Mueller Water Products, Inc.
Supplemental Defined Contribution Plan
Effective April 1, 2007

Purpose

The purpose of this Plan is to provide specified benefits referred to in the Employment Agreement between Walter Industries, Inc. and Gregory E. Hyland dated as of September 9, 2005, as amended, as assumed by Mueller Water Products, Inc. as of December 14, 2006.  Mr. Hyland is considered part of a select group of management or highly compensated employees who contribute materially to the continued growth, development and future business success of Mueller Water Products, Inc. and its subsidiaries and affiliates.  The Plan is intended to constitute an unfunded plan of deferred compensation for a select group of management or highly compensated employees.  As such, the Plan is exempt from the application of Parts 2, 3 and 4 of Title I, and from Title IV, of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and is further exempt from certain ERISA reporting requirements in accordance with Department of Labor Regulation § 2520.104-23.  The Plan is not intended to be qualified under Section 401(a) of the Internal Revenue Code.

This Plan is intended to comply with the American Jobs Creation Act of 2004 and Internal Revenue Code Section 409A and the rules and regulations thereunder.  This Plan, and any payment thereunder may be amended unilaterally by the Company at any time through the period permitted for compliance by the Internal Revenue Service to make changes in compliance with such laws and the guidance issued thereunder.

This Plan supersedes any prior agreement, arrangement or understanding with respect to the benefits provided under this Plan.

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ARTICLE 1
Definitions

For purposes hereof, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

1.1                               “Account Balance” shall mean, with respect to a Participant, the Company Contribution Account.

1.2                               “Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 9, that are entitled to receive benefits under the Plan upon the death of a Participant.

1.3                               “Beneficiary Designation Form” shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to designate one or more Beneficiaries.

1.4                               “Board” shall mean the board of directors of the Company.

1.5                               “Cause” shall mean Termination of Employment, whether by or at the request of the Company, in connection with the Participant’s (i) willful failure to perform his assigned duties, and his failure to cure such failure within thirty days following written notice thereof from the Company, or (ii) intentional engagement in dishonest or illegal conduct in connection with his performance of his duties, or  conviction of a felony, or (iii) material breach of the terms of his employment agreement, and failure to cure such breach within thirty days following written notice thereof from the Company.

1.6                               “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

1.7                               “Committee” shall mean the Compensation and Human Resources Committee of the Board.

1.8                               “Company” shall mean Mueller Water Products, Inc. and any successor thereto.

1.9                               “Company Contribution Account” shall mean a Participant’s Company Contribution Amount adjusted in accordance with Sections 3.1 and 3.4 of the Plan, net of all distributions from such account.  This account shall be a bookkeeping entry only, maintained by the Company, and shall be utilized solely as a device for the measurement and determination of the amount to be paid to the Participant pursuant to the Plan.

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1.10                        “Company Contribution Amount” shall mean the initial amount allocated to the Company Contribution Account in accordance with Section 3.1(a) of the Plan and thereafter the monthly amount allocated to the Company Contribution Account in accordance with Section 3.1(b) of the Plan.

1.11                        “Disability” shall mean either that the Participant is (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last of a continuous period of not less than 12 months, or (b) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, is receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Corporation or its affiliates, or (c) determined to be totally disabled by the United States Social Security Administration.

1.12                        “Disability Benefit” shall mean a benefit set forth in Section 5.2.

1.13                        “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

1.14                        “Hardship” shall mean an  unforeseeable emergency that is caused by an event beyond the control of the Participant that would result in severe financial hardship to the Participant resulting from (a) a sudden and unexpected illness or accident of the Participant or the spouse or a dependent of the Participant (as defined in Code Section 152(a)), (b) a loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster), or (c) such other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in the sole discretion of the Plan Administrator.  In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication, or the need to pay for the funeral expenses of a spouse or a dependent may also constitute a Hardship event.  The Plan Administrator shall determine whether the circumstances presented by the Participant constitute an unanticipated emergency.  Such circumstances and the Plan Administrator’s determination will depend on the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved as described in Section 4.1(a) or 4.1(b).

1.15                        “Participant” shall mean Gregory E. Hyland.

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1.16                        “Plan” shall mean the “Mueller Water Products, Inc. Supplemental Defined Contribution Plan”, which shall be evidenced by this instrument, as amended from time to time.

1.17                        “Plan Administrator” shall mean the Committee.

1.18                        “Plan Year” shall mean the calendar year commencing each January 1 and ending on the next following December 31; provided that the first Plan Year shall be from the effective date, April 1, 2007, through December 31, 2007.

1.19                        “Specified Employee” shall mean a “key employee” as defined for purposes of Code Section 416(i), without regard to paragraph (5) thereof, of a service recipient any stock of which is publicly traded on an established securities market or otherwise.  An employee is a Specified Employee if, at any time during the preceding Plan Year, he or she is (a) one of the 50 (or, if less, the greater of three or 10% of all employees) highest-paid officers of the Company or any Affiliate having annual compensation greater than $135,000 (as adjusted under Code Section 415(d)); (b) a 5% owner of the Company or any Affiliate; or (c) a 1% owner of the Company or any Affiliate having annual compensation of more than $150,000.  If a person is a Specified Employee as of December 31 of the preceding calendar year, he or she is treated as a Specified Employee for the 12-month period beginning on April 1 of the following calendar year.  For purposes of this Section 1.21, the term “compensation” will be defined in accordance with Code Section 415(c)(3).  Whether an individual is a Specified Employee will be determined in accordance with the requirements of Code Section 409A.

