Document:

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                                                                 EXHIBIT (10)(b)

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
July, 2000, by and between LACLEDE STEEL COMPANY, debtor in possession, a
Delaware corporation ("Employer"), and DAVID A. HIGBEE ("Executive").

         WHEREAS, Executive desires to be employed by Employer and Employer
desires to employ Executive under the terms and conditions set forth in this
Employment Agreement; and

         WHEREAS, it is Employer's intention to employ Executive upon the terms
and conditions herein, which recognize and compensate Executive for the
obligations of Executive undertaken hereunder, including specifically, but not
by way of limitation, the agreement of Executive not to compete with the
business of Employer, as provided in paragraph 7(b) for the period provided in
paragraph 7(a) upon the termination of Executive's employment by Employer for
any reason; it being understood and agreed that Executive is employed by
Employer to protect and expand the business of Employer;

         NOW, THEREFORE, in consideration of the foregoing and the promises and
agreements herein contained, the parties agree as follows:

         1. EMPLOYMENT. Employer hereby employs Executive, and Executive hereby
accepts such employment from Employer upon the terms and conditions hereinafter
set forth.

         2. TERM OF EMPLOYMENT. The term of Executive's employment under this
Agreement shall be for the period commencing July 1, 2000, and continuing
through June 30 2003. Provided, that Employer may terminate Executive's
employment as of June 30, 2001 or June 30, 2002, by providing Executive at least
ninety (90) days prior written notice of such termination. In addition, this
Agreement shall terminate on the occurrence of any of the following events:

                   (a) Whenever Employer and Executive shall mutually agree in
writing to terminate Executive's employment by Employer;

                   (b) Upon the death of Executive;

                   (c) For "cause," which shall mean Executive's dishonesty or
unlawful acts committed in connection with the business of Employer, and which
results in substantial gain or profit to Executive.

                   (d) At Employer's option and by action of Employer's Board of
Directors on thirty (30) days' written notice in the event of Executive's
Disability (defined as the failure substantially to discharge Executive's duties
as defined under this Agreement for ninety (90) consecutive days or one hundred
twenty (120) days (whether or not consecutive) in any twelve (12) month period,
as a result of an injury, disease, sickness or other physical or mental
incapacity). A determination of Executive's Disability

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shall be made by a qualified medical doctor licensed to practice in the State of
Missouri chosen by Employer subject to Executive's approval, which approval
shall not be unreasonably withheld. Executive shall consent to be examined by
Employer's medical doctor and shall consent to allow Employer's medical doctor
to discuss Executive's medical condition with Employer. Notwithstanding anything
to the contrary contained herein, Executive's Disability shall not be deemed to
have commenced until full coverage with respect to such Disability shall have
been approved by Employer's disability insurance carrier and payment under
Employer's group disability policy for such Disability shall have commenced.

         3. TITLE AND DUTIES OF EXECUTIVE. Executive's title shall be President
and Chief Executive Officer. Employer shall use its best efforts to cause
Executive to be elected to the Board of Directors of Employer ("Board of
Directors"). During Executive's employment by Employer, Executive shall serve
Employer to the best of Executive's ability and shall perform such duties as are
typically performed by the Chief Executive Officer of Employer. Executive agrees
to devote Executive's time and efforts to the business of Employer (except for
usual vacations and reasonable time for attention to personal affairs so long as
Executive's performance hereunder is not adversely affected thereby), and to be
loyal and faithful at all times, constantly endeavoring to improve Executive's
ability and knowledge of the business of Employer in an effort to increase the
value of Executive's services for the mutual benefit of Executive and Employer.

