**Exhibit 10.2.5**

 

THE DOE RUNRESOURCES CORPORATION1801 PARK 270 DRIVEST. LOUIS, MISSOURI  63146

 

July 1, 2005

 

Bruce Neil

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

 

Re:                               NetWorth Appreciation Agreement

 

Dear Mr. Neil:

 

This letter, sets forththe agreement between you and The Doe Run Resources Corporation, (the“Company”) with respect to your Net Worth Appreciation Benefit, intended toconstitute additional incentive compensation to you as an employee of the Company.The base date of this Net Worth Appreciation Agreement shall be November 1 (the“Base Date”), 2004 (the “Base Year”).

 

# 1.             Vesting. On the Base Date in 2005, provided thatyou have been continuously in the employ of the Company from the Base Date in2002 through such date, you shall receive a Net Worth Appreciation Credit of..6% and on the Base Date in each of the years 2006 and 2007 you shall receivean additional 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 orprior to a given date shall be hereinafter referred to as “Vested Credits”. Youshall not receive any credit unless you have remained in the employ of theCompany from the Base Date in 2002 continually until the Base Date in 2005, andthereafter you shall not receive credit for any partial year, provided that(a) if your employment terminates due to death or Disability (as definedbelow) preventing you from performing your usual employment functions andduties prior to the Base Date in 2005, you shall receive a credit of .4%, and(b) if your employment terminates after the Base Date in 2005 and beforethe Base Date in 2007, due to death or Disability (as defined below), you shallreceive a credit of .2% for the partial year in which the termination takesplace (in addition to all credits previously accrued). For purposes of thisagreement, “Disability” shall mean a physical or mental impairment that can beexpected to result in death or to last for at least 12 months, and the impairmenteither: (1) prevents the employee from engaging in any substantial gainfulactivity; or (2) entitles the employee to receive income replacement benefitsfor at least 3 months under an accident and health plan sponsored by theCompany.

 

----

 

# 2.             Treatment of Matters in Calculation of Benefits.

#  

## (a)           For the purposes of calculating thebenefits payable under this Agreement, the Company will continue to calculateFederal corporate income taxes and the corporate income taxes for thosejurisdictions in which the Company and its subsidiaries do business, for thefiscal periods or portions thereof beginning on or after the Base Date in 2004,as if the Company had commenced operations on the Base Date in 2004 and as ifthe Company and its subsidiaries had continued to have C corporationstatus under the Federal Internal Revenue Code and under state and local taxlaws, in accordance with the provisions of generally accepted accountingprinciples and the Internal Revenue Code and regulations thereunder and understate and local tax laws applicable to C corporations as from time to timein effect (“C Status”). Such tax calculations will include calculations ofcurrent and deferred tax expense or benefit and current and non-current taxassets and liabilities (“C Taxes”) and the differences (“Tax Differences”)between the C Taxes and the taxes as recorded by the Company and itssubsidiaries while being designated a qualified subchapter S subsidiary(“S Taxes”). For clarity, the tax basis of the Company’s assets and liabilitieswill be deemed to be the tax basis as of the Base Date in 2004, except that nonet operating loss carryforward will be deemed to exist as of such date.

##  

## (b)           Cumulative Income Statement TaxDifference shall be the cumulative difference in income tax expenses or benefitbetween the calculation of the C Taxes and S Taxes, in each casecalculated for the tax periods or portions thereof beginning on or after theBase Date in 2004, and through the end of the calculation period. CumulativeCash Flow Tax Difference shall be the cumulative difference in income taxpayments, net of refunds, between the calculation of the C Taxes andS Taxes in each case made after the Base Date in 2004 and applicable toearnings of the Company on and after the Base Date in 2004, or which would bein the case of C Taxes, or are in the case of S Taxes, immediately due andpayable, contemporaneously with the payment of any Distributions, as definedbelow. A “Distribution” for purposes of this Agreement shall mean a dividend,management fee, or any other form of distribution to The Renco Group, Inc.(“Renco”) or an affiliate of Renco other than a subsidiary of the Company(including a transfer to Renco of assets in any form whether as cash or otherform of value which shall have the effect of reducing the net worth of theCompany), 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 perannum, calculated cumulatively from the Base Date in 2002 so that unusedportions shall carry over to succeeding years.

##  

## (c)           In connection with the annual auditof the financial statements of the Company, the Company’s Board of Directorswill require that the independent public accountants issue a special reportindicating their agreement with the Tax Differences.

