**EXHIBIT 10.2.3**

 

THE DOE RUN RESOURCES CORPORATION1801 PARK 270 DRIVEST. LOUIS, MISSOURI  63146

 

July 1, 2005

 

JerryL. Pyatt

c/o The Doe Run ResourcesCorporation1801 Park 270 DriveSt. Louis, Missouri  63146

 

Re:                               Amendedand Restated Net Worth Appreciation Agreement

 

Dear Mr. Pyatt:

 

This letter, sets forth theamended and restated agreement between you and The Doe Run ResourcesCorporation, (the “Company”) with respect toyour Net Worth Appreciation Benefit, intended to constitute additionalincentive compensation to you as an employee of the Company.  Upon your execution of this letter, any priorNet Worth Appreciation Agreement or amendments theretobetween you and DR Acquisition Corp or the Company (including the agreementdated November 1, 2002) shall terminate and all obligations pursuant tosuch agreement as amended shall cease. The base date of this Amended and Restated Net WorthAppreciation Agreement shall be November 1 (the “Base Date”), 2004 (the “BaseYear”).

 

# 1.     Vesting.  On the Base Date in 2005, provided that youhave been continuously in the employ of the Company from the Base Date in 2002through such date, you shall receive a Net Worth Appreciation Credit of .6% andon the Base Date in each of the years 2006 and 2007 you shall receive anadditional Net Worth Appreciation Credit of .2%, provided that you have beencontinuously in the employ of the Company from the Base Date in 2002 to theapplicable Base Date, up to a maximum credit, if you remain in the employ ofthe Company continuously through the Base Date in 2007, of 1% (the “MaximumCredit”).  The aggregate number of Net Worth Appreciation Credits received on or prior to a givendate shall be hereinafter referred to as “Vested Credits”.  You shall not receive any credit unless youhave remained in the employ of the Company from the Base Date in 2002continually until the Base Date in 2005, and thereafter you shall not receivecredit for any partial year, provided that (a) if your employmentterminates due to death or Disability (as defined below) preventing you fromperforming your usual employment functions and duties prior to the Base Date in2005, you shall receive a credit of .4%, and (b) if your employmentterminates after the Base Date in 2005 and before the Base Date in 2007, due todeath or Disability (as defined below), you shall receive a credit of .2% forthe partial year in which the termination takes place (in addition to allcredits previously accrued).  Forpurposes of this agreement, “Disability” shall mean a physical or mentalimpairment that can be expected to result in death or to last for at least 12months, and the impairment either: (1) prevents the employee from engagingin any substantial gainful activity; or (2) entitles the employee toreceive income replacement benefits for at least 3months under an accident and health plan sponsored by the Company.

 

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# 2.     Treatment of Matters in Calculation ofBenefits.

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## (a)   For the purposes of calculating the benefitspayable under this Agreement, the Company will continue to calculate Federalcorporate income taxes and the corporate income taxes for those jurisdictionsin which the Company and its subsidiaries do business, for the fiscal periodsor portions thereof beginning on or after the Base Date in 2004, as if the Companyhad commenced operations on the Base Date in 2004 and as if the Company and itssubsidiaries had continued to have C corporation status under the FederalInternal Revenue Code and under state and local tax laws, in accordance withthe provisions of generally accepted accounting principles and the InternalRevenue Code and regulations thereunder and under state and local tax lawsapplicable to C corporations as from time to time in effect (“C Status”).  Such tax calculations will includecalculations of current and deferred tax expense or benefit and current andnon-current tax assets and liabilities (“C Taxes”) and the differences (“TaxDifferences”) between the C Taxes and the taxes as recorded by the Companyand its subsidiaries while being designated a qualified subchapterS subsidiary (“S Taxes”).  Forclarity, the tax basis of the Company’s assets and liabilities will be deemedto be the tax basis as of the Base Date in 2004, except that no net operatingloss carryforward will be deemed to exist as of such date.