         4. COMPENSATION AND BENEFITS.

                   (a) Employer agrees to pay Executive for Executive's services
during the term of Executive's employment hereunder, a base salary which shall
be at an annual rate of the greater of (i) Three Hundred Twenty-Five Thousand
Dollars ($325,000.00), or (ii) the highest annual base salary authorized by the
Board of Directors after the date hereof. Executive's base salary shall be due
and payable in twelve (12) equal monthly installments. In addition, during the
term of Executive's employment by Employer hereunder, Executive's compensation
shall be reviewed and may be increased and/or Executive may be paid additional
or special compensation including without limitation stock options, stock
appreciation rights and other incentive compensation, or bonuses from time to
time by the mutual agreement of Executive and Employer, as determined by the
Board of Directors. Without limiting the foregoing, for the period which
commences July 1, 2000 and which ends September 30, 2000, Employer shall pay
Executive a bonus of not less than twenty percent (20%) of the base salary
earned by Executive during such period. For fiscal years commencing on and after
October 1, 2000 during the term of this Agreement, Executive shall have the
opportunity to earn annual bonuses of between thirty percent (30%) and forty
percent (40%) of Executive's annual base salary rate as then in effect based
upon achieving certain strategic performance goals, such goals to be recommended
by Executive and submitted in advance to the Board of Directors for approval. In
addition, during the term of this Agreement, Executive shall receive such fringe
benefits as are made available by Employer from time to time to other senior
executives of Employer; provided however, that benefits paid to Executive in all
events shall include Executive's leased automobile, and dues and initiation fees
for a country club in the

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Metropolitan St. Louis area of Executive's choice.
Upon the confirmation of the plan of reorganization of Employer under Chapter 11
of the Federal Bankruptcy laws, Executive shall be granted an option to purchase
not less than three percent (3%) of the then outstanding stock of the
reorganized company at an option price per share equal to the value per share
which the secured creditors of Employer receive pursuant to such plan of
reorganization. One-third (1/3) of such option shall become exercisable in each
of the three (3) succeeding anniversary dates of the grant contingent upon
Executive's continued employment on each such anniversary date; provided,
however, that if, for any reason other than "cause" (as defined in paragraph
2(c)), Employer gives Executive ninety (90) days written notice of the
termination of Executive's employment as set forth in paragraph 2, then one
hundred percent (100%) of such option shall become fully exercisable as of the
date of the giving of such notice. Any unexercised portion of such option shall
expire on Executive's last day of employment. Executive shall be entitled to
five (5) weeks of paid vacation each year.

                   (b) In the event of the termination of Executive's employment
either (i) by Executive for any reason including death or Disability, or (ii) by
Employer without "cause" (as defined in paragraph 2(c) herein), Executive shall
be paid incentive compensation for the fiscal year in which such termination
occurred in an amount equal to the product of (a) the amount of incentive
compensation to which he would have been entitled for such fiscal year had there
been no termination of employment and (b) a fraction, the numerator of which is
the number of days of such fiscal year in which Executive remained in the
employment of Employer and the denominator of which is 365.

         5. TERMINATION. In the event of the termination of Executive's
employment by Employer, without "cause" (as defined in paragraph 2(c) herein),
then, in lieu of any further salary payment pursuant to paragraph 4(a) herein,
Employer agrees to pay Executive for the remaining term of this Agreement at an
annual rate equal to the average of Executive's "compensation" for the three (3)
fiscal years (or such shorter period as Executive shall have been employed by
Employer) preceding the year of such termination. For this purpose the term
"compensation" means Executive's base salary in effect for a particular year
plus the incentive compensation received by Executive with respect to services
rendered in such year whether or not such incentive compensation is actually
paid in such year. Amounts described above due Executive under this paragraph 5
shall be due and payable for the duration of the remaining term in equal monthly
installments. In addition to the foregoing, Employer shall continue, for the
duration of the remaining term, to provide Executive with such additional fringe
benefits to which Executive was entitled as of the day immediately prior to the
date of such termination. Nothing in this paragraph 5 shall reduce or otherwise
effect Executive's right to the benefits set forth in paragraph 4(b) and (c)
herein.