##  

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

 

2

----

 

# (“Payment”) equal to(A) the product of the Vested Credits and the Net Worth Increment, asdefined below, less (B) the product of the Vested Credits and theCumulative Income Statement Tax Difference (the calculation period shall end atthe end of the Company’s fiscal quarter immediately preceding your date oftermination) and excluding such Cumulative Income Statement Tax Difference tothe extent equal to Cumulative Cash Flow Tax Difference utilized in calculatingamounts payable under Paragraph 5(a). The “Net Worth Increment” is theamount, if any, by which the consolidated net worth of the Company and itssubsidiaries, as at the end of its fiscal quarter immediately preceding thedate of your termination, exceeds its consolidated net worth as of the BaseDate in the Base Year, provided, however, that any increase in consolidated networth resulting from a capital contribution to the Company or the sale of stockof the Company shall be disregarded in calculating Net Worth Increment, andfurther provided that preferred stock of the Company and cash payments ofdividends and payments in kind thereon shall be treated as debt of the Companyfor purposes of calculating consolidated net worth. For clarity, it isunderstood that the Net Worth Increment will not include charges for intereston the restructured debt of the Company to the extent not included as interestexpense under GAAP as accounted for under FAS 15, nor will the Tax Differencesinclude any benefit for such interest on such restructured debt. The determinationof the independent public accountants for the Company as to the Net WorthIncrement, made in accordance with generally accepted accounting principles,consistently applied, shall be conclusive on each of us. If there is no NetWorth Increment, no amount shall be payable. If your employment is terminatedfor cause, you shall not be entitled to receive any Payment. Any terminationreferred to in this agreement shall mean separation from service from allmembers of The Renco Group, Inc. corporate controlled group (within the meaningof Internal Revenue Code sections 414(b), (c), (m), and (o)).

#  

# 4.             Payment. The Payment shall be payable to you (oryour designee 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 not be required to pay you (i) any Payment, where the makingof such Payment would violate any agreement between the Company and any lenderof the Company, or (ii) in the event that any agreement between the Company andany lender of the Company limits the aggregate amount that the Company may payas bonuses, net worth appreciation payments, profit sharing payments or otherpayments of similar nature (“Restricted Payments”) during any period, anyPayment in excess of your pro rata portion of the aggregate amount ofapplicable Restricted Payments which the Company is permitted to pay. In theevent that the Company is unable to make a Payment due to the precedingsentence, the Company’s obligation to make such Payment shall be deferred untilsuch time that the Company is permitted to make such Payment pursuant to thepreceding sentence.

#  

# 5.             Dividends; Sale of Substantially All of the Company’sStock or Assets.

#  

## (a)           If and in the event that the Companyshall make a Distribution while you shall be employed by the Company, then youshall be entitled to receive, as additional compensation, (“AdditionalCompensation Benefit”) an amount equal to (A) the excess of (i) theproduct of the Maximum Credit and the cumulative Distributions paid by theCompany subsequent to the Base Date in the Base Year over (ii) the product ofthe Maximum Credit and any positive Cumulative Cash Flow Tax Difference less(B) the amount of Additional Compensation Benefit previously paid to yousubsequent to the

 

3

----

 

## Base Date in the BaseYear. This provision shall not apply to intercompany payments among the Companyand its own wholly-owned subsidiaries or among two wholly-owned subsidiaries ofthe Company, or to reimbursement to Renco for a proportionate part of costs,such as audit charges and insurance premiums, paid by Renco on behalf of itselfand its subsidiaries, including the Company;

##  

## (b)           If, while you shall be employed bythe Company (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. sellsa controlling interest in the Company, then, upon the closing of such sale,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 Credit and anyNet Proceeds (as defined below) of the sale, plus (B) the product of theMaximum Credit and the cumulative Distributions paid by the Company subsequentto the Base Date in the Base Year, less (C) the product of the MaximumCredit and the Cumulative Income Statement Tax Difference through the date ofsale, and less (D) the amount of any Additional Compensation Benefitpreviously paid to you subsequent to the Base Date in the Base Year. “NetProceeds”, for purposes hereof, shall be equal to the amount, if any, of theproceeds of the sale after deducting all expenses of the sale, all applicablefederal, state and local taxes, all liabilities retained by the seller, and allamounts paid or due to holders of the Company’s preferred stock. Except forsuch payment, neither you nor the Company shall have any further rights orliabilities hereunder.

##  

# 6.             Condition Precedent. The Company’s obligation tomake the Payment to you shall be conditioned on your faithful adherence to youremployment arrangements with the Company and on your refraining from engaging,during the period over which such payments are to be made to you, directly orindirectly in any activity which is competitive with the business engaged in bythe Company at the date of termination of your employment. If you do engage inany such competitive activities, then we shall no longer be obligated to make anypayments to you hereunder.

#  

7.             Notice. Any notices to be sent pursuant heretoshall be sent by hand, certified or registered mail or overnight service toyou, at the address indicated above and a copy to The Renco Group, Inc. at30 Rockefeller Plaza, New York, NY 10112, 42nd floor, to the attention of Ira LeonRennert, or to any other address which the Company or Renco may designate bynotice in writing.

 

4

----

 

Please confirm that theforegoing correctly sets forth our full agreement with respect to your networth appreciation benefit by signing and returning the enclosed copy of thisletter.

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

 
| Accepted and Agreed to: |
|-------------------------|
|                    |
|                    |
| /s/ A. B. Neil          |   |
| Bruce Neil              |

 

5

----