Document:

Exhibit 10.3

 

TRANSITION SERVICES AGREEMENT

 

This Transition Services Agreement (this “Services Agreement”)
is made as of the 26th day of May, 2006, by and among (i) Walter
Industries, Inc., a Delaware corporation (“Walter”) on behalf of
itself and each of the other Walter Entities, and (ii) Mueller Water
Products, Inc., a Delaware corporation (“Mueller”), on behalf of
itself and each of the other Mueller Entities. The Mueller Entities currently
receive certain services from and provide certain services to the Walter
Entities. Each of the Walter Entities and the Mueller Entities desire that
these services continue to be provided after the initial public offering of
shares of Mueller and the subsequent spin-off of Mueller’s common stock to
Walter’s shareholders, upon the terms and conditions set forth in this Services
Agreement.

 

In consideration of the mutual covenants and agreements contained in
this Services Agreement, the parties hereto hereby agree as follows:

 

ARTICLE 1.

 

DEFINITIONS

 

1.1                                 Unless
the context otherwise requires, the following terms and their singular or
plural, used in this Services Agreement shall have the meanings set forth
below:

 

a)              “Force Majeure” shall have the
meaning set forth in Section 7.1 of this Services Agreement.

 

b)             “Mueller” shall have the meaning
set forth in the preamble to this Services Agreement.

 

c)              “Mueller Entities” means,
collectively, Mueller and any of its Affiliates that are listed as Recipients
on Schedule A or as Providers on Schedule B.

 

d)             “Mueller Provided Services” shall
have the meaning set forth in Section 2.2 of this Services Agreement.

 

e)              “Person” means an individual,
partnership, corporation, trust, unincorporated association, or other entity or
association.

 

f)                “Provider” shall mean the
particular Walter Entity or Mueller Entity, in any Services Agreement.

 

g)             “Recipient” shall mean the
particular Walter Entity or Mueller Entity, in any given location, that is
receiving services or leasing or subleasing property (as tenant) pursuant to
this Services Agreement.

 

 

h)             “Term” shall have the meaning set
forth in Section 5.1 of this Services Agreement.

 

i)                 “Walter” shall have the meaning
set forth in the preamble to this Services Agreement.

 

j)                 “Walter Entities” means,
collectively, Walter and any of its Affiliates that are listed as Providers on Schedule A
or as Recipients on Schedule B.

 

k)              “Walter Provided Services” shall
have the meaning set forth in Section 2.1 of this Services Agreement.

 

Other terms are used as defined elsewhere herein.

 

ARTICLE 2.

 

SERVICES

 

2.1                                 Walter
Provided Services. Pursuant to the terms of this Services Agreement, the
Walter Entities agree to provide, or cause to be provided, to the respective
Mueller Entities the services described in Schedule A to this Services
Agreement (the “Walter Provided Services”).

 

2.2                                 Mueller
Provided Services. Pursuant to the terms of this Services Agreement, the
Mueller Entities agree to provide, or cause to be provided, the services
described in Schedule B to this Services Agreement (the “Mueller Provided
Services”).

 

2.3                                 Other
Services. If, after the execution of this Services Agreement, the parties
determine that a service provided by the Walter Entities to the Mueller
Entities or by the Mueller Entities to the Walter Entities prior to the date
hereof was omitted from the Schedules to this Services Agreement, then the
parties shall negotiate in good faith to agree to the terms and conditions upon
which such services would be added to this Services Agreement, it being agreed
that the charges for such services should be determined on a basis consistent
with the methodology for determining the initial prices provided for in Section 3.3.

 

ARTICLE 3.

 

COMPENSATION

 

3.1                                 Compensation
for Walter Provided Services. Subject to Section 3.4, the compensation
for the Walter Provided Services for the duration of the Term shall be as
described for each individual service provided as set forth on Schedule A
plus applicable sales or value-added taxes, if any.

 

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3.2                                 Compensation
for Mueller Provided Services. Subject to Section 3.4, the
compensation for the Mueller Provided Services for the duration of the term
shall be as described for each individual service as set forth on Schedule B
plus applicable sales or value-added taxes, if any.