         6. EXTENT OF SERVICES. Executive shall devote Executive's time,
attention and energy to the business of Employer, and shall not during the term
of this Agreement, or any extension hereof, without Employer's consent, be
engaged in any other business activity whether or not such business activity is
pursued for gain, profit or other pecuniary advantage; but nothing contained

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herein shall be construed as preventing Executive from investing his assets in
such form or manner as will not require any service on the part of Executive in
the operation of the affairs of the corporations or other entities in which
Executive may invest his assets.

         7. COVENANTS OF EXECUTIVE.

                   (a) During the term of Executive's employment with Employer,
and for a period of one (1) year after the termination of such employment, for
whatever reason, except for the termination of Executive's employment under
circumstances which constitute a violation by Employer of the provisions of this
Agreement, Executive covenants and agrees that Executive will not (except as
required in Executive's duties to Employer), in any manner directly or
indirectly:

                           (i)  Disclose or divulge to any person, entity,
firm or company whatsoever, or use for Executive's own benefit or the benefit of
any other person, entity, firm or company directly or indirectly, in competition
with the business of Employer, as the same may exist at the date of such
cessation, any proprietary business methods, customer lists, supplier lists,
business plans or other information or data of Employer, without regard to
whether all of the foregoing matters will otherwise be deemed confidential,
material or important, the parties hereto stipulating that as between them, the
same are important, material and confidential and greatly affect the effective
and successful conduct of the business and the goodwill of Employer, and that
any breach of the terms of this subparagraph (i) shall be a material breach of
this Agreement;

                           (ii)  Solicit, divert, take away or interfere with
any of the customers, trade, business, patronage, employees or agents of
Employer;

                           (iii)  Engage, directly or indirectly, either
personally or as an employee, partner, associate, officer, manager, agent,
advisor, consultant or otherwise, or by means of any corporate or other entity
or device, in any business competitive with the business of Employer.

                   (b) For purposes hereof, a business will be deemed
competitive if such business both (i) involves the manufacture and sale of
steel, or any other business which is directly competitive, during or as of the
date of cessation of Executive's employment, with any business then being
conducted by Employer or as to which Employer has at such time formulated
definitive plans to enter; and (ii) makes substantial sales of products directly
competitive with those of Employer in any of the States of Missouri, Illinois,
Indiana, Iowa, Pennsylvania, Michigan and Ohio.

                   (c) All of the covenants on behalf of Executive contained in
this paragraph 7 shall be construed as agreements independent of any other
provision of this Agreement, and the existence of any claim or cause of action
against Employer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of these covenants.

                   (d) It is the intention of the parties to restrict the
activities of Executive under this paragraph 7 only to the extent necessary for
the protection of legitimate business interests of Employer, and the parties
specifically covenant and agree that should any of the clauses or provisions set
forth herein, under any set of circumstances not now foreseen by the parties, be
held by a

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court of competent jurisdiction to be illegal, invalid or unenforceable under
present or future laws effective during the term of this Agreement, then and in
that event, it is the intention of the parties hereto that, in lieu of each such
clause or provision of this paragraph 7, there shall be substituted or added,
and there is hereby substituted or added, terms to such illegal, invalid or
unenforceable clause or provision as may be legal, valid and enforceable.

