time of transfer (each transferee
that receives such minimum number of Registrable Securities, a “Transferee”);
provided, that each Transferee of Registrable Securities (other than
Walter Entities) to which Registrable Securities are transferred, sold or
assigned directly by a Walter Entity (such Transferee, a “Walter Transferee”),
together with any Affiliate of such Walter Transferee (and any subsequent
direct or indirect Transferees of Registrable Securities from such Walter
Transferee and any Affiliates thereof) shall be entitled to request the
registration of Registrable Securities pursuant to this Section 3.9 only once
prior to a Walter Ownership Reduction and thereafter shall only be entitled to
request the registration of Registrable Securities pursuant to Section
3.1(a)(ii) and, provided, further, that no Transferee shall be entitled to
request registration pursuant to this Section 3.9 for an amount of Registrable
Securities equal to less than $50,000,000. 
Any transfer of registration rights pursuant to this Section 3.9 shall
be effective upon receipt by Mueller of (i) written notice from such Holder

18

stating the name and
address of any Transferee and identifying the number of Registrable Securities
with respect to which the rights under this Agreement are being transferred and
the nature of the rights so transferred and (ii) a written agreement from such
Transferee to be bound by the terms of this Article III and Sections 5.3, 5.4,
5.9, 5.10, and 5.11 of this Agreement. 
The Holders may exercise their rights hereunder in such priority as they
shall agree upon among themselves.

3.10.        Holdback
Agreement.  If any registration
pursuant to this Article III shall be in connection with an underwritten public
offering of Registrable Securities, each Selling Holder agrees not to effect
any public sale or distribution, including any sale under Rule 144, of any
equity security of Mueller or any security convertible into or exchangeable or
exercisable for any equity security of Mueller, in the case of Registrable
Securities (otherwise than through the registered public offering then being
made), within 7 days prior to or 90 days (or such lesser period as the lead or
managing underwriters may permit) after the effective date of the registration
statement (or the commencement of the offering to the public of such
Registrable Securities in the case of Rule 415 offerings).  Mueller hereby also so agrees; provided,
that, subject to Section 3.6(a) hereof, Mueller shall not be so restricted from
effecting any public sale or distribution of any security in connection with
any merger, acquisition, exchange offer, subscription offer, dividend
reinvestment plan or stock option or other executive or employee benefit or
compensation plan.

3.11.        Registration of Preferred Stock.  Mueller agrees that it shall from time to
time enter into one or more agreements with Walter and/or the Series B
Transferee, if any, in form and substance reasonably satisfactory to the
parties thereto, granting to Walter or the Series B Transferee, as the case may
be, registration rights for the registration of any shares of preferred stock
of Mueller that may hereafter be owned, directly or indirectly, by Walter or
the Series B Transferee, as the case may be, substantially upon the same terms
and conditions as those contained in Article III for the benefit of Walter.

ARTICLE IV

CERTAIN COVENANT AND AGREEMENTS

4.1.          No Violations.  (a) 
For so long as the Walter Entities collectively own shares of capital
stock of Mueller having more than fifty percent (50%) of the total voting power
of all capital stock of Mueller outstanding, Mueller covenants and agrees that
it will not take any action or enter into any commitment or agreement which may
reasonably be anticipated to result, with or without notice and with or without
lapse of time or otherwise, in a contravention or event of default by any
Walter Entity of (i) any provisions of applicable law or regulation, including
but not limited to provisions pertaining to the Internal Revenue Code of 1986,
as amended, or the Employee Retirement Income Security Act of 1974, as amended,
(ii) any provision of Walter’s certificate of incorporation or bylaws, (iii)
any credit agreement or other material instrument binding upon Walter or (iv) any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over Walter or any of its assets.

(b)           Mueller and Walter agree to provide to the other any
information and documentation requested by the other for the purpose of evaluating
and ensuring compliance with Section 4.1(a) hereof.

19

(c)           Notwithstanding the foregoing Sections 4.1(a) and 4.1(b),
nothing in this Agreement is intended to limit or restrict in any way Walter’s
rights as a shareholder of Mueller.

4.2.          Confidentiality.  Except as required by law, regulation or
legal or judicial process, Walter agrees that neither it nor any Walter Entity
nor any of their respective directors, officers or employees will without the
prior written consent of Mueller disclose to any Person any material,
non-public information concerning the business or affairs of Mueller acquired
from any director, officer or employee of Mueller (including any director,
officer or employee of Mueller who is also a director, officer or employee of Walter).

ARTICLE V

MISCELLANEOUS

5.1.          Limitation of Liability.  Neither Walter nor Mueller shall be liable to
the other for any special, indirect, incidental or consequential damages of the
other arising in connection with this Agreement.

5.2.          Subsidiaries.  Walter agrees and acknowledges that Walter
shall be responsible for the performance by each Walter Entity of the
obligations hereunder applicable to such Walter Entity.

5.3.          Amendments.  This Agreement may not be amended or
terminated orally, but only by a writing duly executed by or on behalf of the
parties hereto.  Any such amendment shall
be validly and sufficiently authorized for purposes of this Agreement if it is
signed on behalf of Walter and Mueller by any of their respective presidents or
vice presidents.

5.4.          Term.  This Agreement shall remain in effect until
all Registrable Securities held by Holders have been transferred by them to
Persons other than Transferees; provided, that the provisions of Section 3.7
shall survive any such expiration.

5.5.          Severability.  If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement or such provision
of the application of such provision to such party or circumstances, other than
those to which it is so determined to be invalid, illegal or unenforceable,
shall remain in full force and effect to the fullest extent permitted by law
and shall not be affected thereby, unless such a construction would be
unreasonable.

5.6.          Notices.  All notices and other communications required
or permitted hereunder shall be in writing, shall be deemed duly given upon
actual receipt, and shall be delivered (a) in person, (b) by registered or
certified mail, postage prepaid, return receipt requested or (c) by facsimile
or other generally accepted means of electronic transmission (provided that a
copy of any notice delivered pursuant to this clause (c) shall also be sent
pursuant to clause (b)), addressed as follows:

20

(a)           if to Mueller, to:

Mueller Water Products, Inc.

4211 W. Boy Scout Blvd.

Tampa, FL 33607

Attention:  Chief Executive Officer

Tel: (813) 871-4455

Fax: (813) 871-4430

(b)           If to Walter, to:

Walter Industries, Inc.

4211 W. Boy Scout Blvd.

Tampa, FL 33607

Attention:  General Counsel

Tel: (813) 871-4120

Fax: (813) 871-4420

or to such other addresses
or telecopy numbers as may be specified by like notice to the other parties.

