I don't have any specific numbers or methods, just some suggestions. You said he is getting old. We old people seem to forget things or get confused sometimes. I would definitely want something in writing that defined the terms. Not just a conversation you both agreed to.
You are going to lease the cows, but he can't sell them for three years? i don't need to know the details, but I would try to ensure that whatever that situation is, there is not someone else that has any control of the cows or claim of ownership during that time.
I would think about all the expenses and income and events that could occur during that time and write those down with who pays and what percentage. Income that comes in - who gets what and what percentage. Unusual events- cows die from lightening strike, you become disabled, he dies, etc. What happens? Those things could be part of a written agreement, or just a list to help you arrive at a fair definition of how expenses and income are shared, some fairness in sharing risk and sharing reward, etc.
He already owns the cows, so should receive enough to compensate for that investment. You would be putting your labor into it and should receive enough to cover that. In other words, think about all the parts and pieces and possibilities to help define the deal.
I was confused by statement that you would lease the cows and graze his land, but he would provide the hay and wants you to calve them. Seems like if you lease the cows, you could also lease the grazing rights on his land, and purchase hay from him if he has hay for sale. What happens if he has no hay in year 2? If you lease the cows, seems like to me that you are responsible for them and would graze them where ever is best for you and get hay wherever is best for you. Try to avoid the situation where the old guy still has an emotional attachment so strong that he starts telling you what to do, how to do it and when to do it. That's what we old guys might tend to do. You don't want to function as a hired hand who also shares a large portion of the risk in an agreement.
I said I was confused and probably don't have the correct view of the situation, so will go back to where I started. Think about everything and be sure you and he are on the same page and that enough is written to protect both of you from any bad and reward both of you for any good proportionate to the contribution each makes. Maybe he should just hire you to do the work and manage the cattle and pay in either replacements or dollars.
