Exhibit 10.1


 


December 23, 2008


 


Mark J. O’Brien


[home address]


Tampa, FL [zip]


 


Dear Mark:


 


We
are pleased that you have accepted the position of Chairman of the Board of
Directors and Chief Executive Officer of Walter Investment Management
Corporation, the surviving entity following the merger of JWH Holding Company,
LLC (“JWHHC”) with Hanover Capital Mortgage Holdings, Inc. (“HCM”)
pursuant to the Agreement and Plan of Merger entered into between JWHHC and HCM
(the “Company”). Except as specifically provided in paragraph 2(c)(viii) hereof,
this agreement will be the sole obligation of the survivor corporation
following the merger of JWHHC and HCM. 
The three-year period commencing October 1, 2008 is referred to
herein as the “Term” of this Agreement. While employed during the Term, you
agree to devote during normal business hours during business days your full
time and efforts to advancing the Company’s interests; provided, however, that
you may continue engaging in the other business and investment activities you
are currently engaged in so long as such activities are not directly
competitive with the Company’s business and do not prevent you from carrying
out your duties as Chairman of the Board of Directors and Chief Executive
Officer of the Company.


 


The purpose of this
letter is to confirm your acceptance of the terms of your employment, effective
October 1, 2008, as follows:


 


1.             As
the Chairman of the Board of Directors and Chief Executive Officer of
the Company, you shall report to and serve at the direction of the Board of
Directors of the Company. In your capacity as Chairman of the Board of
Directors and Chief Executive Officer of the Company, you will be responsible
for directing all aspects of the business.


 


2.             Your
compensation package will be as follows:


 


(a)           Base Salary


 


$500,000 per year
commencing October 1, 2008, which will be subject to periodic review and
increase (but not decrease) by the Compensation Committee of the Board of
Directors of the 


 


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Company and
paid in accordance with the payroll practices of the Company, as they may
change from time to time.


 


(b)           Bonus


 


Your annual target
bonus will be 75% of your base salary or $375,000 at your current base pay,
with an upside of 200% of your base pay or $1,000,000 at your current base pay.
The amount of your bonus will fluctuate based upon actual performance under the
Company’s bonus plan as in effect from time to time. The amount of your bonus
is dependent upon the achievement of the Company’s annual financial and other
goals, as well as the accomplishment of individual objectives, each mutually
agreed upon in writing each year. To receive a bonus, you must be employed
through the end of the year for which the bonus is payable (the “Bonus Year”).  The bonus for a Bonus Year will be payable to
you during the next following year (the “Bonus Payment Year”) immediately upon
the closing of the Company’s books for the Bonus Year, but not later than March 14
of the Bonus Payment Year.


 


For calendar year
2008, your annual bonus will be $500,000, which will be paid to you no later
than December 31, 2008.


 


(c)           Benefits


 


(i)            During
the Term, you will be entitled to receive from the Company prompt reimbursement
for all reasonable out-of-pocket business expenses incurred by you in the
performance of your duties hereunder, in accordance with the most favorable
policies, practices and procedures of the Company relating to reimbursement of
business expenses incurred by Company directors, officers or employees in
effect at any time during the 12 month period preceding the date you incur the
expenses; provided, however, that any such expense reimbursement will be made
no later than the last day of the calendar year following the calendar year in
which you incur the expense, will not affect the expenses eligible for
reimbursement in any other calendar year, and cannot be liquidated or exchanged
for any other benefit.


 


(ii)           Participation
in the Company’s group life and health insurance benefit programs generally
applicable to executives in the location in which you are primarily based, and
in accordance with their terms, as they may change from time to time.  Such group life and health insurance benefits
shall be at least comparable to those provided to the chief 


 


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executive officer of similar-size
companies engaged in a business similar to the Company’s business.


 


(iii)          Participation
in the Company’s retirement plan, generally applicable to salaried employees in
the location in which you are primarily based, as it may change from time to
time and in accordance with its terms. Your eligibility to participate will be
consistent with the requirements of ERISA. 
Such retirement plan benefits shall be at least comparable to those
provided to the chief executive officer of similar-size companies engaged in a
business similar to the Company’s business.


 


(iv)          Participation
in the Company’s long-term incentive plan as it applies to other executives and
subject to terms of the Company’s Long-Term Incentive Plan. During the Term of
this Agreement, your annual long-term incentive opportunity will have an
economic value of $600,000.  Annual
equity grants will vest one-third per year over three years and option grants
will have a 10-year term.  Vesting will
accelerate upon your death, disability, termination of your employment by the
Company without Cause (defined below), your Constructive Termination (defined
below), or upon a change in ownership or effective control of the Company or in
the ownership of a substantial portion the assets of the Company within the
meaning of Treas. Reg. 1.409A-3(i)(5). 
The specific terms of your annual long-term incentive opportunity will
be mutually agreed upon and set forth in separate grant agreements.