 

3.3                                 Methodology
for Determining Prices. The parties agree that the prices charged by a
Provider for any Service provided hereunder shall be sufficient to cover such
Provider’s reasonable estimate of its actual costs and, if applicable, consistent
with the prices such provider would charge to an Affiliate, in each case
without taking into account any profit margin or projected savings from
increased efficiency.

 

3.4                                 Price
Adjustments. It is the intent of the parties that the prices set forth on
the Schedules hereto are consistent with the methodology for determining prices
as described in Section 3.3. If the parties determine in good faith that
the initial prices set forth on the Schedules hereto are not consistent with
such methodology, then the parties shall negotiate in good faith to adjust such
prices in a manner that is consistent with such methodology.

 

3.5                                 Allocation
of Certain Expenses.

 

(a)             (i)  In respect of software
applications which are resident in the Mueller Entities while they are
affiliates of the Walter Entities, Mueller shall bear the costs and expenses of
obtaining any and all licenses for such software applications for Mueller.

 

(ii)  Walter and Mueller cooperate in good faith to minimize the
costs and expenses to be incurred pursuant to this Section 3.5(a).

 

(b)                                 Walter
and Mueller shall each bear the costs and expenses of obtaining any and all
consents from third parties which may be necessary in connection with the
other party’s provision of services to the Recipient hereunder.

 

3.6                                 Terms
of Payment; Dispute Resolution.

 

(a)                                  Except
as otherwise expressly provided herein, Providers shall invoice Recipients
monthly (or, if mutually agreeable to Provider and Recipient, quarterly or
semi-annually) in arrears for the services provided by them under this Services
Agreement. Payment in U.S. dollars shall be made by Recipients within 30 days
after receipt of any invoice. No Recipient shall withhold any payments to its
Provider under this Services Agreement, and no Provider shall withhold the
provision of any services to its Recipient, notwithstanding any dispute that may be
pending between them, whether under this Services Agreement or otherwise (any
required adjustment being made on subsequent invoices), unless such withholding
is provided for in an arbitral award in accordance with Section 9.6 of
this Services Agreement.

 

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(b)                                 If
there is a dispute between any Recipient and any Provider regarding the amounts
shown as billed to such Recipient on any invoice, such Provider shall furnish
to such Recipient reasonable documentation to substantiate the amounts billed
including, but not limited to listings of the dates, times and amounts of the
services in question where applicable and practicable. Upon delivery of such
documentation, such Recipient and such Provider shall cooperate and use their
best efforts to resolve such dispute among themselves. If such disputing
parties are unable to resolve their dispute within thirty (30) calendar days of
the initiation of such procedure, and such Recipient believes in good faith and
with a reasonable basis that the amounts shown as billed to such Recipient are
inaccurate or are otherwise not in accordance with the terms of this Services
Agreement, then such Recipient shall have the right, as its own expense, to
commence arbitration in accordance with Section 9.1 of this Services
Agreement.

 

ARTICLE 4.

 

OCCUPANCY RIGHTS

 

4.1                                 Any
Employee of a Walter Entity or Mueller Entity who is located at a facility of
the other party may remain at such location for a period not to exceed 180
days after the date of the spin-off; provided, however, that such
employee shall be required to adhere to all applicable security restrictions
and guidelines at such facility. Thereafter, the owner of such facility may require
such employee(s) to vacate the premises unless, prior to such time, the parties
have executed a formal lease or other occupancy arrangements upon commercially
reasonable terms that are mutually acceptable to the parties.

 

ARTICLE 5.

 

TERM

 

5.1                                 Term.
Except as expressly provided otherwise in this Services Agreement, or with
respect to specific services as indicated on the Schedules hereto, the term of
this Services Agreement shall commence immediately and shall expire
automatically at the time the term of every service described on the Schedules
hereto has terminated (the “Term”). The obligation of any Recipient to
make a payment for services previously rendered shall not be affected by the
expiration of the term and shall continue until full payment is made.