5.7.          Further Assurances.  Walter and Mueller shall execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
instruments and take such other action as may be necessary or advisable to
carry out their obligations under this Agreement and under any exhibit,
document or other instrument delivered pursuant hereto.

5.8.          Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original instrument, but all
of which together shall constitute but one and the same agreement.

5.9.          Governing
Law.  This Agreement and the
transactions contemplated hereby shall be construed in accordance with, and
governed by, the laws of the State of Delaware.

5.10.        Entire Agreement.  This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.

5.11.        Series B Transferee.  Mueller agrees that it shall enter into an
agreement with the Series B Transferee (as defined in Mueller’s Restated
Certificate of Incorporation), if any, in form and substance reasonably
satisfactory to the Series B Transferee and Mueller (i) granting to the Series
B Transferee options for the purchase of Series B Common Stock and Nonvoting
Stock substantially upon the same terms and conditions as those contained in
Article II, (ii) granting to the Series B Transferee registration rights for
the registration of Registrable Securities substantially upon the same terms
and conditions as those contained in Article III for the benefit of Walter and
(iii) containing other covenants and agreement for the benefit of the Series B
Transferee that are substantially similar to the other covenants and agreements
contained in this Agreement for the benefit of Walter; provided, that
such agreement shall contain terms (including covenants and agreements of the
Series B Transferee) for the benefit of

21

Mueller that are substantially similar to the terms
(including the covenants and agreements of Walter) for the benefit of Mueller
contained herein. 

5.12.        Successors.  This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.  Nothing
contained in this Agreement, express or implied, is intended to confer upon any
other person or entity any benefits, rights or remedies.

5.13.        Specific Performance.  The parties hereto acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached.  Accordingly, it is
agreed that they shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof in any court of competent jurisdiction in the
United States or any state thereof, in addition to any other remedy to which
they may be entitled at law or equity.

22

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement the day and year first above
written.

	
   

  	
  Walter
  Industries, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Mueller
  Water Products, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

23EXHIBIT 10.9

 

 

[Form of Income Tax Allocation Agreement by
and among Walter Industries, Inc., the Walter Affiliates (as defined therein),
Mueller Water Products, Inc. and the Mueller Affiliates (as defined therein)]

 

INCOME TAX ALLOCATION AGREEMENT

THIS AMENDED AND RESTATED INCOME TAX ALLOCATION AGREEMENT (this
“Agreement”) dated as of                       ,
2006 is made and entered into by Walter Industries, Inc., a Delaware
corporation (“Walter”) and the Walter Affiliates (as defined below), and
Mueller Water Products, Inc., a Delaware corporation (“Mueller”) and the
Mueller Affiliates (as defined below).

RECITALS

WHEREAS, Walter is the common parent corporation of an “affiliated
group” of corporations within the meaning of Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the “Code”) and of certain combined groups as
defined under similar laws of other jurisdictions and Mueller and the Mueller
Affiliates are, as of the date hereof, and have been members of such groups;

WHEREAS, the groups of which Walter is the common parent and Mueller
and the Mueller Affiliates are members file or intend to file Consolidated
Returns and Combined Returns (each as defined below);

WHEREAS, Mueller intends to effect the initial public offering by
Mueller of Mueller common stock that will reduce Walter’s ownership of Mueller,
on a fully diluted basis, to less than eighty percent (80%) of the value of
Mueller’s common stock (the “IPO”);

WHEREAS, as a result of the reduction in Walter’s ownership, Mueller
and the Mueller Affiliates will cease to be members of the Consolidated Group
and may cease to be members of one or more Combined Groups (each as defined
below);

WHEREAS, Walter intends to make a distribution of the issued and
outstanding shares of Mueller stock pro rata to the holders of Walter capital
stock in a transaction that is intended to qualify as a tax-free distribution
under Section 355 of the Code; and

WHEREAS, Walter and Mueller desire to set forth their agreement
regarding the allocation of taxes, the filing of tax returns, the
administration of tax contests and other related matters and to replace in its
entirety the Income Tax Allocation Agreement, dated as of October 3, 2005,
between Walter and Mueller setting forth their agreement with respect to
certain tax matters (the “Original Income Tax Allocation Agreement”) with the
terms of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:

 

 

SECTION
1.           DEFINITIONS

1.1      
“AUDIT” includes any audit,
assessment of Taxes, other examination by any Tax Authority, proceeding, or
appeal of such proceeding relating to Taxes, whether administrative or
judicial.

1.2       “COMBINED
GROUP” means a group of
corporations or other entities that files a Combined Return.

1.3       “COMBINED
RETURN” means any Tax
Return with respect to Non-Federal Taxes filed on a consolidated, combined
(including nexus combination, worldwide combination, domestic combination, line
of business combination or any other form of combination) or unitary basis
wherein one or more members of the Mueller Group join in the filing of a Tax
Return with Walter or a Walter Affiliate that is not also a member of the
Mueller Group.

1.4       “CONSOLIDATED
GROUP” means the affiliated
group of corporations within the meaning of Section 1504(a) of the Code of
which Walter is the common parent and which includes the Mueller Group.

1.5       “CONSOLIDATED
RETURN” means any Tax
Return with respect to Federal Income Taxes filed by the Consolidated Group
pursuant to Section 1501 of the Code.

1.6       “DECONSOLIDATION” means any event pursuant to which Mueller and
the Mueller Group cease to be includible in either the Consolidated Group or
any Combined Group, as the context requires.

1.7       “DECONSOLIDATION
DATE” means the close of
business on the day on which a Deconsolidation occurs. Unless otherwise
required by the relevant Tax Authority or a court of competent jurisdiction,
Walter and Mueller, for itself and the Mueller Group, agree to file all Tax
Returns, and to take all other actions, relating to Federal Income Taxes or
Non-Federal Combined Taxes in a manner consistent with the position that
Mueller and the Mueller Group are includible in the Consolidated Group and any
applicable Combined Group for all days from the date hereof through and
including a Deconsolidation Date.

1.8       “DISTRIBUTION” means any distribution by Walter of the issued
and outstanding shares of Mueller stock that Walter holds at such time in a
transaction intended to qualify as a tax-free distribution under Section 355 of
the Code.

1.9       “DISTRIBUTION
TAXES” means any (i) Taxes
imposed on, or increase in Taxes incurred by, Walter or any Walter Affiliate
and (ii) any Taxes of a Walter shareholder (or former Walter shareholder) that
are required to be paid or reimbursed by Walter or any Walter Affiliate
pursuant to a legal determination, resulting from, or arising in connection
with, the failure of a Distribution to qualify as a tax-free transaction under
Section 355 of the Code (including, without limitation, any Tax resulting from
the application of Section 355(d) or Section 355(e) of the Code to a
Distribution) or corresponding provisions of the laws of any other
jurisdictions.  Any Tax referred to in
the immediately preceding sentence shall be determined using the highest
applicable statutory Tax rate for the relevant taxable period (or portion
thereof).