         8. EXPENSES. In addition to compensation paid to Executive under
paragraph 4 hereof, during the period of Executive's employment, Employer will
pay directly or reimburse Executive for reasonable and necessary expenses
incurred by Executive in the interest of the business of Employer. Without
limiting the foregoing, Employer shall (a) reimburse Executive for Executive's
reasonable commuting and local living expenses incurred in commuting between
Executive's current residence in Hermitage, Pennsylvania and St. Louis,
Missouri, until such time as Executive relocates Executive's family to St.
Louis, Missouri, or, if earlier, September 18, 2000, (b) pay the cost of the
real estate fee on the sale of Executive's current principal residence in
Hermitage, Pennsylvania, (c) pay Executive the excess, if any of Two Hundred
Eighty-Thousand Dollars ($280,000) over the gross sales price to be paid to
Executive on the arms' length sale of Executive's current principal residence in
Hermitage, Pennsylvania, and (d) reimburse Executive for Executive's reasonable
moving expenses incurred in Executive's move from Hermitage, Pennsylvania to St.
Louis, Missouri. Employer agrees that Executive may contract with Global Van
Lines to move Executive and his family's property to the St. Louis Metropolitan
Area. In addition, the Company shall pay Executive an amount equal to taxes
actually incurred and payable by Executive arising from reimbursement by the
Company of Executive's reimbursable expenses arising from Executive's sale of
his present home and Executive's family's move to the St. Louis Metropolitan
area. All such reimbursable expenses paid by Executive will be reimbursed by
Employer upon presentation by Executive, from time to time, of an itemized
account of such expenditures, accompanied by appropriate receipts or other
evidence of payment to the extent necessary to permit the deductibility thereof
for Federal income tax purposes.

         9. DOCUMENTS. Executive agrees that all documents, instruments,
drawings, plans, contracts, proposals, records, notebooks, invoices, statements
and correspondence, including all copies thereof, relating to the business of
Employer, other than purely personal documents, shall be the property of
Employer; and upon the cessation of Executive's employment with Employer, for
whatever reason, all of the same then in Executive's possession, whether
prepared by Executive or others, will be left with or immediately delivered to
Employer.

         10. REMEDIES. It is agreed that any material breach or evasion of any
of the terms of this Agreement by Executive will result in immediate and
irreparable injury to Employer and will authorize recourse to injunction and/or
specific performance as well as to all other legal or equitable remedies to
which Employer may be entitled. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy whether given hereunder or not or whether hereafter existing at law
or in equity, by statute or

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otherwise. The election of any one or more remedies by Employer or Executive
shall not constitute a waiver of the right to pursue other available remedies at
any time or cumulatively from time-to-time.

         11. SEVERABILITY. All agreements and covenants herein contained are
severable, and in the event any of them shall be held to be invalid or
unenforceable by any court of competent jurisdiction, this Agreement shall
continue in full force and effect and, subject to paragraph 7(d) hereof, shall
be interpreted as if such invalid agreement or covenant were not contained
herein.

         12. WAIVER OR MODIFICATION. No amendment, waiver or modification of
this Agreement or of any covenant, condition or limitation herein contained
shall be valid unless in writing and duly executed by the party to be charged
therewith, and no evidence of any amendment, waiver or modification shall be
offered or received in evidence in any proceeding, arbitration or litigation
between the parties hereto arising out of or affecting this Agreement, or the
rights or obligations of the parties hereunder, unless such amendment, waiver or
modification is in writing, duly executed as aforesaid, and the parties further
agree that the provisions of this paragraph may not be waived or modified except
as herein set forth. Failure of Executive or Employer to exercise or otherwise
act with respect to any rights granted hereunder in the event of a breach of any
of the terms or conditions hereof by the other party, shall not be construed as
a waiver of such breach, nor prevent Executive or Employer from thereafter
enforcing strict compliance with any and all of the terms and conditions hereof.

         13. FEES AND EXPENSES. If Executive is the prevailing party, Employer
shall pay all of Executive's reasonable legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred by Executive as
a result of (i) Executive's termination of employment (including all such fees
and expenses, if any, incurred in contesting or disputing any such termination
of employment) or (ii) Executive's seeking to obtain or enforce any right or
benefit provided by this Agreement or by any other plan or arrangement
maintained by Employer under which Executive is or may be entitled to receive
benefits.

