Mueller Water Products, Inc. Amended and Restated 2006 Stock Incentive Plan Notice of Stock Option Grant

Unless otherwise defined herein, all capitalized terms in this Notice of Stock Option Grant (“Notice of Grant”) shall have the meanings ascribed to them in the Mueller Water Products, Inc. Amended and Restated 2006 Stock Incentive Plan (the “Plan”).

[Participant Name]

[Address Line 1]

[Address Line 2]

The person named above (the “Optionholder”) has been granted an option (the “Option”) to purchase shares of Common Stock of Mueller Water Products, Inc. (the “Company”), subject to the terms and conditions of the Plan, this Notice of Grant, and the Stock Option Agreement (attached as Exhibit A), as follows:

Date of Grant:    

Exercise Price per Share:    $

Total Number of Shares Granted:    

Total Exercise Price:    $

Type of Option (check one):      Incentive Stock Option Nonstatutory Stock Option

Term/ Expiration Date:    Not later than [insert date that is 10 years from date of grant]

Payment:

By one or a combination of the following items (as described in greater detail in the Stock Option Agreement and the Plan):

Vesting Schedule:

This Option will vest and may be exercised, in whole or in part, to the extent vested in accordance with the following schedule:

have not previously vested upon the Optionholder’s Retirement provided that the Optionholder has remained in Continuous Service from the Grant Date through at least the first anniversary of the Grant Date (for Optionholders who are not non-employee directors) or at least to the date of the next regularly scheduled annual stockholders meeting (for Optionholders who are non-employee directors). If an Optionholder who is not a non-employee director terminates Continuous Service before the first anniversary of the Grant Date or an Optionholder who is a non-employee director terminates Continuous Service before the next regularly scheduled annual stockholders meeting, the portion of the Option attributable to any unvested shares will lapse and terminate and shall not be exercisable by any Person. By way of example, (i) if an Optionholder who is not a non-employee director and who received an Option (scheduled to vest one-third on each of the first three anniversaries of the grant date) on December 3, 2013 terminates Continuous Service by reason of Retirement on December 4, 2014, then the remaining unvested shares of Common Stock subject to the Option will vest and such vested shares may be exercised immediately and (ii) if this same Optionholder terminates Continuous Service on December 2, 2014, then none of the shares of Common Stock subject to the Option will vest and the Option will lapse and terminate and shall not be exercisable by any Person.

The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this Notice of Grant, the Stock Option Agreement, and the Plan, both of which are made a part of this document. The Optionholder has reviewed the Plan, the Notice of Grant and the Stock Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Notice of Grant. Optionholder further acknowledges that as of the Date of Grant, this Notice of Grant, the Stock Option Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) options previously granted and delivered to Optionholder, and (ii) the following agreements only:

Other Agreements (if any):                     

The Optionholder acknowledges that if no other agreements are listed above, no other agreements on the subject hereof exist. By signing the Notice of Grant, the Optionholder agrees to accept as binding, conclusive and final all decisions or interpretations of the Board of Directors (or any Committee to whom the Board has delegated administration of the Plan) upon any questions relating to the Plan, the Notice of Grant and the Option Agreement.

OPTIONHOLDER:                     MUELLER WATER PRODUCTS, INC.

/s/ Gregory E. Hyland

(Signature)    (Signature)

Gregory E. Hyland, Chairman of the Board of Directors,

President and Chief Executive Officer

(Date)            

    

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an Incentive Stock Option, to the extent that the aggregate Fair Market Value of the Common Stock subject to the Option (as determined at the time of grant) exceeds the $100,000 rule of Code Section 422(d), it shall be treated as a Nonstatutory Stock Option (“NSO”).

Affiliate; OR (III) AS A DIRECTOR pursuant to the Bylaws of the Company, and any applicable provisions of the corporate law of the state or other jurisdiction in which the Company is domiciled, as the case may be.

Mueller Water Products, Inc.

1200 Abernathy Road

Atlanta, GA 30328

Attention: Stock Plan Administrator

Cash or check in the amount of $_________, with any checks made payable to Mueller Water Products, Inc.

Irrevocable instructions to sell shares acquired upon exercise in accordance with the terms of the Company’s “same day sale” program.

____________ shares of Common Stock, with a fair market value of $__________, as to which I am attesting ownership pursuant to the form of Tender of Already-Owned Shares by Attestation of Share Ownership Rather than Physical Delivery of Shares attached hereto as Attachment 2 (as further described in Attachment 1, Exercise via Attestation).

Submitted by:    Accepted by:

PURCHASER:    MUELLER WATER PRODUCTS, INC.

______________________    ______________________

(Signature)            (Signature)

______________________    ______________________

(Print Name)            (Print Name)

Address:

______________________

______________________

______________________    ______________________

(Date Executed)            (Date Received)