 

 

2

 

1.10     “ESTIMATED
TAX INSTALLMENT DATE” means
the installment due dates prescribed in Section 6655(c) of the Code (presently
April 15, June 15, September 15 and December 15).

1.11     “FEDERAL
INCOME TAX” or “FEDERAL INCOME TAXES” means any tax imposed under Subtitle A of the Code (including the taxes
imposed by Sections 11, 55, 59A, and 1201(a) of the Code), including any
interest, additions to Tax, or penalties applicable thereto, and any other
income based United States Federal Tax which is hereinafter imposed upon
corporations.

1.12     “FEDERAL TAX” means any Tax imposed under
the Code or otherwise under United States federal Tax law.

1.13     “FINAL
DETERMINATION” means (a)
the final resolution of any Tax (or other matter) for a taxable period,
including any related interest or penalties, that, under applicable law, is not
subject to further appeal, review or modification through proceedings or
otherwise, including (1) by the expiration of a statute of limitations (giving
effect to any extension, waiver or mitigation thereof) or a period for the
filing of claims for refunds, amended returns, appeals from adverse
determinations, or recovering any refund (including by offset), (2) by a
decision, judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable, (3) by a closing
agreement or an accepted offer in compromise under Section 7121 or 7122 of the
Code, or comparable agreements under laws of other jurisdictions, (4) by
execution of an IRS Form 870-AD, or by a comparable form under the laws of
other jurisdictions (excluding, however, any such form that reserves (whether
by its terms or by operation of law) the right of the taxpayer to file a claim
for refund and/or the right of the Tax Authority to assert a further
deficiency), or (5) by any allowance of a refund or credit, but only after the
expiration of all periods during which such refund or credit may be recovered
(including by way of offset) or (b) the payment of Tax by any member of the
Consolidated Group or Combined Group with respect to any item disallowed or adjusted
by a Tax Authority provided that Walter determines that no action should be
taken to recoup such payment.

1.14     “IRS” means the Internal Revenue Service.

1.15     “MARKET
VALUATION” means as of the
first business day immediately following the date on which the Distribution is
effected (i) with respect to Mueller, the fair market value of all of its
issued and outstanding stock (measured using the mean of the high and low of
the public trading price as published in The Wall Street Journal) as of such date,
or (ii) with respect to Walter, the fair market value of all of its issued and
outstanding stock (measured using the mean of the high and low of the public
trading price as published in The Wall Street Journal) as of such date.

1.16     “MUELLER
AFFILIATE” means any
corporation or other entity, including any entity that is a disregarded entity
for federal income tax purposes, directly or indirectly “controlled” by Mueller
where “control” means the ownership of fifty percent (50%) or more of the
ownership interests of such corporation or other entity (by vote or value) or
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such corporation or other entity.

 

 

3

 

1.17     “MUELLER
BUSINESS” means the
business and operations conducted by Mueller and its Affiliates as such
business and operations will continue after the date of the IPO.

1.18     “MUELLER
GROUP” means the affiliated
group of corporations, including any entity that is a disregarded entity for
federal income tax purposes, as defined in Section 1504(a) of the Code, or
similar group of entities as defined under similar laws of other jurisdictions,
of which Mueller would be the common parent if it were not a subsidiary of
Walter, and any corporation or other entity, including any entity that is a
disregarded entity for federal income tax purposes, which may be or become a
member of such group from time to time.

1.19     “MUELLER
GROUP COMBINED TAX LIABILITY”
means, with respect to any taxable year, the Mueller Group’s liability for Non-Federal
Combined Taxes as determined under Section 3.6 of this Agreement.

1.20     “MUELLER
GROUP FEDERAL INCOME TAX LIABILITY” means, with respect to any taxable year, the Mueller Group’s liability
for Federal Income Taxes as determined under Section 3.5 of this Agreement.

1.21     “NON-FEDERAL
COMBINED TAXES” means any
Non-Federal Taxes with respect to which a Combined Return is filed.

1.22     “NON-FEDERAL
SEPARATE TAXES” means any
Non-Federal Taxes that are not Non-Federal Combined Taxes.

1.23     “NON-FEDERAL
TAXES” means any Tax other
than a Federal Tax.

1.24     “OFFICER’S CERTIFICATE” means a letter
executed by an officer of Walter or Mueller and provided to Tax Counsel as a
condition for the completion of a Tax Opinion or Supplemental Tax Opinion.

1.25     “POST-DECONSOLIDATION PERIOD” means a taxable period beginning after the
applicable Deconsolidation Date.

1.26     “PRE-DECONSOLIDATION
PERIOD” means any taxable
period beginning  on or prior to the
applicable Deconsolidation Date.

1.27     “PRO
FORMA MUELLER GROUP COMBINED RETURN” means a pro forma non-federal combined tax return or other schedule
prepared pursuant to Section 3.6 of this Agreement.

1.28     “PRO
FORMA MUELLER GROUP CONSOLIDATED RETURN” means a pro forma consolidated federal income tax return prepared
pursuant to Section 3.5(b) of this Agreement.

1.29     “REDETERMINATION
AMOUNT” means, with respect
to any taxable year, the amount determined under Section 3.10 of this
Agreement.

1.30     “RULING” means (i) any private letter ruling issued by
the IRS in connection with a Distribution in response to a request for such a
private letter ruling filed by Walter (or any Walter Affiliate) prior to the
date of a Distribution, and (ii) any similar ruling issued

 

 

4

 

by
any other Tax Authority addressing the application of a provision of the laws
of another jurisdiction to a Distribution.

1.31     “RULING
DOCUMENTS” means (i) the
request for a Ruling filed with the IRS, together with any supplemental filings
or other materials subsequently submitted on behalf of Walter, its Affiliates
and shareholders to the IRS, or on behalf of Mueller, its Affiliates and
shareholders to the IRS the appendices and exhibits thereto, and any Ruling
issued by the IRS to Walter (or any Walter Affiliate) or Mueller (or any
Mueller Affiliate) in connection with a Distribution and (ii) any similar
filings submitted to, or rulings issued by, any other Tax Authority in
connection with a Distribution.

1.32     “SUPPLEMENTAL
RULING” means (i) any
ruling (other than the Ruling) issued by the IRS in connection with a
Distribution, and (ii) any similar ruling issued by any other Tax Authority
addressing the application of a provision of the laws of another jurisdiction
to a Distribution.

