Help with changing global direction to local

When the character is grounded, it always faces one global direction. How do I make it so that I can modify his rotation.

 //ALIGN WITH TERRAIN
 
 var isGrounded: boolean = false;
 var hit: RaycastHit;
 var theRay: Vector3;
 var smoothTime : float = 0.3;
 
 function FixedUpdate ()
 {
     if(isGrounded)
     {
         // Convert from local space to world space
         theRay = transform.TransformDirection(Vector3 (0,-1,0));    

         // Send ray from origin of transform. If the ray 
         // (facing downwards globally) hits something...
         if (Physics.Raycast(transform.position, theRay, hit))    
         {
             // Set the rotation so that the transform's y-axis 
             // is perpendicular to the normal
             transform.rotation = Quaternion.FromToRotation(Vector3(0,1,0), hit.normal);    
         }
     }    
 }
 
 // character is touching the ground
 function OnCollisionEnter(collision : Collision)
 {
     isGrounded = true;
 }
 
 
 // character gets airborn
 function OnCollisionExit(collisionInfo : Collision)
 {
     isGrounded = false;
     // Prevent character from spiraling out of control the second it goes airborn
     rigidbody.angularVelocity = Vector3.zero;
 }