 

5.2                                 Termination
of Individual Services. (a)  Each of the individual services described
on the schedules hereto has a separate term which, in respect of some services,
includes a right of extension. Unless earlier terminated pursuant to the
following sentence, the obligation of a Provider to provide a service will
terminate upon the expiration of the term of such service. Effective between
the respective Provider and Recipient, a Recipient may terminate at any
time during the Term any individual service provided under this Services
Agreement on a service-by-service basis (and/or location-by-location basis
where an individual service is provided to multiple locations of a Recipient)
upon 

 

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written notice
to the Provider identifying the particular service (or location) to be
terminated and the effective date of termination, which date shall not be less
than 30 days after receipt of such notice unless the Provider otherwise agrees.
Effective upon the termination of any service, an appropriate reduction will be
made in the fees charged to such Recipient.

 

ARTICLE 6.

 

CERTAIN COVENANTS

 

6.1                                 Points
of Contact. Each Provider and Recipient shall name a point of contact which
shall be added to the Schedules hereto. Such points of contact shall be
responsible for the implementation of this Services Agreement between the
respective Provider and its Recipient, including resolutions of any issues that
may arise during the performance hereunder on a day-to-day basis.

 

6.2                                 Cooperation;
Reasonable Care.

 

(a)                                  The
parties will cooperate (using reasonable commercial efforts) to effect a smooth
and orderly transition of the services provided hereunder from the Providers to
the respective Recipients including, without limitation, the separation of the
Mueller Entities from the Walter Entities; provided, however,
that this Section 6.2 shall not require any party hereto to incur any
out-of-pocket expenses unless and except as expressly provided otherwise
herein.

 

(c)                                  Each
Provider shall perform the services that it is required to provide to its
respective Recipient(s) under this Services Agreement with reasonable skill and
care and shall use at least that degree of skill and care that it would
exercise in similar circumstances in carrying out its own business. Each
Provider shall take necessary measures to protect the respective Recipient’s
data that is processed by such Provider from destruction, deletion or
unauthorized change and allow its recovery in events of Force Majeure; provided,
however, that a Provider shall be deemed to have satisfied this
obligation if the measures taken to protect and recover recipient’s data are
equivalent to what it uses in carrying out its own business.

 

6.3                                 Migration
Projects. Each Provider will provide the respective Recipient with
reasonable support necessary to transition the services, which may include
consulting and training and providing reasonable access to data and other
information and to Providers employees; provided, however, that
such activities shall not unduly burden or interfere with Provider’s business
and operations. Where required for transitioning the services, the Recipient’s
employees will be granted reasonable access to the respective Provider’s
facilities during normal business hours.

 

6.4                                 Further
Assurances. From time to time after the date hereof, without further
consideration, each party shall execute and deliver such formal lease or
license 

 

5

 

agreements as
another party may reasonably request to evidence any lease or license
provided for herein or contemplated hereby.

 

6.5                                 Certain
disbursements/receipts. The parties hereto contemplate that, from time to
time, Walter-related entities and/or Mueller-related entities (any such party,
the “Paying  Party”), as a convenience to another Mueller-related
entity or Walter-related entity, as the case may be (the “Responsible
Party”), in connection with the transactions contemplated by this Services
Agreement, may make certain payments that are properly the responsibility
of the Responsible Party (any such payment made, a “Disbursement”). Similarly,
from time to time, Walter Entities and/or Mueller Entities (any such party, the
“Receiving Party”) may receive from third parties certain payments
to which another Mueller-related entity or Walter-related entity, as the case may be,
is entitled (any such party, the “Other Party”, and any such payment received,
a “Receipt”).

 

(a)                                  Disbursements.

 

(i)                                     For
Disbursements made by check, the Responsible Party will reimburse the Paying
Party within seven (7) business days after written notice of such
Disbursement has been given to the Responsible Party.

 

(ii)                                  In
case of a Disbursement by wire, if written notice has been given by 2:00 p.m.
on the business day prior to the payment of such Disbursement, the Responsible
Party shall reimburse the Paying Party for the amount of such payment on the
date the Disbursement is made by the Paying Party. If notice as provided above
has not been given prior to the payment of such Disbursement, the Responsible
Party shall reimburse the Paying party for the amount of such payment within
one business day after receipt of the Responsible Party of such notice from the
Paying Party.

