Exhibit 10.2
CONFIDENTIAL
March 2, 2006
Mr. Mark O'Brien
Tampa, Florida
Dear Mark,
We are delighted to offer you the position of Chairman and Chief Executive
Officer of the combined Homebuilding and Financing Segments (the "Homes Group")
of Walter Industries, Inc. ("Walter").
The terms of your employment will be as
follows:
1.
WE ANTICIPATE THAT YOU WILL REMAIN A
DIRECTOR OF WALTER (SUBJECT TO YOUR REELECTION BY THE SHAREHOLDERS). IN YOUR
CAPACITY AS CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE HOMES GROUP, YOU WILL
REPORT TO GREGORY E. HYLAND, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
WALTER, OR TO HIS SUCCESSOR AS WALTER'S CHAIRMAN.
YOU WILL BE RESPONSIBLE FOR
ALL ASPECTS OF THE BUSINESS OF THE HOMES GROUP. IF THE HOMES GROUP IS SPUN OFF
TO WALTER'S SHAREHOLDERS, IT IS CONTEMPLATED THAT YOU WILL CONTINUE TO BE ITS
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, REPORTING TO ITS BOARD OF DIRECTORS.
2.
YOUR EMPLOYMENT WILL COMMENCE AS OF
MARCH 2, 2006.
3.
YOUR COMPENSATION PACKAGE WILL BE AS
FOLLOWS:
A)
YOUR BASE SALARY WILL BE $150,000 PER
YEAR, SUBJECT TO REVIEW AND ADJUSTMENT BY THE COMPENSATION COMMITTEE OF WALTER'S
BOARD OF DIRECTORS.
B)
YOUR ANNUAL TARGET BONUS UNDER THE WALTER
INDUSTRIES EXECUTIVE INCENTIVE PLAN (EIP) WILL BE 100% OF BASE PAY. THE AMOUNT
OF YOUR ANNUAL BONUS WILL FLUCTUATE BASED UPON ACTUAL PERFORMANCE UNDER WALTER'S
EIP AS IN EFFECT FROM TIME TO TIME.
C)
YOU WILL RECEIVE A ONE-TIME GRANT OF
NON-QUALIFIED STOCK OPTIONS ON THE EQUIVALENT OF 7.5% OF THE TOTAL COMBINED
EQUITY OF THE HOMES GROUP (OR ANOTHER VEHICLE THAT WILL DELIVER EQUIVALENT
VALUE).
THE PER SHARE STRIKE PRICE OF THESE OPTIONS SHALL BE CALCULATED BY
REFERENCE TO A VALUATION OF THE HOMES GROUP AS A GOING CONCERN CONDUCTED AS SOON
AS POSSIBLE BY A MUTUALLY AGREEABLE, EXPERIENCED VALUATION FIRM OF NATIONAL
REPUTATION.
THESE OPTIONS WILL VEST AT THE RATE OF 1/3 PER YEAR OVER A
THREE-YEAR PERIOD.
THE OPTIONS WILL BE EVIDENCED BY AN OPTION AGREEMENT AND
OPTION PLAN WHICH ARE SUBSTANTIALLY EQUIVALENT TO THE FORM OF PLAN AND AGREEMENT
CURRENTLY USED BY WALTER, WITH SUCH REVISIONS AS ARE NECESSARY TO CONFORM TO
THIS AGREEMENT.
EXCEPT AS PROVIDED BELOW, THESE OPTIONS WILL EXPIRE TEN YEARS
FROM THE GRANT DATE.
THE OPTIONS WILL VEST ON ANY CHANGE IN CONTROL OF THE
HOMES GROUP.
A SPIN-OFF OR OTHER TRANSACTION SEPARATING THE HOMES GROUP FROM
WALTER SHALL NOT BE CONSIDERED A CHANGE IN CONTROL AND IN THE CASE OF SUCH A
TRANSACTION YOUR OPTIONS AND THIS AGREEMENT WILL CONTINUE IN FULL FORCE AND
EFFECT.
IN THE EVENT OF YOUR TERMINATION BY THE HOMES GROUP FOR CAUSE OR YOUR
VOLUNTARY TERMINATION OF EMPLOYMENT OTHER THAN FOR A REASON SPECIFIED IN THE
NEXT SENTENCE, YOUR UNVESTED OPTIONS WILL EXPIRE IMMEDIATELY, AND YOU WILL HAVE
90 DAYS TO EXERCISE ANY OPTIONS WHICH ARE VESTED ON THE DATE
YOUR EMPLOYMENT TERMINATES.
IN THE EVENT OF YOUR TERMINATION BY THE HOMES GROUP
FOR ANY OTHER REASON, YOUR RESIGNATION BECAUSE OF A SIGNIFICANT DIMINUTION IN
PAY OR