1.33     “SUPPLEMENTAL
RULING DOCUMENTS” means (i)
the request for a Supplemental Ruling, together with any supplemental filings
or other materials subsequently submitted, the appendices and exhibits thereto,
and any Supplemental Rulings issued by the IRS in connection with a
Distribution and (ii) any similar filings submitted to, or rulings issued by,
any other Tax Authority in connection with a Distribution.

1.34     “SUPPLEMENTAL
TAX OPINION” has the
meaning set forth in Section 4.2(c) of this Agreement.

1.35     “TAX
ASSET” means any net
operating loss, net capital loss, investment tax credit, foreign tax credit,
charitable deduction or any other deduction, credit or tax attribute which
could reduce Taxes (including without limitation deductions and credits related
to alternative minimum taxes).

1.36     “TAX
AUTHORITY” includes the IRS
and any state, local, or other governmental authority responsible for the
administration of any Taxes.

1.37     “TAX
COUNSEL” means a nationally
recognized law firm or accounting firm selected by Walter to provide a Tax
Opinion or a Supplemental Tax Opinion.

1.38     “TAX” or
“TAXES” means any charges,
fees, levies, imposts, duties, or other assessments of a similar nature,
including without limitation, income, alternative or add-on minimum, gross
receipts, excise, employment, sales, use, transfer, license, payroll,
franchise, severance, stamp, occupation, windfall profits, withholding, Social
Security, unemployment, disability, ad valorem, estimated, highway use,
commercial rent, capital stock, paid up capital, recording, registration,
property, real property gains, value added, business license, custom duties, or
other tax or governmental fee of any kind whatsoever, imposed or required to be
withheld by any Tax Authority including any interest, additions to Tax, or
penalties applicable thereto.

1.39     “TAX
RETURN” OR “TAX RETURNS”
means any return, declaration, statement, report, schedule, certificate, form,
information return or any other document (and any related or supporting
information) including an amended tax return required to be supplied to, or
filed with, a Tax Authority with respect to Taxes.

 

 

5

 

1.40     “TAX
OPINION” means an opinion
issued by Tax Counsel as one of the conditions to completing a Distribution
addressing certain United States federal income tax consequences of a
Distribution under Section 355 of the Code.

1.41     “WALTER
AFFILIATE” means any
corporation or other entity, including any entity that is disregarded for
federal income tax purposes, directly or indirectly “controlled” by Walter
where “control” means the ownership of fifty percent (50%) or more of the
ownership interests of such corporation or other entity (by vote or value) or
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such corporation or other entity,
but at all times excluding Mueller or any Mueller Affiliate.

1.42     “WALTER
BUSINESS” means all of the
businesses and operations conducted by Walter and its Affiliates, excluding the
Mueller Business, at any time, whether prior to, or after the date of the IPO.

SECTION
2.           PREPARATION AND FILING OF TAX RETURNS

2.1       IN
GENERAL.  (a) 
Walter shall have the sole and exclusive responsibility for the
preparation and filing of any Consolidated Return or Combined Return.

(b)       Mueller
shall, subject to Section 2.2 of this Agreement, be responsible for preparing
and filing all Tax Returns of Mueller and the Mueller Affiliates other than
those described in Section 2.1(a) of this Agreement.

2.2       PREPARATION AND FILING OF RETURNS.  (a) All Tax Returns filed after the date of
this Agreement by Walter, any Walter Affiliate, Mueller, or any Mueller
Affiliate shall (1) be prepared in a manner that is consistent with Section 4 of this Agreement and the Code, and (2)
filed on a timely basis (taking into account applicable extensions) by the
party responsible for such filing under Section 2.1 of this Agreement.

(b)       In its sole discretion, Walter shall have
the exclusive right with respect to any Consolidated Return or Combined Return
(a) to determine (1) the manner in which such Tax Return shall be prepared and
filed, including, without limitation, the manner in which any item of income,
gain, loss, deduction or credit shall be reported, (2) whether any extensions
may be requested, (3) the elections that will be made by any member of the
Consolidated Group or applicable Combined Group, and (4) whether any amended
Tax Returns should be filed, (b) to control, contest, and represent the
interests of the Consolidated Group and 
any Combined Group in any Audit and to resolve, settle, or agree to any
adjustment or deficiency proposed, asserted or assessed as a result of any
Audit, (c) to file, prosecute, compromise or settle any claim for refund, and
(d) to determine whether any refunds, to which the Consolidated Group or
applicable Combined Group may be entitled, shall be paid by way of refund or
credited against the Tax liability of the Consolidated Group or applicable
Combined Group. Mueller, for itself and its subsidiaries, hereby irrevocably
appoints Walter as its agent and attorney-in-fact to take such action
(including the execution of documents) as Walter may deem appropriate to effect
the foregoing.

2.3       FURNISHING
INFORMATION. Mueller (or
the applicable Mueller Affiliate) shall (a) furnish to Walter in a timely
manner such information and documents as Walter may reasonably request for
purposes of (1) preparing any original or amended Consolidated Return or
Combined Return, (2) contesting or defending any Audit relating to a
Consolidated

 

 

6

 

Return
or a Combined Return, and (3) making any determination or computation necessary
or appropriate under this Agreement, (b) cooperate in any Audit of any
Consolidated Return or Combined Return, (c) retain and provide on demand books,
records, documentation or other information relating to any tax return until
the later of (1) the expiration of the applicable statute of limitations
(giving effect to any extension, waiver, or mitigation thereof) and (2) in the
event any claim is made under this Agreement for which such information is
relevant, until a Final Determination with respect to such claim, and (d) take
such action as Walter may deem appropriate in connection therewith. Walter
shall provide Mueller (or the applicable Mueller Affiliate) any assistance
reasonably required in providing any information requested pursuant to this
Section 2.3.

2.4       EXPENSES.  Mueller
shall reimburse Walter for any outside legal and accounting expenses incurred
by Walter in the course of the conduct of any Audit regarding the Tax liability
of the Consolidated Group or any Combined Group, and for any other expense
incurred by Walter in the course of any litigation relating thereto, to the
extent such costs are reasonably attributable to Mueller or any Mueller
Affiliate and provided Walter has conferred with Mueller as to the portion of
the Audit relating to Mueller or the Mueller Affiliate. Notwithstanding the
foregoing, Walter shall have the sole discretion to control, contest,
represent, file, prosecute, challenge or settle any Audit pursuant to Section
2.2 of this Agreement.

SECTION
3.           PAYMENT OF TAXES AND TAX SHARING AMOUNTS

3.1       FEDERAL
INCOME TAXES. Walter shall
pay (or cause to be paid) to the IRS all Federal Income Taxes, if any, of the
Consolidated Group.

3.2       NON-FEDERAL
COMBINED TAXES. Walter
shall pay (or cause to be paid) to the appropriate Tax Authorities all
Non-Federal Combined Taxes, if any, of any Combined Group.