 

(iii)                               A
Paying Party shall provide such supporting documentation regarding
Disbursements for which it is seeking reimbursement as the Responsible Party may reasonably
request.

 

(b)                                 Receipts.
A Receiving Party shall remit Receipts to the Other Party within one business
day of receipt thereof. Concerning the cash collection of outstanding
receivables, the Receiving Party shall remit such cash on a weekly basis with
interest at the prime rate stated in 6.5(e).

 

(c)                                  Certain
Exceptions. Notwithstanding anything to the contrary set forth above, if
with respect to any particular transaction(s), it is impossible or
impracticable under the circumstances to comply with the procedures set forth
in subsections (a) and (b) of this Section 6.5 (including the
time periods specified therein), the parties will cooperate to find a mutually
agreeable alternative that will achieve substantially similar economic results
from the point of view of the Paying Party or the Other Party, as the case may be
(i.e., an alternative pursuant to which the Paying Party will not incur any
material interest expense or the Other Party will not be deprived of any
material interest income); provided, however, that if a Receiving
party cannot comply with the procedures 

 

6

 

set forth in
subsection (b) of this Section because it does not become aware
of a Receipt on behalf of the Other Party shall remit such Receipt (without
interest thereon) to the Other Party within one business day after the Receiving
Party becomes aware of such Receipt.

 

(d)                                 Funding
of Payroll. Notwithstanding anything which may be to the contrary set
forth in Section 6(a) or 6(c) above, payroll checks disbursed by
or at the direction of a Walter Entity as part of the Walter Provided
Services shall be funded in immediately available funds to an account as
directed by such Walter Entity on the day the checks are issued to Mueller
employees, provided such Walter Entity notifies the respective Mueller Entity
by 3:00 p.m. on the business day prior to check issuance of the funding
requirement amount (which amount shall be grossed up to include any social
charges and other accessories on salaries). Direct deposit of payroll will have
the same notice requirement and be funded on payday (alternately referred to as
the settlement date).

 

(e)                                  Interest
Rate. The rate for any interest or expense that is paid or payable pursuant
to Section 6.5(b) shall be the prime rate as published by the Wall
Street Journal.

 

ARTICLE 7.

 

FORCE MAJEURE

 

7.1                                 Force
Majeure. No Provider shall bear any responsibility or liability for any
losses, damages, liabilities, claims, costs or expenses, including attorneys’,
accountants’ or experts’ fees (“Damages”) arising out of any delay, inability
to perform or interruption of its performance of obligations under this
Services Agreement due to any acts or omissions of Recipient or for events
beyond its reasonable control (herinafter referred to as “Force Majeure”)
including, without limitation, acts of God, act of governmental authority, act
of the public enemy or due to war, riot, flood, civil commotion, insurrection,
labor difficulty, severe or adverse weather conditions, lack of or shortage of
electrical power, malfunctions of equipment or software programs or any other cause
beyond the reasonable control of the Provider whose performance is affected by
the Force Majeure event.

 

ARTICLE 8.

 

INDEMNITY

 

8.1                                 Indemnity.

 

(a)  The Walter Entities and Mueller Entities, in both instances
jointly and severally, will each indemnify and hold harmless the other, their
agents, employees and invitees, against all liabilities, claims, losses,
damages, death or personal injury of 

 

7

 

whatever
nature or kind, arising out of their respective performance of this Services
Agreement or the entry of their respective agents, employees or invitees in the
premises of the other, to the extent occasioned by their own willful misconduct
or negligent actions or omissions or the willful misconduct or negligent
actions or omissions of their respective agents, employees or invitees.

 

(b)                                 Notwithstanding
the foregoing, no party shall be entitled to any damages with respect to lost
profits or other consequential damages or punitive damages with respect to the
performance by any other party under this Services Agreement.

 

ARTICLE 9.

 

MISCELLANEOUS

 

9.1                                 Resolution
of Disputes; Continuation of Services Pending Outcome of Dispute. In the
event of any dispute between the parties or between Providers and Recipients, the
parties agree to be bound by the arbitration procedures set forth in Section 9.6
of this Services Agreement. Notwithstanding the existence of any dispute
between the parties, no Provider shall discontinue the supply of any service
provided for herein, unless so provided in an arbitral determination that the
respective Recipient is in default of an obligation under this Services
Agreement.