         14. NOTICES. All notices, requests, demands or other communications
hereunder ("Notice") shall be in writing and shall be given by registered or
certified mail, return receipt requested:

if to Employer to:

                           Laclede Steel Company
                           Attn:  Michael H. Lane
                           Executive Vice President and Chief Financial
                             Officer
                           440 North Fourth Street
                           St. Louis, Missouri 63102

and, if to Executive, to:

                           David A. Higbee
                           1552 Juniper Court, #14
                           Hermitage, Pennsylvania 16148

or to such other addresses as to which the parties hereto give Notice in
accordance with this paragraph 14.

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         15. CONSTRUCTION. This Agreement shall be governed by and construed and
interpreted according to the laws of the State of Missouri, notwithstanding the
place of execution hereof, nor the performance of any acts in connection
herewith or hereunder in any other jurisdiction. For all purposes hereof,
reference to Employer shall include each and every subsidiary and affiliated
company of Employer.

         16. ASSIGNABILITY. The services to be performed by Executive hereunder
are personal in nature and therefore Executive shall not assign his rights or
delegate his obligations under this Agreement, and any attempted or purported
assignment or delegation not herein permitted shall be null and void.

         17. SUCCESSORS. Subject to the provisions of paragraph 7, this
Agreement shall be binding upon and shall inure to the benefit of Employer and
Executive and their respective heirs, executors, administrators, legal
representatives, successors and assigns.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                    __________________________
                                           DAVID A. HIGBEE

                                    LACLEDE STEEL COMPANY

                                    By____________________________
                                    THOMAS E. BREW, JR., PRESIDENT

                                                                              39<PAGE>   1
                                                                 EXHIBIT (10)(c)

                          EXECUTIVE RETENTION AGREEMENT

         THIS AGREEMENT made as of the 1st day of July, 2000, by and among
LACLEDE STEEL COMPANY, ("Laclede Steel"), LACLEDE CHAIN MANUFACTURING CO.,
("Laclede Chain"), LACLEDE MID-AMERICA, INC. ("Laclede Mid-America"), each with
its principal office in St. Louis, Missouri, (collectively, the "Companies")and
RALPH M. CASSELL, residing at 5423 Dantonaire Place, St. Louis, Missouri 63128
(hereinafter called the "Executive").

                                   WITNESSETH

         WHEREAS, the Executive is currently employed as President Of Laclede
Chain and Laclede Mid-America and Vice President of Laclede Steel; and

         WHEREAS, the Companies desire to reduce the Executive's concerns about
the disruption of income and certain benefits due to the possibility of
unexpected job loss in the event of the Companies' termination of Executive's
employment without Cause (as hereinafter defined) following a Termination of
Bankruptcy Proceeding (as hereinafter defined):

         NOW, THEREFORE, the parties hereby enter into this Agreement effective
as of the date first above written.

         I. Definitions.

         For the purpose of this Agreement, the following terms shall have the
following meanings:

         A."Cause" shall mean Executive's violation of the provisions of
paragraph III herein or his dishonesty or unlawful acts committed in connection
with the businesses of the Companies, and which results in substantial gain or
profit to Executive.

         B."Good Reason" shall mean a reduction in the total of Executive's
collective base salary from all of the Companies, a material reduction in
Executive's fringe benefits, the requirement that Executive relocate, a
requirement that Executive's place of employment be based more than fifty (50)
miles from the city limits of the City of St. Louis, Missouri or Executive's
termination from all of his positions as President of Laclede Chain and Laclede
Mid-America and Vice President of Laclede Steel.

         C. "Termination of Bankruptcy Proceeding" shall mean either (i) the
confirmation of a plan of reorganization of the Companies under Chapter 11 of
the Federal bankruptcy laws, or (ii) the conversion of the Companies'
reorganization to a plan of liquidation of the Companies under Chapter 7 of the
Federal bankruptcy laws.