3.3       NON-FEDERAL
SEPARATE TAXES AND OTHER TAXES. Mueller shall pay to the appropriate Tax Authorities all Non-Federal
Separate Taxes and any other Taxes (other than those described in Section 3.1
and Section 3.2 of this Agreement), if any, of Mueller and the Mueller
Affiliates.

3.4       MUELLER
LIABILITY FOR FEDERAL INCOME TAXES AND NON-FEDERAL COMBINED TAXES.  For
each taxable year (or portion thereof ending on the applicable Deconsolidation
Date) during a Pre-Deconsolidation Period, Mueller shall pay to Walter an
amount equal to the sum of the Mueller Group Federal Income Tax Liability and
the Mueller Group Combined Tax Liability for such period.

3.5       MUELLER
GROUP FEDERAL INCOME TAX LIABILITY.  (a)  IN GENERAL. The Mueller Group Federal Income
Tax Liability for each taxable year (or portion thereof ending on the
applicable Deconsolidation Date) shall be the Mueller Group’s liability for
Federal Income Taxes as determined on a Pro Forma Mueller Group Consolidated Return
prepared in accordance with Section 3.5(b) of this Agreement.

(b)       PRO
FORMA FEDERAL RETURN. For each taxable year (or portion thereof ending on the
applicable Deconsolidation Date) during a Pre-Deconsolidation Period, Walter
shall prepare or cause to be prepared (and, as requested by Walter, Mueller
shall cooperate in preparing) a Pro Forma Mueller Group Consolidated Return as
if the Mueller Group were not

 

 

7

 

and never were part of the Consolidated Group, but rather were a
separate affiliated group of corporations of which Mueller were the common
parent filing a consolidated federal income tax return pursuant to Section 1501
of the Code.  For purposes of this
Section 3.5(b), the Mueller Group’s Federal Income Tax Liability shall not be
reduced by the Mueller Group’s carrybacks and carryovers of federal Tax Assets
from other taxable years (such items being addressed by Section 3.5(c) herein).

(c)       FEDERAL TAX ASSETS.  Walter shall pay to the Mueller Group, not
later than 15 business days after Walter makes a payment to, or receives a
payment, credit or offset from any Tax Authority pursuant to this Section 3,
the amount, if any, by which one or more federal Tax Assets of the Mueller
Group reduced the Federal Income Tax liability of the Consolidated Group for
any taxable year.  For purposes of
computing the amount of the payment described in this Section 3.5(c), one or
more federal Tax Assets of the Mueller Group shall be considered to have
reduced the Consolidated Group’s Federal Income Tax liability in a given year
by an amount equal to the difference, if any, between (i) the amount of the
Consolidated Group’s Federal Income Tax liability for the year computed without
regard to such Tax Asset or Tax Assets and (ii) the amount of the Consolidated
Group’s Federal Income Tax liability for the year computed with regard to such
Tax Asset or Tax Assets.

3.6       MUELLER GROUP COMBINED TAX LIABILITY.  (a) IN
GENERAL. The Mueller Group Combined Tax Liability for each taxable year (or
portion thereof ending on the applicable Deconsolidation Date) shall be the sum
for such taxable period of the Mueller Group’s liability for each Non-Federal
Combined Tax, as determined on Pro Forma Mueller Group Combined Returns
prepared in a manner consistent with the principles and procedures set forth in
Section 3.5 hereof.

(b)       STATE TAX ASSETS. 
Walter shall pay to the Mueller Group, not later than 15 business days
after Walter makes a payment to, or receives a payment, credit or offset from any
Tax Authority pursuant to this Section 3, the amount, if any, by which one or
more state or local Tax Assets of Mueller and the Mueller Affiliates reduced
the Combined Tax liability of the applicable Combined Group for any taxable
year.  For purposes of computing the
amount of the payment described in this Section 3.6(b), one or more state or
local Tax Assets of Mueller and the Mueller Affiliates shall be considered to
have reduced the Combined Group’s Tax liability in a given year by an amount
equal to the difference, if any, between (i) the amount of the Combined Group’s
Tax liability for the year computed without regard to such Tax Asset or Tax
Assets and (ii) the amount of the Combined Group’s Tax liability for the year
computed with regard to such Tax Asset or Tax Assets.

3.7       FOREIGN TAX ASSETS.  Any other Tax Assets (other than Tax Assets
described in Sections 3.5(c) and 3.6(b)) will be reimbursed at the time of use
by Walter or Walter Affiliates in accordance with principles set forth in
Sections 3.5(c) and 3.6(b).

3.8       TAX
SHARING INSTALLMENT PAYMENTS.  (a) 
FEDERAL INCOME TAXES. Not later than five business days prior to each
Estimated Tax Installment Date with respect to any Pre-Deconsolidation Period,
Walter shall determine under Section 6655 of the Code the estimated amount of
the related installment of the Mueller Group Federal Income Tax Liability.
Mueller shall then pay to Walter, not later than such Estimated Tax Installment
Date, the amount thus determined.

 

 

8

 

(b)       NON-FEDERAL
COMBINED TAXES. Not later than five business days prior to any estimated tax
installment date with respect to Non-Federal Combined Taxes for any
Pre-Deconsolidation Period, Walter shall determine the estimated amount of the
related installment of the Mueller Group Combined Tax Liability for the taxable
year.  Mueller shall pay to Walter, not
later than the due date for such installment, the amount thus determined.

3.9       TAX
SHARING TRUE-UP PAYMENTS.  (a) 
FEDERAL INCOME TAXES.  Not later
than 15 business days after the Consolidated Return is filed with respect to
any Pre-Deconsolidation Period, Walter shall deliver to Mueller a Pro Forma
Mueller Group Consolidated Return or other comparable schedule reflecting the
Mueller Group Federal Income Tax Liability for such taxable year (or portion
thereof ending on the applicable Deconsolidation Date). Not later than 10
business days after the date such Pro Forma Mueller Group Consolidated Return
or other schedule is delivered, Mueller shall pay to Walter, or Walter shall
pay to Mueller, as appropriate, an amount equal to the difference, if any,
between the Mueller Group Federal Income Tax Liability for such taxable year
(or portion thereof ending on the applicable Deconsolidation Date) and the
aggregate amount paid by Mueller with respect to such taxable year (or portion
thereof ending on the applicable Deconsolidation Date) under Section 3.8(a) of
this Agreement.