 

9.2                                 Notices.
All notices, consents, waiver, claims and other communications hereunder (each
a “Notice”) shall be in writing and shall be (a) personally
delivered, (b) deposited, prepaid in a nationally established overnight
delivery firm such as Federal Express, (c) mailed by certified mail,
return receipt requested, or (d) transmitted by facsimile as follows:

 

	
  As to Walter
  or any other Walter Entity:

  
	
   

  	
  Walter
  Industries, Inc.

  
	
   

  	
  4211 W. Boy
  Scout Blvd.

  
	
   

  	
  Tampa, FL
  33607

  
	
   

  	
  Attention:

  	
  Victor P.
  Patrick

  
	
   

  	
   

  	
  Senior Vice
  President and General Counsel

  
	
   

  	
  Fax No.:
  (813) 871-4420

  
	
   

  	
   

  	
   

  
	
  As to
  Mueller or any other Mueller Entity:

  
	
   

  	
  Mueller
  Water Products, Inc.

  
	
   

  	
  4211 W. Boy
  Scout Blvd.

  
	
   

  	
  Tampa, FL
  33607

  
	
   

  	
  Attention:

  	
  Chief
  Executive Officer

  
	
   

  	
  Fax No.:
  (813) 871-4430

  

 

or to any
other address which such party may have subsequently communicated to the
other party by a Notice given in accordance with the provisions of this Section.
Each Notice shall be deemed given and effective upon receipt (or refusal or
receipt).

 

8

 

9.3                                 Entire
Agreement. This Services Agreement and the Schedules attached hereto
contain every obligation and understanding between the parties relating to the
subject matter hereof and merge all prior discussion, negotiations and
agreement, if any, between them, and none of the parties shall be bound by any
representations, warranties, covenants or other understandings, other than as
expressly provided herein or therein.

 

9.4                                 Waiver
and Amendment. Any representation, warranty, covenant, term or condition of
this Services Agreement which may legally be waived, may be waived,
or the time of performance thereof extended, at any time by the party hereto
entitled to the benefit thereof, and any term, condition or covenant hereto may be
amended by the parties hereto at any time. Any such waiver, extension or
amendment shall be evidenced by an instrument in writing executed on behalf of
the appropriate party by a Person who has been authorized by such party to
execute waivers, extensions or amendments on its behalf. No waiver by any party
hereto, whether express or implied, of its rights under any provisions at any
other time or a waiver of such party’s rights under any other provision of this
Services Agreement. No failure by any party hereto to take any action against
any breach of this Services Agreement or default by another party shall
constitute a waiver of the former party’s right to enforce any provision of
this Services Agreement or to take action against such breach or default or any
subsequent breach or default by such other party.

 

9.5                                 Severability.
In the event that any one or more of the provisions contained in this Services
Agreement shall be declared invalid, void or unenforceable, the remainder of
the provisions of this Services Agreement shall remain in full force and
effect, and such invalid, void or unenforceable provision shall be interpreted
as closely as possible to the manner in which it was written.

 

9.6                                 Governing
Law; Jurisdiction. This Services Agreement shall be interpreted and
construed in accordance with the laws of New York without giving effect to the
principles of conflicts of laws thereof. Neither party shall commence any
proceeding against the other party under this Services Agreement unless and
until the parties shall have attempted in good faith to settle the underlying
dispute through negotiation or mediation for a period of not less than 30 days.
If the parties have not resolved the dispute within 30 days, then either party may initiate
arbitration by notifying the other party in writing that arbitration is
demanded. The arbitration shall be conducted in accordance with the CPR
Institute for Dispute Resolution Rules for Non-Administered Arbitration
(the “Rules”) by one arbitrator. Unless the parties agree on an
individual arbitrator by name, each party shall appoint one arbitrator,
obtain its appointee’s acceptance of such appointment, and deliver written
notification of such appointment and acceptance to the other party within 10
days after delivery of the written notice demanding arbitration. The two party
appointed arbitrators shall then jointly appoint a third arbitrator, obtain the
appointee’s acceptance of such appointment and notify the parties in writing of
such appointment and acceptance within 10 days after their appointment and
acceptance. The arbitrator appointed by the two party-appointed arbitrators
shall serve as the sole arbitrator. If the party appointed arbitrators fail to
appoint an arbitrator within the time limits specified herein, the CPR
Institute for Dispute 