1.20                        “Termination Benefit” shall mean the benefit set forth in Section 5.3.

1.21                        “Termination of Employment” shall mean the severing of employment with the Company and any Affiliate (determined without regard to Code Sections 414(m) and 414(o)), voluntarily or involuntarily, for any reason.  A Participant will not be deemed to have incurred a Termination of Employment while he or she is on military leave, sick leave, or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months or such longer period as the Participant’s right to reemployment with the Company is provided either by statute or by contract.  If the period of leave exceeds six months and the Participant’s right to reemployment is not provided either by statute or by contract, the Termination of Employment will be deemed to occur on the first date immediately following such six-month period.  Whether a Participant incurs a Termination of Employment with the Company will be determined in accordance with the requirements of Code Section 409A.

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ARTICLE 2
Eligibility/Participation

2.1                               Eligibility; Commencement of Participation.  In carrying out the intent of the   Employment Agreement between the Company and the Participant, and superseding all prior understandings and agreements with respect to a supplemental defined contribution benefit, the Participant shall commence participation in the Plan upon the effective date of the Plan which is April 1, 2007.

2.2                               Change of Employer.  If the Participant is employed by any subsidiary or affiliate of the Company, the Participant will be considered as employed by the Company for purposes of the Plan.

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ARTICLE 3
Contributions/Vesting/Earnings Crediting

3.1                               Company Contributions.  Company Contribution Amounts will be credited to Participant’s Company Contribution Account as follows:

(a)                                  as of April 1, 2007, the amount of $193,652;

(b)                                 commencing April 16, 2007 and as of the 16th day of each calendar month thereafter through the earlier of (1) September 16, 2010 or (2) the Participant’s death, Disability or Termination of Employment for any reason other than Cause, an amount equal to 10% of the Participant’s then current base salary paid for the monthly period from the 16th day of the prior calendar month through the 15th day of the current calendar month.  In the event of death, Disability or Termination of Employment for any reason other than Cause, prior to September 16, 2010, a final credit for base salary through such event will be made as soon as practicable following such event.

3.2                               Leave of Absence.  If a Participant is authorized by the Company for any reason to take a leave of absence from employment on a paid or unpaid basis, the Participant shall continue to be considered actively employed by the Company but no Company Contribution Amount shall be made for any full month during which the Participant is on such authorized leave of absence.

3.3                               Vesting.  A Participant shall be one hundred percent (100%) vested in the amount credited to his Company Contribution Account at all times.  Notwithstanding the foregoing, if a Participant has a Termination of Employment for Cause, the Company Contribution Account shall be forfeited in full.

3.4                               Value of Account Balances.  In accordance with, and subject to, the rules and procedures that are established from time to time by the Committee, in its sole discretion, the value of a Participant’s Account Balance at any time and from time to time up to the date of payment shall be based upon the increase in the Account Balance determined as of the 15th day of each month at a rate that is, on an annualized basis, 120% of the applicable federal long-term rate, with compounding on a monthly basis (as prescribed under Code Section 1274(d)).

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ARTICLE 4
Hardship Withdrawal Payouts

4.1                               Hardship Distributions.  A Participant may request that all or a portion of his vested Account Balance be distributed at any time by submitting a written request to the Plan Administrator, provided that the Participant has incurred a Hardship and the distribution is necessary to alleviate such Hardship.  The Plan Administrator shall deem a distribution to be necessary to alleviate a Hardship if the distribution is not in excess of the amount of the Participant’s Hardship, plus taxes reasonably anticipated as a result of the distribution.  In determining whether the Hardship distribution request should be approved, the Plan Administrator shall be entitled to rely on the Participant’s representation that the Hardship cannot be alleviated:

(a)                                  through reimbursement or compensation by insurance or otherwise; or

(b)                                 by reasonable liquidation of the Participant’s assets, to the extent such liquidation would not itself cause a severe financial hardship.

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ARTICLE 5
Benefits

5.1                               Termination Benefit.  If a Participant experiences a Termination of Employment other than for Cause for any reason other than death or Disability, the Participant shall receive a Termination Benefit equal to his vested Account Balance paid in a lump sum cash amount, less applicable tax withholdings, as soon as practicable but not later than March 15 of the year following the year of the Termination of Employment.

5.2                               Disability Benefits.  If a Participant’s employment with the Company terminates by reason of Disability, then the Participant shall receive a Disability Benefit equal to his Account Balance paid in a lump sum cash amount, less applicable tax withholdings, as soon as practicable following his Disability but not later than March 15 of the year following the year of the Plan’s determination of Disability.

5.3                               Survivor Benefit. 

(a)                                  If a Participant dies while employed by the Company but before he otherwise has a Termination of Employment, the Participant’s Beneficiary shall receive a Survivor Benefit equal to the Participant’s Account Balance paid as if the Company had terminated the employment of the Participant on the date of death  and the Participant’s Beneficiary will be paid in a lump sum cash amount as soon as practicable following the Participant’s death.

(b)