(b)       NON-FEDERAL
COMBINED TAXES.  Not later than 15
business days after the Combined Return is filed with respect to any period
that includes any Pre-Deconsolidation Period, Walter shall deliver to Mueller a
Pro Forma Mueller Group Combined Return or other comparable schedule reflecting
the Mueller Group Combined Tax Liability for such taxable year (or portion
thereof ending on the applicable Deconsolidation Date). Not later than 10
business days following delivery of such Pro Forma Mueller Group Combined
Return or other schedule, Mueller shall pay to Walter, or Walter shall pay to
Mueller, as appropriate, an amount equal to the difference, if any, between the
Mueller Group Combined Tax Liability for such taxable year (or portion thereof
ending on the applicable Deconsolidation Date) and the amount paid by Mueller
with respect to such taxable year (or portion thereof ending on the applicable
Deconsolidation Date) under Section 3.8(b) of this Agreement.

3.10     REDETERMINATION
AMOUNT.  (a)  IN
GENERAL.  In the event of any
redetermination of any item of income, gain, loss, deduction or credit of any
member of the Consolidated Group or any Combined Group as a result of a Final
Determination or any settlement or compromise with any Tax Authority (including
any amended Tax Return or claim for refund filed by Walter), Mueller shall pay
Walter or Walter shall pay Mueller, as the case may be, the Redetermination
Amount.

(b)       COMPUTATION.  The Redetermination Amount shall be the
difference, if any, between all amounts previously determined under Section 3
of this Agreement and all amounts that would have been determined under Section
3 of this Agreement taking such redetermination into account (including any
additions to Tax or penalties applicable thereto), together with interest for
each day calculated (1) with respect to redeterminations affecting Federal
Income Taxes, at the rate determined, in the case of payment by Mueller to
Walter, under Section 6621(a)(2) of the Code and, in the case of payment by
Walter to Mueller, under Section 6621(a) (1) of the Code, and (2) with respect
to redeterminations affecting Non-Federal Combined Taxes, under similar laws,
if any, of other jurisdictions.

(c)       PAYMENT.  Walter shall deliver to Mueller a schedule
reflecting the computation of any Redetermination Amount with respect to any
taxable year. Not later than

 

 

9

 

5 business days after the date such schedule is delivered, Mueller
shall pay Walter, or Walter shall pay Mueller, such Redetermination Amount.

3.11.
   INTEREST. Payments under this Section 3
that are not made within the prescribed period shall thereafter bear interest
at the Federal short-term rate established pursuant to Section 6621 of the
Code.

3.12.    CARRYBACKS. 
(a) In the event any Tax Asset of the Mueller Group for any
Post-Deconsolidation Period is eligible to be carried back to a
Pre-Deconsolidation Period, Mueller shall, to the extent permitted by
applicable law, elect to carry such amounts forward to any Post-Deconsolidation
Period.  If Mueller is required by law to
carry back any such Tax Asset to a taxable Pre-Deconsolidation Period, Walter
agrees to make a payment to Mueller to the extent that such a payment would be
required under the terms of Section 3.5(c), Section 3.6(b) or Section 3.7 of
this Agreement, net of any expenses incurred by Walter or Walter
Affiliates.  If subsequent to the payment
by Walter to Mueller of any such amount, there shall be (a) a Final
Determination which results in a disallowance or a reduction of the Tax Asset
so carried back or (b) a reduction in the amount of the benefit realized by the
Walter Group for any reason, Mueller shall repay to Walter, within 30 business
days of such event any amount which would not have been payable to Mueller
pursuant to this Section 3.12 had the amount of the benefit been determined in
light of these events. Mueller shall hold Walter harmless for any penalty,
addition to Tax or interest payable by any member of the Walter Group as a
result of any such event. Any such amount shall be paid by Mueller to Walter
within 30 business days of the payment by Walter or any member of the
Consolidated Group or Combined Group of any such penalty, addition to Tax, or
interest.

SECTION
4.           DECONSOLIDATION AND DISTRIBUTION TAXES

4.1       CONTINUING
COVENANTS.  Mueller, for itself and the Mueller Affiliates,
covenants that on or after a Deconsolidation it will not (nor will it cause or
permit any member of the Mueller Group ), in respect of any Pre-Deconsolidation
Period, (i) make or change any tax election, (ii) change any accounting method,
(iii) amend any Tax Return or take any Tax position on any Tax Return that is
inconsistent with any Tax position on any Tax Return of the Walter Group, or
(iv) take any action, omit to take any action or enter into any transaction
that results in any increased Tax liability or reduction of any Tax Asset of
the Walter Group.

4.2       ADDITIONAL
CONTINUING COVENANTS.  (a) 
MUELLER RESTRICTIONS.  Mueller
agrees that, until such time as the stock of Mueller owned by Walter and Walter
Affiliates constitutes fifty percent (50%) or less of the total combined voting
power of all of the outstanding stock of Mueller, Mueller (1) will not
knowingly take or fail to take, or permit any Mueller Affiliate to knowingly
take or fail to take, any action that could reasonably be expected to preclude
Walter’s ability to effectuate a Distribution, and (2) will not issue any stock
of Mueller (or any instrument that is convertible, exercisable or exchangeable
into any such stock) in an acquisition or public or private offering if,
immediately after such issuance, Walter would, or would reasonably be expected
to, not own stock of Mueller that, on a fully diluted basis, constitutes
“control” (within the meaning of Section 368(c) of the Code) of Mueller.  In the event of a Distribution, Mueller
agrees that (1) it will take, and cause each Mueller Affiliate to take, any
action reasonably requested by Walter in order to enable Walter to effectuate a
Distribution (including, without limitation, any internal restructuring
necessary to satisfy the active trade or business requirement of Section 355(b)
of the Code) and (2) it will not take or fail to take, or permit any Mueller

 

 

10

 

Affiliate
to take or fail to take, any action where such action or failure to act would
be inconsistent with any written representations of an officer of Mueller
pursuant to Section 4.2(e) of this Agreement with respect to any material,
information, covenant or representation that relates to facts or matters
related to Mueller, any Mueller Affiliate, or the Mueller Business in an
Officer’s Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents,
Supplemental Ruling Documents, Ruling, or Supplemental Ruling other than as
permitted by Section 4.2(c) of this Agreement. 
For this purpose an action is considered inconsistent with a
representation if the representation states that there is no plan or intention
to take such action.  In the event of a
Distribution, Mueller agrees that it will not take (and it will cause the
Mueller Affiliates to refrain from taking) any position on a Tax Return that is
inconsistent with the treatment of a Distribution as a tax-free transaction
under Section 355 of the Code.