 

9

 

Resolution
shall appoint the arbitrator in accordance with Article 6 of the Rules. Judgment
upon the award rendered by the arbitrator may be entered by any court
having jurisdiction thereof. Unless otherwise agreed, the place of the
arbitration shall be Jacksonville, Florida.

 

9.7                                 Counterpart Execution.
This Services Agreement may be executed in counterparts with the same
effect as if all of the parties had signed the same document. Such counterparts
shall be construed together and shall constitute one and the same instrument,
notwithstanding that all of the parties are not signatories to the original or
the same instrument, or that signature pages from different counterparts
are combined. The signature of any party to one counterpart shall be
deemed to be a signature to and may be appended to any other counterpart.

 

9.8                                 Assignment.
This Services Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, provided that
this Agreement may not be assigned by either party to any Person without
the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, either party may assign
any of its rights and obligations under this Services Agreement, in whole or in
part, to one or more wholly owned subsidiaries of such party. Any party so
assigning this Services Agreement shall remain fully liable to the other party
for the performance by any assignee of any obligation of such party so assigned.
Any purported assignment in violation of this Section 9.8 shall be void.

 

9.9                                 No
Third Party Beneficiary. Nothing expressed or implied in this Services
Agreement is intended, or shall be construed, to confer upon or give any Person
other than the parties hereto, their respective successors and permitted
assigns and the indemnities, any rights or remedies under or by reason of this
Services Agreement.

 

9.10                           Headings
and Interpretation. Titles and headings to articles and sections herein and
titles to the Schedules are inserted for convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of
this Services Agreement. The Schedules referred to herein shall be construed
with and as an integral part of this Services Agreement to the same extent
as if they were set forth verbatim herein.

 

9.11                           Survival.
Notwithstanding anything to the contrary herein, the rights and obligations of
the parties under this Services Agreement which by their nature would continue
beyond the termination of this Services Agreement, including but not limited to
rights and obligations those set forth in Sections 3.6, 6.5, 8.1, 9.1 and 9.6,
shall survive termination of this Services Agreement.

 

10

 

IN WITNESS WHEREOF, the duly authorized officers or representatives of
the parties hereto have duly executed this Services Agreement as of the date
first written above.

 

 

	
  MUELLER
  ENTITIES:

  	
  WALTER
  ENTITIES:

  
	
   

  	
   

  
	
  MUELLER
  WATER PRODUCTS, INC.

  	
  WALTER
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/  

  	
  Victor P.
  Patrick

  	
   

  	
  /s/  

  	
  William F.
  Ohrt

  
	
  Name:

  	
  Victor P.
  Patrick

  	
   

  	
  Name:

  	
  William F.
  Ohrt

  
	
  Title:

  	
  Vice
  President and Secretary

  	
  Title:

  	
  Executive
  Vice President and Chief Financial OfficerExhibit 10.1

 

CORPORATE
AGREEMENT

 

THIS CORPORATE AGREEMENT (“Agreement”)
is entered into as of May 26, 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).

 

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

 

2

 

“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.

 

“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 

 

3

 

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.

 

“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.

 

4

 

“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 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 

 

5

 

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

 

6

 

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.

 

7

 

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

 

8

 

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 

 

9

 

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 

 

10

 

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:

  	
  /s/

  	
   William F. Ohrt

  	
   

  
	
   

  	
   

  	
  Name:

  	
   William F. Ohrt

  
	
   

  	
   

  	
  Title:

  	
   Executive
  Vice President and

   Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MUELLER WATER PRODUCTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   Victor P. Patrick

  	
   

  
	
   

  	
   

  	
  Name:

  	
   Victor P. Patrick

  
	
   

  	
   

  	
  Title:

  	
   Vice President and Secretary

  
						

 

23

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