 


You understand and agree that the Jim Walter
Homes Holding Company, LLC equity grant you received under your previous
employment letter agreement, effective March 2, 2006, will be cancelled at
the Effective Time of the Merger.  The
Company will issue you stock comprising 2.5% of the total outstanding stock of
the Company on the third anniversary of the date of this Agreement, subject to
your right to elect to further defer receipt of such stock (“Subsequent
Deferral Election”) as follows: (i) the Subsequent Deferral Election will
not take effect until at least 12 months after the date on which it is made, (ii) the
Subsequent Deferral Election must be to defer receipt of the stock for at least
5 years from the date you would otherwise receive the stock had you not made
the Subsequent Deferral Election, and (iii) the Subsequent Deferral
Election must be made not less than 12 months before you would otherwise
receive the stock had you not made the Subsequent Deferral Election.  Notwithstanding the foregoing, the deferral
period will terminate and the Company will immediately issue you the 2.5% stock
interest upon your death or disability, upon 


 


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involuntary termination of your employment for
any reason other than for “Cause” as defined in Section 6 of this
Agreement, or upon a change in the ownership or effective control of the
Company or in the ownership of a substantial portion of the assets of the
Company within the meaning of Treas. Reg. 1.409A-3(i)(5).  Your right to receive the 2.5% stock interest
is fully vested and not subject to forfeiture, as of the Effective Time of the
Merger. Dividend
equivalents will be paid to you in cash until the end of the deferral
period.  In accordance with Treas. Reg.
1.409A-3(e), the dividend equivalents will be treated separately from your
right to the 2.5% stock interest and the dividend equivalents, if any, must be
paid contemporaneously with actual dividends, if any, but at least annually.


 


(v)           4 weeks of vacation to be used each year,
without carryover of unused vacation days, and in accordance with the Company’s
vacation policy, as it may change from time to time.


 


(vi)          You
will receive a monthly auto allowance of $2,000, subject to the usual
withholding taxes.


 


(vii)         You
may use company-owned aircraft, leased or chartered aircraft for your business
travel as appropriate.  However, you will
not use any company-owned, leased or chartered aircraft for personal travel at
company expense, except in the case of a family emergency and with the prior
approval of the Chairman of the Compensation and Human Resources Committee of
the Board, or in the event of his unavailability, the Chairman of the Corporate
Governance Committee. You will not be required to reimburse the cost of any
such pre-approved emergency travel to the Company, but the value of such travel
will be taxable to you in accordance with applicable IRS regulations.  You shall not pilot company aircraft or
leased or chartered aircraft used for company business.


 


(viii)        After
December 31, 2008 Walter Industries, Inc. will use its best efforts
to provide you with a country club membership under the corporate membership
program currently in place at Walter industries, Inc. (subject to the
terms and provisions of such corporate membership). You will be responsible for
paying monthly dues and other personal expenses associated with the membership
and use of the club.


 


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Your Benefits under this
Agreement, including grants to you under the Company’s Long-Term Incentive
Plan, will be subject to periodic review and increase by the Compensation
Committee of the Board of Directors of the Company.


 


3.             It is agreed and understood that your employment with
the Company is to be at will, and either you or the Company may terminate the
employment relationship at any time for any reason, with or without cause, and
with or without notice to the other; nothing herein or elsewhere constitutes or
shall be construed as a commitment to employ you for any period of time.


 


4.             You agree that all inventions, improvements, trade
secrets, reports, manuals, computer programs, systems, tapes and other ideas
and materials developed or invented by you during the period of your employment
with the Company, either solely or in collaboration with others, which relate
to the actual or anticipated business or research of the Company, which result
from or are suggested by any work you may do for the Company, or which result
from use of the Company’s premises or the Company’s or its customers’ property
(collectively, the “Developments”) shall be the sole and exclusive property of
the Company.  You hereby assign to the
Company your entire right and interest in any such Developments, and will
hereafter execute any documents in connection therewith that the Company may
reasonably request.


 


5.             As an inducement to the Company to make this offer to
you, you represent and warrant that you are not a party to any agreement or
obligation for personal services that would prevent you from performing your
duties as Chairman of the Board and Chief Executive Officer of the Company
hereunder, and there exists no impediment or restraint, contractual or
otherwise on your power, right or ability to accept this offer and to perform
the duties and obligations specified herein.