(b)       WALTER
RESTRICTIONS.  In the event of a
Distribution, Walter agrees that it will not take or fail to take, or permit
any Walter Affiliate to take or fail to take, any action where such action or
failure to act would be inconsistent with any material, information, covenant
or representation that relates to facts or matters related to Walter (or any
Walter Affiliate) or within the control of Walter and is contained in an
Officer’s Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents,
Supplemental Ruling Documents, Ruling, or Supplemental Ruling.  For this purpose an action is considered
inconsistent with a representation if the representation states that there is
no plan or intention to take such action. 
In the event of a Distribution, Walter agrees that it will not take (and
it will cause the Walter Affiliates to refrain from taking) any position on a
Tax Return that is inconsistent with the treatment of a Distribution as a
tax-free transaction under Section 355 of the Code.

(c)       CERTAIN
MUELLER ACTIONS FOLLOWING A DISTRIBUTION. 
In the event of a Distribution, Mueller agrees that, during the 2-year
period following a Distribution, without first obtaining, at Mueller’s own
expense, either a supplemental opinion from Tax Counsel that such action will
not result in Distribution Taxes (a “Supplemental Tax Opinion”) or a
Supplemental Ruling that such action will not result in Distribution Taxes,
unless in any such case Walter and Mueller agree otherwise, Mueller shall not
(1) sell all or substantially all of the assets of Mueller or any Mueller
Affiliate, (2) merge Mueller or any Mueller Affiliate with another entity,
without regard to which party is the surviving entity, (3) transfer any assets
of Mueller in a transaction described in Section 351 (other than a transfer to
a corporation which files a consolidated return with Mueller and which is
wholly-owned, directly or indirectly, by Mueller) or subparagraph (C) or (D) of
Section 368(a)(1) of the Code, (4) issue stock of Mueller or any Mueller
Affiliate (or any instrument that is convertible or exchangeable into any such stock)
in an acquisition or public or private offering, or (5) facilitate or otherwise
participate in any acquisition of stock in Mueller that would result in any
shareholder owning five percent (5%) or more of the outstanding stock of
Mueller.  Mueller or any Mueller
Affiliate shall only undertake any of such actions after Walter’s receipt of
such Supplemental Tax Opinion or Supplemental Ruling and pursuant to the terms
and conditions of any such Supplemental Tax Opinion or Supplemental Ruling or
as otherwise consented to in writing in advance by Walter.  The parties hereby agree that they will act
in good faith to take all reasonable steps necessary to amend this Section
4.2(c), from time to time, by mutual agreement, to (i) add certain actions to
the list contained herein, or (ii) remove certain actions from the list
contained herein, in either case, in order to reflect any relevant change in
law, regulation or administrative interpretation occurring after the date of
this Agreement.

 

 

11

 

(d)       NOTICE
OF SPECIFIED TRANSACTIONS.  Not later
than 30 days prior to entering into any oral or written contract or agreement,
and not later than 5 days after it first becomes aware of any negotiations,
plan or intention (regardless of whether it is a party to such negotiations,
plan or intention), regarding any of the transactions described in Section
4.2(c) of this Agreement, Mueller shall provide written notice of its intent to
consummate such transaction or the negotiations, plan or intention of which it
becomes aware, as the case may be, to Walter.

(e)       MUELLER
COOPERATION.  Mueller agrees that, at the
request of Walter, Mueller shall cooperate fully with Walter to take any action
necessary or reasonably helpful to effectuate a Distribution, including seeking
to obtain, as expeditiously as possible, a Tax Opinion, Supplemental Tax
Opinion, Ruling, and/or Supplemental Ruling. 
Such cooperation shall include the execution of any documents that may
be necessary or reasonably helpful in connection with obtaining any Tax
Opinion, Supplemental Tax Opinion, Ruling, and/or Supplemental Ruling
(including, without limitation, any (i) power of attorney, (ii) Officer’s
Certificate, (iii) Ruling Documents, (iv) Supplemental Rulings Documents,
and/or (v) reasonably requested written representations confirming that (a)
Mueller has read the Officer’s Certificate, Ruling Documents, and/or
Supplemental Ruling Documents and (b) all information and representations, if
any, relating to Mueller, any Mueller Affiliate, or the Mueller Business
contained in the Officer’s Certificate, Ruling Documents, and/or Supplemental
Ruling Documents are true, correct and complete in all material respects).

4.3       DISTRIBUTION
TAXES.  The parties have set forth how certain Tax
matters with respect to a Distribution would be handled in the event that a
Distribution is pursued at some future time.

(a)       WALTER’S
LIABILITY FOR DISTRIBUTION TAXES.  In the
event of a Distribution, notwithstanding Section 3 of this Agreement, Walter
and each Walter Affiliate shall be jointly and severally liable for any
Distribution Taxes, to the extent that such Distribution Taxes are attributable
to, caused by, or result from, one or more of the following:

(1)       any
action or omission by Walter (or any Walter Affiliate) inconsistent with any
material, information, covenant or representation related to Walter, any Walter
Affiliate, or the Walter Business in an Officer’s Certificate, Tax Opinion,
Supplemental Tax Opinion, Ruling Documents, Supplemental Ruling Documents,
Ruling, or Supplemental Ruling (for the avoidance of doubt, disclosure of any
action or fact that is inconsistent with any material, information, covenant or
representation submitted to Tax Counsel, the IRS, or other Tax Authority, as
applicable, in connection with an Officer’s Certificate, Tax Opinion,
Supplemental Tax Opinion, Ruling Documents, Supplemental Ruling Documents,
Ruling, or Supplemental Ruling shall not relieve Walter (or any Walter
Affiliate) of liability under this Agreement);

(2)       any
action or omission by Walter (or any Walter Affiliate), including a cessation,
transfer to affiliates, or disposition of its active trades or businesses, or
an issuance of stock, stock buyback or payment of an extraordinary dividend by Walter
(or any Walter Affiliate) following a Distribution;

(3)       any
acquisition of any stock or assets of Walter (or any Walter Affiliate) by one
or more other persons (other than Mueller or a Mueller Affiliate) prior to or
following a Distribution; or

 

 

12

 

(4)       any
issuance of stock by Walter (or any Walter Affiliate).