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## (b)   Cumulative Income Statement Tax Differenceshall be the cumulative difference in income tax expenses or benefit betweenthe calculation of the C Taxes and S Taxes, in each case calculatedfor the tax periods or portions thereof beginning on or after the Base Date in2004, and through the end of the calculation period.  Cumulative Cash Flow Tax Difference shall bethe cumulative difference in income tax payments, net of refunds, between thecalculation of the C Taxes and S Taxes in each case made after theBase Date in 2004 and applicable to earnings of the Company on and after theBase Date in 2004, or which would be in the case of C Taxes, or are in thecase of S Taxes, immediately due and payable, contemporaneously with thepayment of any Distributions, as defined below. A “Distribution” for purposesof this Agreement shall mean a dividend, management fee, or any other form ofdistribution to The Renco Group, Inc. (“Renco”) or an affiliate of Rencoother than a subsidiary of the Company (including a transfer to Renco of assets in any form whether as cash orother form of value which shall have the effect of reducing the net worth ofthe Company), in excess of the Renco Amount (as defined herein), provided thatpayments made in respect of any debt to Renco, including, but not limited to,principal interest and fees thereon, or the preferred stock of the Company,including, but not limited to, dividends thereon and redemptions thereof, shallnot be a Distribution.  The “Renco Amount”shall be equal to $2,400,000 per annum, calculated cumulatively from the BaseDate in 2002 so that unused portions shall carry over to succeeding years.

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## (c)   In connection with the annual audit of thefinancial statements of the Company, the Company’s Board of Directors willrequire that the independent public accountants issue a special reportindicating their agreement with the Tax Differences.

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# 3.     Net WorthAppreciation Benefit.  Upon thetermination of your employment by the Company, other than for cause, you shallbe entitled to a net worth appreciation payment 

 

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# (“Payment”) equal to (A) the productof the Vested Credits and the Net Worth Increment, as defined below, less (B) theproduct of the Vested Credits and the Cumulative Income Statement TaxDifference (the calculation period shall end at the end of the Company’s fiscalquarter immediately preceding your date of termination) and excluding suchCumulative Income Statement Tax Difference to the extent equal to CumulativeCash Flow Tax Difference utilized in calculating amounts payable underParagraph 5(a). The “Net Worth Increment” is the amount, if any, by whichthe consolidated net worth of the Company and its subsidiaries, as at the endof its fiscal quarter immediately preceding the date of your termination,exceeds its consolidated net worth as of the Base Date in the Base Year,provided, however, that any increase in consolidated net worth resulting from acapital contribution to the Company or the sale of stock of the Company shallbe disregarded in calculating Net Worth Increment, and further provided thatpreferred stock of the Company and cash payments of dividends and payments inkind thereon shall be treated as debt of the Company for purposes of calculatingconsolidated net worth.  For clarity, itis understood that the Net Worth Increment will notinclude charges for interest on the restructured debt of the Company to theextent not included as interest expense under GAAP as accounted for under FAS15, nor will the Tax Differences include any benefit for such interest on suchrestructured debt. The determination of the independent public accountants forthe Company as to the Net Worth Increment, made inaccordance with generally accepted accounting principles, consistently applied,shall be conclusive on each of us. If there is no Net WorthIncrement, no amount shall be payable. If your employment is terminated for cause, you shall not be entitled toreceive any Payment.  Any terminationreferred to in this agreement shall mean separation from service from allmembers of The Renco Group, Inc. corporate controlled group (within themeaning of Internal Revenue Code sections 414(b), (c), (m), and (o)).

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# 4.     Payment.  The Payment shall be payable to you (or yourdesignee or estate) in 40 equal quarterly installments, without interest,commencing three months after the termination of your employment, and at 3month intervals thereafter. Notwithstanding any provision in this Agreement, the Company shall notbe required to pay you (i) any Payment, where the making of such Paymentwould violate any agreement between the Company and any lender of the Company,or (ii) in the event that any agreement between the Company and any lenderof the Company limits the aggregate amount that the Company may pay as bonuses,net worth appreciation payments, profit sharing payments or other payments ofsimilar nature (“Restricted Payments”) during any period, any Payment in excessof your pro rata portion of the aggregate amount of applicable RestrictedPayments which the Company is permitted to pay. In the event that the Company is unable to make a Payment due to thepreceding sentence, the Company’s obligation to make such Payment shall bedeferred until such time that the Company is permitted to make such Paymentpursuant to the preceding sentence.