 


6.             In the event of your involuntary termination, other
than for “Cause” (defined below), in the event of your Constructive Termination
(also defined below), if you are required to relocate more than 50 miles from
the Company’s Tampa, Florida location, or in the event of your death or
disability, in each case, you will be entitled to the following severance
benefits, in accordance with all government regulations, e.g. IRC 409A.


 


·      Continued participation in benefits until
the earlier of the 18-month anniversary of the termination date or until you
are eligible to receive comparable benefits from subsequent employment.  The COBRA election period will not commence
until the expiration of that 18-month period. 
The amount of expenses eligible for reimbursement, or in-kind benefits
provided, during a calendar year may not affect the expenses eligible for
reimbursement, or the in-kind benefits to be provided, in any other calendar
year.  Your right to reimbursement or
in-kind benefits is not subject to liquidation or exchange for another
benefit.  Payment will be provided only
if the filing of the claim for payment and completion of the reimbursement
payment can reasonably be completed by the end of the calendar year following
the year in which the expense is incurred.


 


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“Involuntary Termination” shall mean your termination from
employment due to the independent exercise of unilateral authority by Company to
terminate your services, other than due to your implicit or explicit request,
where you are willing and able to continue performing services.  The determination of whether a termination of
employment is involuntary is based on all the facts and circumstances.  Any reference in this Agreement to “termination
of employment” shall mean “separation from service” within the meaning of
Treas. Reg. 1.409A-1(h).


 


“Cause” shall mean
conviction of a felony arising from any act of fraud, embezzlement or willful
dishonesty in relation to the business or affairs of the Company or any other
felonious conduct on your part that is demonstrably detrimental to the best
interests of the Company or any subsidiary or affiliate.


 


“Constructive
Termination” shall mean, without your written consent: (a) a material
failure of the Company to comply with the provisions of this agreement, (b) a
material diminution of your position (including status, offices, title and
reporting relationships), duties or responsibilities or pay, or (c) any
purported termination of your employment other than for Cause.


 


For purposes of this Agreement, a significant diminution in
pay or responsibility shall not have occurred if the amount of your
bonus fluctuates due to performance considerations under the Company’s
executive incentive plan or other Company incentive plan applicable to you and
in effect from time to time.


 


7.             Non-Compete.  It is understood and agreed that the Company you
will have substantial relationships with specific businesses and personnel,
prospective and existing, vendors, contractors, customers, and employees of the
Company that result in the creation of customer goodwill. Therefore, except
with respect to business and investment activities you are currently engaged
in, following the termination of employment under this Agreement for any reason
and continuing for a period of eighteen (18) months from the date of such
termination, so long as the Company or any affiliate, successor or assigns
thereof is in the residential real estate mortgage servicing business or
directly related businesses within the Restricted Area (defined as the
residential real estate mortgage servicing and directly related industries in
which the Company competes at the time of your separation), unless the Board of
Directors approves an exception, you shall not, directly or indirectly, for
yourself or on behalf of, or in conjunction with, any other person, persons,
company, partnership, corporation, business entity or otherwise:


 


a.     Call upon, solicit, write,
direct, divert, influence, or accept residential real estate mortgage servicing
and directly related business (either directly or indirectly) with respect to
any account or customer or prospective customer of the Company or any
corporation controlling, controlled by, under common control with, or otherwise
related to the Company, including but not limited to Walter Investment Management
Corporation, Hanover


 


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Capital Mortgage Holdings, Inc., Walter Mortgage Company, or any
other affiliated companies; or


 


b.     Hire away any
independent contractors or personnel of the Company and/or entice any such
persons to leave the employ of the Company or its affiliated entities without
the prior written consent of the Company


 


8.             Non-Disparagement.   Following the termination of employment under
this Agreement for any reason and continuing for so long as the Company or any
affiliate, successor or assigns thereof carries on the same business within the
Restricted Area, you shall not and the Company, its affiliates, successors or
assigns shall not, directly or indirectly, for yourself or itself or on behalf
of, or in conjunction with, any other person, persons, company, partnership,
corporation, business entity or otherwise:


 


a.     Make any
statements or announcements or permit anyone to  make any public statements or announcements
concerning your termination with the Company, or


 


b.     Make any
statements that are inflammatory, detrimental, slanderous, or negative in any
way to you or to the interests of the Company or its affiliated entities.


 


9.             You
acknowledge and agree that you will respect and safeguard the Company’s
property, trade secrets and confidential information. You acknowledge that the
Company’s electronic communication systems (such as email and voicemail) are
maintained to assist in the conduct of the Company’s business and that such
systems and data exchanged or stored thereon are Company property.  In the event that you leave the employ of the
Company, you will not disclose any Company trade secrets or confidential
information you acquired while an employee of the Company to any other person
or entity, including without limitation, a subsequent employer, or use such
information in any manner.