(b)       MUELLER’S
LIABILITY FOR DISTRIBUTION TAXES.  In the
event of a Distribution, notwithstanding Section 3 of this Agreement, Mueller
and each Mueller Affiliate shall be jointly and severally liable for any
Distribution Taxes, to the extent that such Distribution Taxes are attributable
to, caused by, or result from, one or more of the following:

(1)       any
action or omission by Mueller (or any Mueller Affiliate) after a Distribution
at any time, that is inconsistent with any written representations of an
officer of Mueller pursuant to Section 4.2(e) of this Agreement with respect to
any material, information, covenant or representation related to Mueller, any
Mueller Affiliate, or the Mueller Business in an Officer’s Certificate, Tax
Opinion, Supplemental Tax Opinion, Ruling Documents, Supplemental Ruling
Documents, Ruling, or Supplemental Ruling (for the avoidance of doubt,
disclosure by Mueller (or any Mueller Affiliate) to Walter (or any Walter
Affiliate) of any action or fact that is inconsistent with any material,
information, covenant or representation submitted to Tax Counsel, the IRS, or
other Tax Authority, as applicable, in connection with an Officer’s
Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents,
Supplemental Ruling Documents, Ruling, or Supplemental Ruling shall not relieve
Mueller (or any Mueller Affiliate) of liability under this Agreement);

(2)       any
action or omission by Mueller (or any Mueller Affiliate) after the date of a
Distribution (including any act or omission that is in furtherance of,
connected to, or part of a plan or series of related transactions (within the
meaning of Section 355(e) of the Code) occurring on or prior to the date of a
Distribution) including a cessation, transfer to affiliates or disposition of
the active trades or businesses of Mueller (or any Mueller Affiliate), stock
buyback or payment of an extraordinary dividend;

(3)       any
acquisition of any stock or assets of Mueller (or any Mueller Affiliate) by one
or more other persons (other than Walter or any Walter Affiliate) prior to or
following a Distribution; or

(4)       any
issuance of stock by Mueller (or any Mueller Affiliate) after a Distribution,
including any issuance pursuant to the exercise of employee stock options or
other employment related arrangements or the exercise of warrants.

(c)       JOINT
LIABILITY FOR REMAINING DISTRIBUTION TAXES. 
Walter and each Walter Affiliate shall be liable for a percentage of any
Distribution Taxes (not otherwise allocated by Sections 4.3(a) or (b) of this
Agreement) equal to the quotient of (i) Walter’s Market Valuation, divided by
(ii) the sum of (x) Walter’s Market Valuation, and (y) Mueller’s Market Valuation.  Mueller and each Mueller Affiliate shall be
jointly and severally liable for a percentage of any Distribution Taxes (not
otherwise allocated by Sections 4.3(a) or (b) of this Agreement) equal to the
quotient of (i) Mueller’s Market Valuation, divided by (ii) the sum of (x)
Walter’s Market Valuation, and (y) Mueller’s Market Valuation.

SECTION
5.           MISCELLANEOUS

5.1       TERM.  All
rights and obligations arising hereunder shall survive until they are fully
effectuated or performed provided that, notwithstanding anything in this
Agreement to the contrary, this Agreement shall remain in effect and its
provisions shall survive for the

 

 

13

 

full
period of all applicable statutes of limitation (giving effect to any extension,
waiver or mitigation thereof).

5.2       ALLOCATIONS. 
(a)  IN GENERAL.  All computations with respect to any
Pre-Deconsolidation Period shall be made pursuant to the principles of Treasury
Regulations Section 1.1502-76(b), taking into account such elections thereunder
as Walter, in its sole discretion, shall make.

(b)       TAX
ASSETS.  Walter shall advise Mueller in
writing within 90 days after the filing of the Consolidated Return for the
taxable year that includes the Deconsolidation Date of the allocation of any
Tax Assets among Walter, each Walter Affiliate, Mueller, and each Mueller
Affiliate.  The parties hereby agree
that, for purposes of determining such allocation, Walter shall be free to use
any legally permissible method of allocation in its sole discretion.

5.3       CHANGES
IN LAW.  Any reference to a provision of the Code or a
similar law of another jurisdiction shall include a reference to any successor
provision to such provision.

5.4       CONFIDENTIALITY. Each party shall hold and cause its advisors
and consultants to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or, in the opinion of its counsel, by other
requirements of law, all information (other than any such information relating
solely to the business or affairs of such party) concerning the other parties
hereto furnished it by such other party or its representatives pursuant to this
Agreement (except to the extent that such information can be shown to have been
(a) previously known by the party to which it was furnished, (b) in the public
domain through no fault of such party, or (c) later lawfully acquired from
other sources not under a duty of confidentiality by the party to which it was
furnished), and each party shall not release or disclose such information to
any other person, except its auditors, attorneys, financial advisors, bankers
and other consultants who shall be advised of and agree to be bound by the
provisions of this Section 5.4. Each party shall be deemed to have satisfied
its obligation to hold confidential information concerning or supplied by the
other party if it exercises the same care as it takes to preserve
confidentiality for its own similar information.

5.5       SUCCESSORS. This Agreement shall be binding on and inure
to the benefit of any successor, by merger, acquisition of assets or otherwise,
to any of the parties hereto (including any successor of Walter and Mueller
succeeding to the tax attributes of such party under Section 381 of the Code),
to the same extent as if such successor had been an original party.

5.6       AUTHORIZATION,
ETC.  Each of the parties hereto hereby represents
and warrants that it has the power and authority to execute, deliver and
perform this Agreement, that this Agreement has been duly authorized by all
necessary corporate action on the part of such party, that this Agreement
constitutes a legal, valid and binding obligation of each such party and that
the execution, delivery and performance of this Agreement by such party does
not contravene or conflict with any provision of law or of its charter or
bylaws or any agreement, instrument or order binding on such party.

5.7       ENTIRE
AGREEMENT. This Agreement
contains the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements.

 

 

14

 

5.8       SECTION
CAPTIONS.  Section captions used in this Agreement are
for convenience and reference only and shall not affect the construction of
this Agreement.

5.9       GOVERNING
LAW. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York without giving effect to laws and principles relating to conflicts of law.

5.10     COUNTERPARTS.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
Agreement.

5.11     WAIVERS
AND AMENDMENTS.  This Agreement shall not be waived, amended
or otherwise modified except in writing, duly executed by all of the parties
hereto.

5.12     SEVERABILITY.  In
case any one or more of the provisions in this Agreement should be invalid,
illegal or unenforceable, the enforceability of the remaining provisions hereof
will not in any way be effected or impaired thereby.

5..13    NO THIRD
PARTY BENEFICIARIES.  This Agreement is solely for the benefit of
the parties to this Agreement and each Walter Affiliate and Mueller Affiliate
and should not be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other rights in excess of those
existing without this Agreement.

5.14     OTHER
REMEDIES.  Mueller recognizes that any failure by it or
any Mueller Affiliate to comply with its obligations under Section 4 of this
Agreement would, in the event of a Distribution, result in Distribution Taxes
that would cause irreparable harm to Walter, Walter Affiliates, and their
stockholders.  Accordingly, Walter shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy to which Walter is
entitled at law or in equity.

IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by a duly authorized officer as of the date first
above written.

	
  WALTER INDUSTRIES, INC.

  
	
   

  
	
  By:

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
  MUELLER WATER PRODUCTS, INC.

  
	
   

  
	
  By: 

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  

 

 

15

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