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# 5.     Dividends; Sale of Substantially All ofthe Company’s Stock or Assets.

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## (a)   If and in the event that the Company shallmake a Distribution while you shall be employed by the Company, then you shallbe entitled to receive, as additional compensation, (“Additional CompensationBenefit”) an amount equal to (A) the excess of  (i) the product of the Maximum Creditand the cumulative Distributions paid by the Company subsequent to the BaseDate in the Base Year over (ii) the product of the Maximum Credit and anypositive Cumulative Cash Flow Tax Difference less (B) the amount ofAdditional Compensation Benefit previously paid to you subsequent to the

 

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## Base Date in the BaseYear.  Thisprovision shall not apply to intercompany payments among the Company and itsown wholly-owned subsidiaries or among two wholly-owned subsidiaries of theCompany, or to reimbursement to Renco for a proportionate part of costs, suchas audit charges and insurance premiums, paid by Renco on behalf of itself andits subsidiaries, including the Company;

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## (b)   If, while you shall be employed by theCompany (and whether before or after the Base Date in 2007), all orsubstantially all the stock or assets of the Company shall be sold to a personwho is not an affiliate of Ira Leon Rennert, or if The Renco Group, Inc.sells a controlling interest in the Company, then, upon the closing of suchsale, your full Maximum Credit shall be deemed to be vested, and you shall beentitled to receive, in kind and on the same terms and conditions as theCompany or its shareholder is being paid as payment in full of yourparticipation, an amount equal to (A) the product of the Maximum Creditand any Net Proceeds (as defined below) of the sale, plus (B) the productof the Maximum Credit and the cumulative Distributions paid by the Companysubsequent to the Base Date in the Base Year, less (C) the product of theMaximum Credit and the Cumulative Income Statement Tax Difference through thedate of sale, and less (D) the amount of any Additional CompensationBenefit previously paid to you subsequent to the Base Date in the BaseYear.  “Net Proceeds”, for purposeshereof, shall be equal to the amount, if any, of  the proceeds of the sale after deducting allexpenses of the sale, all applicable federal, state and local taxes, allliabilities retained by the seller, and all amounts paid or due to holders ofthe Company’s preferred stock. Except for such payment, neither you nor theCompany shall have any further rights or liabilities hereunder.

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# 6.     Condition Precedent. The Company’sobligation to make the Payment to you shall be conditioned on your faithfuladherence to your employment arrangements with the Company and on yourrefraining from engaging, during the period over which such payments are to bemade to you, directly or indirectly in any activity which is competitive withthe business engaged in by the Company at the date of termination of youremployment.  If you do engage in any suchcompetitive activities, then we shall no longer be obligated to make anypayments to you hereunder.

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# 7.     Notice.  Anynotices to be sent pursuant hereto shall be sent by hand, certified or registered mailor overnight service to you, at the address indicated above and a copy to TheRenco Group, Inc. at 30 Rockefeller Plaza, New York, NY 10112, 42ndfloor, to the attention of Ira Leon Rennert, or to any other address which theCompany or Renco may designate by notice in writing.

 

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Please confirm that the foregoing correctly sets forthour full agreement with respect to your net worth appreciation benefit bysigning and returning the enclosed copy of this letter.

 

 
|   | Very truly yours,                   |
|--------|-------------------------------------|
|   |                                |
|   |                                |
|   | The Doe Run  Resources Corporation. |
|   |                                |
|   |                                |
|   | /s/ Ira Leon Rennert                |   |
|   | Ira Leon Rennert                    |
|   | Chairman of the Board               |

 

Accepted and Agreed to:

 

 
| /s/ Jerry L. Pyatt |   |
|--------------------|--------|
| Jerry L. Pyatt     |

 

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