 


10.           In the event that any portion of any
payment under this agreement, or under any other agreement with, or plan of the
Company (in the aggregate, Total Payments) would constitute an “excess
parachute payment,” such that a golden parachute excise tax is due, the Company
shall provide to you, in cash, an additional payment in an amount sufficient to
cover the full cost of any excise tax and all of your additional federal,
state, and local income, excise, and employment taxes that arise on this
additional payment (cumulatively, the Full Gross-Up Payment), such that you are
in the same after-tax position as if you had not been subject to the excise
tax. For this purpose, you shall be deemed to be in the highest marginal rate
of federal, state, and local income taxes in the state and locality of your
residence on the date of your termination. For purposes of this agreement, the
term “excess parachute payment” shall have the meaning assigned to such term in
Section 280G of the Internal Revenue Code, as amended (the Code), and the
term “excise tax” shall mean the tax imposed on such excess parachute payment
pursuant


 


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to
Sections 280G and 4999 of the Code.  Any
Full Gross-Up Payment made under this paragraph will be made by December 31
of the year next following the calendar year in which you pay the taxes to the
applicable taxing authority.


 


11.           Tax Compliance
Delay in Payment.  If the Company
reasonably determines that any payment or benefit due under this Agreement, or
any other amount that may become due to you after termination of employment, is
subject to Section 409A of the Code, and also determines that you are a “specified
employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, upon
your termination of employment for any reason other than death (whether by
resignation or otherwise), no amount may be paid to you or on your behalf
earlier than six months after the date of your termination of employment (or,
if earlier, your death) if such payment would violate the provisions of Section 409A
of the Code and the regulations issued thereunder, and payment shall be made,
or commence to be made, as the case may be, on the date that is six months and
one day after your termination of employment (or, if earlier, one day after
your death).  For this purpose, you will
be considered a “specified employee” if you are employed by an employer that
has its stock publicly traded on an established securities market or certain
related entities have their stock traded on an established securities market
and you are a “key employee”, with the exact meaning of “specified employee”, “key
employee” and “publicly traded” defined in Section 409A(a)(2)(B)(i) of
the Code and the regulations thereunder. 
Notwithstanding the above, the Company hereby retains discretion to make
determinations regarding the identification of “specified employees” and to
take any necessary corporate action in connection with such determination.


 


12.           You acknowledge and agree that you have read this
letter agreement carefully, have been advised by the Company to consult with an
attorney regarding its contents, and that you fully understand the same.


 


13.           It is agreed and understood that this acceptance
letter shall constitute our entire agreement with respect to the subject matter
hereof and shall supersede all prior agreements, discussions, understandings
and proposals (written or oral) relating to your employment with the Company.
This letter agreement will be interpreted under and in accordance with the laws
of the State of Florida without regard to conflicts of laws.


 


14.           You and the Company intend that payments and benefits
under this Agreement comply with Code Section 409A and the regulations and
guidance promulgated thereunder (collectively “Code Section 409A”) and,
accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be in compliance therewith. 
In the event that any provision of this Agreement is determined by you
or the Company to not comply with Code Section 409A, the Company shall
fully cooperate with you to reform the Agreement to correct such noncompliance
to the extent permitted under any guidance, procedure, or other method
promulgated by the Internal Revenue Service now or in the future that provides
for such correction as a means to avoid or mitigate any taxes, interest, or
penalties that would otherwise be incurred by you on account of such
non-compliance.


 


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Mark, we are delighted
that you have agreed to head the Company. If the terms contained within this
letter are acceptable, please sign one of the enclosed copies and return it to
me in the envelope provided and retain one copy for your records.


 


	
  Very truly yours,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Victor P. Patrick

  	
   

  	
  /s/ Victor P. Patrick

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Victor P. Patrick

  	
   

  	
  Victor P. Patrick

  
	
  Director

  	
   

  	
  Vice Chairman,
  CFO & General Counsel

  
	
  On behalf of JWHHC

  	
   

  	
  On behalf of Walter
  Industries, Inc.

  
	
   

  	
   

  	
  In Respect of Paragraph
  2 (c) (viii).

  



 


ACCEPTANCE


 


I have read the
foregoing, have been advised to consult with counsel of my choice concerning
the same, and I fully understand the same. 
I approve and accept the terms set forth above as governing my
employment relationship with the Company.


 


	
  Signature

  	
  /s/ Mark J. O’Brien

  	
   

  	
  Date

  	
  December 23, 2008

  



 


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