         II. Termination Benefits.

         If, within twelve (12) months following a Termination of Bankruptcy
Proceeding, Executive's employment is terminated by all of the Companies for any
reason other than Cause, or Executive terminates his employment of all of the
Companies for Good Reason, Executive shall be paid a lump cash sum equal to one
hundred percent (100%) of the higher of (i) Executive's annual base salary rate
from all of the Companies in effect as of the date of this Agreement, or (ii)
Executive's annual base salary rate from all of the Companies in effect as of
the date of such termination of employment. Such payment shall be made within
fifteen (15) days of such termination. If Executive terminates employment for
any reason other than Good Reason or if the Companies terminate Executive's
employment for Cause, no benefit shall be payable hereunder.

         III. Covenants of Executive

                   (a)     During the term of Executive's employment with the
Companies, Executive covenants and agrees that he will not (except as required
in Executive's duties to the Companies), in any manner directly or indirectly:

                           (i)  Disclose or divulge to any person, entity, firm
or company whatsoever, or use for Executive's own benefit or the benefit of any
other person, entity, firm or company directly or indirectly, in competition
with the businesses of the Companies, as the same may exist at the date of such
cessation, any proprietary business methods, customer lists, supplier lists,
business plans or other information or data of the Companies, without regard to
whether all of the foregoing matters will otherwise be deemed confidential,
material or important, the parties hereto stipulating that as between them, the
same are important, material and

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confidential and greatly affect the effective and successful conduct of the
business and the goodwill of the Companies, and that any breach of the terms of
this subparagraph (i) shall be a material breach of this Agreement;

                           (ii)   Solicit, divert, take away or interfere with
any of the customers, trade, business, patronage, employees or agents of the
Companies;

                           (iii)  Engage, directly or indirectly, either
personally or as an employee, partner, associate, officer, manager, agent,
advisor, consultant or otherwise, or by means of any corporate or other entity
or device, in any business competitive with any of the businesses of the
Companies.

                   (b)     For purposes hereof, a business will be deemed
competitive if (i) such business involves the manufacture and sale of steel, or
any other business which is competitive, during or as of the date of cessation
of Executives' employment, with any business then being conducted by the
Companies or as to which the Companies have at such time formulated definitive
plans to enter; and (ii) such business makes substantial sales of products
competitive with those of the Companies in any of the States of Missouri,
Illinois, Indiana, Iowa, Michigan, Pennsylvania and Ohio.

                   (c)     All of the covenants on behalf of Executive contained
in this paragraph III shall be construed as agreements independent of any other
provision of this Agreement, and the existence of any claim or cause of action
against the Companies, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Companies of these covenants.

                   (d)      It is the intention of the parties to restrict the
activities of Executive under this paragraph III only to the extent necessary
for the protection of legitimate business interests of the Companies, and the
parties specifically covenant and agree that should any of the clauses or
provisions set forth herein, under any set of circumstances not now foreseen by
the parties, be held by a court of competent jurisdiction to be illegal, invalid
or unenforceable under present or future laws effective during the term of this
Agreement, then and in that event, it is the intention of the parties hereto
that, in lieu of each such clause or provision of this paragraph III, there
shall be substituted or added, and there is hereby substituted or added, terms
to such illegal, invalid or unenforceable clause or provision as may be legal,
valid and enforceable.

         IV.   Indemnification for Expense

         If Executive is the prevailing party, the Companies shall pay all of
Executive's reasonable legal fees and related expenses (including the costs of
experts, evidence and counsel) incurred by Executive as a result of Executive's
seeking to obtain or enforce any right or benefit provided by this Agreement.

         V.    Successors

         A.    The rights and obligations of the Companies under this Agreement
shall inure to the benefit of and shall be binding upon the Companies, their
successors and assigns, including without limitation, any person, partnership or
corporation which may acquire all or substantially all of the Companies' assets
and business, or with or into which the Companies may be consolidated or merged.
Any and all references to the Companies in this Agreement shall be deemed to
mean and include any successor or assignee.

         B.    This Agreement shall also inure to the benefit of and be binding
on Executive and Executive's legal representatives, but being a contract for
personal services, cannot be assigned by Executive.

