Exhibit 10.2.5


 


THE DOE RUN
RESOURCES CORPORATION

1801 PARK 270 DRIVE

ST. LOUIS, MISSOURI  63146


 


July 1, 2005


 


Bruce Neil


c/o The Doe Run Resources
Corporation

1801 Park 270 Drive

St. Louis, Missouri  63146


 


Re:                               Net
Worth Appreciation Agreement


 


Dear Mr. Neil:


 


This letter, sets forth
the agreement between you and The Doe Run Resources Corporation, (the
“Company”) with respect to your Net Worth Appreciation Benefit, intended to
constitute 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 that
you have been continuously in the employ of the Company from the Base Date in
2002 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 receive
an additional Net Worth Appreciation Credit of .2%, provided that you have been
continuously in the employ of the Company from the Base Date in 2002 to the
applicable Base Date, up to a maximum credit, if you remain in the employ of
the Company continuously through the Base Date in 2007, of 1% (the “Maximum
Credit”). The aggregate number of Net Worth Appreciation Credits received on or
prior to a given date shall be hereinafter referred to as “Vested Credits”. You
shall not receive any credit unless you have remained in the employ of the
Company from the Base Date in 2002 continually until the Base Date in 2005, and
thereafter you shall not receive credit for any partial year, provided that
(a) if your employment terminates due to death or Disability (as defined
below) preventing you from performing your usual employment functions and
duties 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 before
the Base Date in 2007, due to death or Disability (as defined below), you shall
receive a credit of .2% for the partial year in which the termination takes
place (in addition to all credits previously accrued). For purposes of this
agreement, “Disability” shall mean a physical or mental impairment that can be
expected to result in death or to last for at least 12 months, and the impairment
either: (1) prevents the employee from engaging in any substantial gainful
activity; or (2) entitles the employee to receive income replacement benefits
for at least 3 months under an accident and health plan sponsored by the
Company.


 

















 


2.             Treatment of Matters in Calculation of Benefits.


 


(a)           For the purposes of calculating the
benefits payable under this Agreement, the Company will continue to calculate
Federal corporate income taxes and the corporate income taxes for those
jurisdictions in which the Company and its subsidiaries do business, for the
fiscal 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 if
the Company and its subsidiaries had continued to have C corporation
status under the Federal Internal Revenue Code and under state and local tax
laws, in accordance with the provisions of generally accepted accounting
principles and the Internal Revenue Code and regulations thereunder and under
state and local tax laws applicable to C corporations as from time to time
in effect (“C Status”). Such tax calculations will include calculations of
current and deferred tax expense or benefit and current and non-current tax
assets and liabilities (“C Taxes”) and the differences (“Tax Differences”)
between the C Taxes and the taxes as recorded by the Company and its
subsidiaries while being designated a qualified subchapter S subsidiary
(“S Taxes”). For clarity, the tax basis of the Company’s assets and liabilities
will be deemed to be the tax basis as of the Base Date in 2004, except that no
net operating loss carryforward will be deemed to exist as of such date.


 


(b)           Cumulative Income Statement Tax
Difference shall be the cumulative difference in income tax expenses or benefit
between the calculation of the C Taxes and S Taxes, in each case
calculated for the tax periods or portions thereof beginning on or after the
Base Date in 2004, and through the end of the calculation period. Cumulative
Cash Flow Tax Difference shall be the cumulative difference in income tax
payments, net of refunds, between the calculation of the C Taxes and
S Taxes in each case made after the Base Date in 2004 and applicable to
earnings of the Company on and after the Base Date in 2004, or which would be
in the case of C Taxes, or are in the case of S Taxes, immediately due and
payable, contemporaneously with the payment of any Distributions, as defined
below. 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 other
form of value which shall have the effect of reducing the net worth of the
Company), in excess of the Renco Amount (as defined herein), provided that
payments 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, shall
not be a Distribution. The “Renco Amount” shall be equal to $2,400,000 per
annum, calculated cumulatively from the Base Date in 2002 so that unused
portions shall carry over to succeeding years.


 


(c)           In connection with the annual audit
of the financial statements of the Company, the Company’s Board of Directors
will require that the independent public accountants issue a special report
indicating their agreement with the Tax Differences.