         VI.   Severability

         In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.

         VII.   Applicable Law

         The construction and interpretation of this Agreement shall be governed
by the laws of the State of Missouri applicable to agreements made and to be
performed within Missouri, without regard to Missouri's conflict of laws rules.

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         VIII.  No Mitigation Required

         Executive shall not be obligated to seek other employment in mitigation
of the amounts payable or arrangements made under any provision of this
Agreement, and the obtaining of any such other employment shall in no event
effect any reduction of the Companies' obligations to make the payments and
arrangements required to be made under this Agreement.

         IX.   Notice

         All notices under this Agreement shall be made in writing and shall be
duly sent if sent by registered mail or certified mail to the respective
parties' address shown hereinabove or such other address as the parties may
hereafter designate in writing for such purpose.

         X.    Captions and Titles

         Captions and titles have been used in this Agreement only for
convenience, and in no way define, limit or describe the meaning of this
Agreement or any part thereof.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

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<PAGE>   4

                          EXECUTIVE RETENTION AGREEMENT

         THIS AGREEMENT made as of the 1st day of July, 2000, by and between
LACLEDE STEEL COMPANY, with its principal office in St. Louis, Missouri (the
"Company"), and JAMES CAPORALETTI, residing at 14 Eaton Lane, Willingboro, New
Jersey 08046 (hereinafter called the "Executive").

                                   WITNESSETH

         WHEREAS, the Executive is currently employed as the Vice President and
General Manager, Wire Division of the Company; and

         WHEREAS, the Company desires to reduce the Executive's concerns about
the disruption of income and certain benefits due to the possibility of
unexpected job loss in the event of the Company's termination of Executive's
employment without Cause (as hereinafter defined) following a Termination of
Bankruptcy Proceeding (as hereinafter defined):

         NOW, THEREFORE, the parties hereby enter into this Agreement effective
as of the date first above written.

         I. Definitions.

         For the purpose of this Agreement, the following terms shall have the
following meanings:

         A."Cause" shall mean Executive's violation of the provisions of
paragraph III herein or his dishonesty or unlawful acts committed in connection
with the business of the Company, and which results in substantial gain or
profit to Executive.

         B. "Good Reason" shall mean a reduction in Executive's base salary, a
material reduction in Executive's fringe benefits or the imposition by the
Company of a material reduction in employer's responsibilities.

         C. "Termination of Bankruptcy Proceeding" shall mean either (i) the
confirmation of a plan of reorganization of the Company under Chapter 11 of the
Federal bankruptcy laws, or (ii) the conversion of the Company's reorganization
to a plan of liquidation of the Company under Chapter 7 of the Federal
bankruptcy laws.

         II. Termination Benefits.

         If, within twelve (12) months following a Termination of Bankruptcy
Proceeding, Executive's employment is terminated by the Company for any reason
other than Cause, or Executive terminates his employment for Good Reason,
Executive shall be paid a lump cash sum equal to one hundred percent (100%) of
the higher of (i) Executive's annual base salary rate in effect as of the date
of this Agreement, or (ii) Executive's annual base salary rate in effect as of
the date of such termination of employment. Such payment shall be made within
fifteen (15) days of such termination.

         III. Covenants of Executive

                   (e)   During the term of Executive's employment with the
Company, Executive covenants and agrees that he will not (except as required in
Executive's duties to the Company), in any manner directly or indirectly:

                         (i)  Disclose or divulge to any person, entity, firm or
company whatsoever, or use for Executive's own benefit or the benefit of any
other person, entity, firm or company directly or indirectly, in competition
with the business of the Company, as the same may exist at the date of such
cessation, any proprietary business methods, customer lists, supplier lists,
business plans or other information or data of the Company, without regard to
whether all of the foregoing matters will otherwise be deemed confidential,
material or important, the parties hereto stipulating that as between them, the
same are important, material and confidential and greatly affect the effective
and successful conduct of the business and the goodwill of the Company, and that
any breach of the terms of this subparagraph (i) shall be a material breach of
this Agreement;

                        (ii) Solicit, divert, take away or interfere with any of
the customers, trade, business, patronage, employees or agents of the Company;

                        (iii) Engage, directly or indirectly, either personally
or as an employee, partner, associate, officer, manager, agent, advisor,
consultant or otherwise, or by means of any corporate or other entity or device,
in any business competitive with the business of the Company.

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<PAGE>   5

                   (f) For purposes hereof, a business will be deemed
competitive if (i) such business involves the manufacture and sale of steel, or
any other business which is competitive, during or as of the date of cessation
of the Company's employment, with any business then being conducted by the
Company or as to which the Company has at such time formulated definitive plans
to enter; and (ii) such business makes substantial sales of products competitive
with those of the Company in any of the States of Missouri, Illinois, Indiana,
Iowa, Michigan, Pennsylvania and Ohio.

                   (g) All of the covenants on behalf of Executive contained in
this paragraph III shall be construed as agreements independent of any other
provision of this Agreement, and the existence of any claim or cause of action
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of these covenants.

                   (h) It is the intention of the parties to restrict the
activities of Executive under this paragraph III only to the extent necessary
for the protection of legitimate business interests of the Company, and the
parties specifically covenant and agree that should any of the clauses or
provisions set forth herein, under any set of circumstances not now foreseen by
the parties, be held by a court of competent jurisdiction to be illegal, invalid
or unenforceable under present or future laws effective during the term of this
Agreement, then and in that event, it is the intention of the parties hereto
that, in lieu of each such clause or provision of this paragraph III, there
shall be substituted or added, and there is hereby substituted or added, terms
to such illegal, invalid or unenforceable clause or provision as may be legal,
valid and enforceable.

         IV. Indemnification for Expense

         If Executive is the prevailing party, the Company shall pay all of
Executive's reasonable legal fees and related expenses (including the costs of
experts, evidence and counsel) incurred by Executive as a result of Executive's
seeking to obtain or enforce any right or benefit provided by this Agreement.

         V.   Successors

              A.   The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the Company,
its successors and assigns, including without limitation, any person,
partnership or corporation which may acquire all or substantially all of the
Company's assets and business, or with or into which the Company may be
consolidated or merged. Any and all references to the Company in this Agreement
shall be deemed to mean and include any successor or assignee.

              B.   This Agreement shall also inure to the benefit of and be
binding on Executive and Executive's legal representatives, but being a contract
for personal services, cannot be assigned by Executive.

         VI.  Severability

              In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, in whole or
in part, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.

         VII. Applicable Law

              The construction and interpretation of this Agreement shall be
governed by the laws of the State of Missouri applicable to agreements made and
to be performed within Missouri, without regard to Missouri's conflict of laws
rules.

         VIII. No Mitigation Required

               Executive  shall  not be  obligated  to seek  other  employment
in mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and the obtaining of any such other employment shall in no event
effect any reduction of the Company's obligations to make the payments and
arrangements required to be made under this Agreement.

         IX.   Notice

               All notices under this Agreement shall be made in writing and
shall be duly sent if sent by registered mail or certified mail to the
respective parties' address shown hereinabove or such other address as the
parties may hereafter designate in writing for such purpose.

                                                                              44
<PAGE>   6

         X.    Captions and Titles

               Captions and titles have been used in this Agreement only for
convenience, and in no way define, limit or describe the meaning of this
Agreement or any part thereof.

               IN WITNESS WHEREOF, the parties have signed this Agreement on
this day of _________, 2000.

                           LACLEDE STEEL COMPANY

                           By:__________________________________
                                    THOMAS E. BREW, JR.
                                       PRESIDENT

                           ______________________________________
                             JAMES CAPORALETTI

                                                                              45

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