 


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


 


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(“Payment”) equal to
(A) the product of the Vested Credits and the Net Worth Increment, as
defined below, less (B) the product of the Vested Credits and the
Cumulative Income Statement Tax Difference (the calculation period shall end at
the end of the Company’s fiscal quarter immediately preceding your date of
termination) and excluding such Cumulative Income Statement Tax Difference to
the extent equal to Cumulative Cash Flow Tax Difference utilized in calculating
amounts payable under Paragraph 5(a). The “Net Worth Increment” is the
amount, if any, by which the consolidated net worth of the Company and its
subsidiaries, as at the end of 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 a capital contribution to the Company or the sale of stock
of the Company shall be disregarded in calculating Net Worth Increment, and
further provided that preferred stock of the Company and cash payments of
dividends and payments in kind thereon shall be treated as debt of the Company
for purposes of calculating consolidated net worth. For clarity, it is
understood that the Net Worth Increment will not include charges for interest
on the restructured debt of the Company to the extent not included as interest
expense under GAAP as accounted for under FAS 15, nor will the Tax Differences
include any benefit for such interest on such restructured debt. The determination
of the independent public accountants for the Company as to the Net Worth
Increment, made in accordance with generally accepted accounting principles,
consistently applied, shall be conclusive on each of us. If there is no Net
Worth Increment, no amount shall be payable. If your employment is terminated
for cause, you shall not be entitled to receive any Payment. Any termination
referred to in this agreement shall mean separation from service from all
members of The Renco Group, Inc. corporate controlled group (within the meaning
of Internal Revenue Code sections 414(b), (c), (m), and (o)).


 


4.             Payment. The Payment shall be payable to you (or
your designee or estate) in 40 equal quarterly installments, without interest,
commencing three months after the termination of your employment, and at 3
month intervals thereafter. Notwithstanding any provision in this Agreement,
the Company shall not be required to pay you (i) any Payment, where the making
of such Payment would 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 lender of the Company limits the aggregate amount that the Company may pay
as bonuses, net worth appreciation payments, profit sharing payments or other
payments of similar nature (“Restricted Payments”) during any period, any
Payment in excess of your pro rata portion of the aggregate amount of
applicable Restricted Payments which the Company is permitted to pay. In the
event that the Company is unable to make a Payment due to the preceding
sentence, the Company’s obligation to make such Payment shall be deferred until
such time that the Company is permitted to make such Payment pursuant to the
preceding sentence.


 


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


 


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


 


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Base Date in the Base
Year. This provision shall not apply to intercompany payments among the Company
and its own wholly-owned subsidiaries or among two wholly-owned subsidiaries of
the 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 itself
and its subsidiaries, including the Company;


 


(b)           If, while you shall be employed by
the Company (and whether before or after the Base Date in 2007), all or
substantially all the stock or assets of the Company shall be sold to a person
who 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 such sale,
your full Maximum Credit shall be deemed to be vested, and you shall be
entitled to receive, in kind and on the same terms and conditions as the
Company or its shareholder is being paid as payment in full of your
participation, an amount equal to (A) the product of the Maximum Credit and any
Net Proceeds (as defined below) of the sale, plus (B) the product of the
Maximum Credit and the cumulative Distributions paid by the Company subsequent
to the Base Date in the Base Year, less (C) the product of the Maximum
Credit and the Cumulative Income Statement Tax Difference through the date of
sale, and less (D) the amount of any Additional Compensation Benefit
previously paid to you subsequent to the Base Date in the Base Year. “Net
Proceeds”, for purposes hereof, shall be equal to the amount, if any, of the
proceeds of the sale after deducting all expenses of the sale, all applicable
federal, state and local taxes, all liabilities retained by the seller, and all
amounts paid or due to holders of the Company’s preferred stock. Except for
such payment, neither you nor the Company shall have any further rights or
liabilities hereunder.


 


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


 


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


 


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Please confirm that the
foregoing correctly sets forth our full agreement with respect to your net
worth appreciation benefit by signing 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/ A. B. Neil

  	
   

  
	
  Bruce Neil

  



 


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