<PAGE>
 
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 16, 1995
 
                                                       REGISTRATION NO. 33-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
 
                               ----------------
 
                                    FORM S-4
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
 
                               ----------------
 
                            REUNION INDUSTRIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                               ----------------
 
         DELAWARE                     3070                 06-1439715
      (STATE OR OTHER           (PRIMARY STANDARD       (I.R. S. EMPLOYER
       JURISDICTION         INDUSTRIAL CLASSIFICATION  IDENTIFICATION NO.)
    OF INCORPORATION OR           CODE NUMBER)
       ORGANIZATION)
                              ONE STAMFORD LANDING
                              62 SOUTHFIELD AVENUE
                          STAMFORD, CONNECTICUT 06902
                                 (203) 325-0551
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
 
                               ----------------
 
NAME, ADDRESS INCLUDING ZIP CODE AND           COPY OF COMMUNICATIONS TO:
TELEPHONE NUMBER INCLUDING AREA CODE            ANN F. CHAMBERLAIN, ESQ.
        OF AGENT FOR SERVICE:                    RICHARDS & O'NEIL, LLP
          RICHARD L. EVANS                          885 THIRD AVENUE
      REUNION INDUSTRIES, INC.                NEW YORK, NEW YORK 10022-4873
        ONE STAMFORD LANDING                         (212) 207-1200
        62 SOUTHFIELD AVENUE
     STAMFORD, CONNECTICUT 06902
           (203) 325-0551
 
  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective time of the Merger described
in this Registration Statement.
  If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
 
                        CALCULATION OF REGISTRATION FEE
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--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                           PROPOSED       PROPOSED
                                           MAXIMUM        MAXIMUM
 TITLE OF EACH CLASS OF                    OFFERING      AGGREGATE      AMOUNT OF
       SECURITIES         AMOUNT TO BE     PRICE PER      OFFERING     REGISTRATION
    TO BE REGISTERED      REGISTERED(1)     UNIT(2)       PRICE(2)        FEE(2)
-----------------------------------------------------------------------------------
<S>                      <C>            <C>            <C>            <C>
Common Stock, par value
 $.01 per share......... 3,845,085 shs      $5.50      $21,147,967.50   $4,229.59
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(1) Represents the maximum number of shares to be issued in exchange for all of
    the issued and outstanding common stock of Reunion Resources Company (the
    "Existing Common Stock") pursuant to the Merger.
(2) Pursuant to Rule 457 (c) and (f)(1), the registration fee is computed upon
    the basis of the last sale of the Common Stock at $5.50 per share on
    November 14, 1995 reported in the consolidated reporting system for NASDAQ
    Small-Cap. Issues.
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
 
                            REUNION INDUSTRIES, INC.
 
                             CROSS-REFERENCE SHEET
 
  This cross-reference sheet is provided pursuant to Item 501(b) of Regulation
S-K showing the location in the Proxy Statement/Prospectus of information
required by Part I of Form S-4:
 
<TABLE>
<CAPTION>
                                                    LOCATION IN PROXY
         FORM S-4 ITEM NUMBER                     STATEMENT/PROSPECTUS
         --------------------                     --------------------
 <C> <S>                                <C>
 A. INFORMATION ABOUT THE TRANSACTION
  1. Forepart of Registration
     Statement and Outside Front        Forepart of Registration Statement and
     Cover Page of Prospectus........    Outside Front Cover Page of Proxy
                                         Statement/Prospectus
  2. Inside Front and Outside Back
     Cover Pages of Prospectus.......   Inside Front Cover Page of Proxy
                                         Statement/Prospectus; Available
                                         Information; Table of Contents
  3. Risk Factors, Ratio of Earnings
     to Fixed Charges and Other         Outside Front Cover Page of Proxy
     Information.....................    Statement/Prospectus; Summary; Certain
                                         Special Considerations; The Special
                                         Meeting; Proposal I: The Election of
                                         Directors; Proposal II: The Merger
  4. Terms of the Transaction........   Outside Front Cover Page of Proxy
                                         Statement/Prospectus; The Special
                                         Meeting; Proposal I: The Election of
                                         Directors; Proposal II: Merger
  5. Pro Forma Financial Information.   Not Applicable
  6. Material Contacts with the
     Company Being Acquired..........   Proposal II: The Merger
  7. Additional Information Required
     for Reoffering by Persons and      Not Applicable
     Parties Deemed to Be
     Underwriters....................
  8. Interests of Named Experts and     Not Applicable
     Counsel.........................
  9. Disclosure of Commission
     Position on Indemnification for    Not Applicable
     Securities Act Liabilities......
 B. INFORMATION ABOUT THE REGISTRANT
 10. Information with Respect to S-3    Not Applicable
     Registrants.....................
 11. Incorporation of Certain
     Information by Reference........   Not Applicable
 12. Information with Respect to S-2
     or S-3 Registrants..............   Not Applicable
 13. Incorporation of Certain
     Information by Reference........   Not Applicable
 14. Information with Respect to
     Registrants Other Than S-3 or S-   Not Applicable
     2 Registrants...................
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
                                                      LOCATION IN PROXY
          FORM S-4 ITEM NUMBER                      STATEMENT/PROSPECTUS
          --------------------                      --------------------
 <C> <S>                                  <C>
 C. INFORMATION ABOUT THE COMPANY BEING
  ACQUIRED
 15. Information with Respect to S-3      Not Applicable
     Companies.........................
 16. Information with Respect to S-2 or   Not Applicable
     S-3 Companies.....................
 17. Information with Respect to
     Companies Other Than S-3 or S-2      Not Applicable
     Companies.........................
 D. VOTING AND MANAGEMENT INFORMATION
 18. Information if Proxies, Consents
     or Authorizations are to be          Outside Front Cover Page of Proxy
     Solicited.........................    Statement/Prospectus; The Special
                                           Meeting; Proposal I: Election of
                                           Directors; Proposal II: The Merger;
                                           Ownership Information; Management
                                           Information; Certain Relationships and
                                           Related Transactions
 19. Information if Proxies, Consents
     or Authorizations are not to be      Not Applicable
     Solicited or in an Exchange Offer.
</TABLE>
<PAGE>
 
                           REUNION RESOURCES COMPANY
 
                   NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
 
                           TO BE HELD JANUARY 4, 1996
 
To Stockholders of Reunion Resources Company:
 
  NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of REUNION
RESOURCES COMPANY, a Delaware corporation (the "Company"), will be held at the
offices of Richards & O'Neil, LLP, 885 Third Avenue New York, New York, at
10:00 a.m., Eastern Standard Time, on January 4, 1996 (the "Special Meeting"),
for the following purposes:
 
    1. To elect five directors to the Company's Board of Directors;
 
    2. To consider and act upon a proposal to approve the Merger Agreement
  dated as of November 14, 1995 (the "Merger Agreement"), between the Company
  and Reunion Industries, Inc., a Delaware corporation that is a newly-
  formed, wholly-owned subsidiary of the Company ("New Subsidiary"), pursuant
  to which the Company will be merged with and into New Subsidiary, with New
  Subsidiary being the surviving corporation (the "Merger"). The Merger is
  being proposed by the Board of Directors of the Company to help assure that
  the Company's substantial tax benefits (in the form of net operating loss
  carryforwards) will continue to be available to offset future taxable
  income by decreasing the likelihood of an "ownership change" for federal
  income tax purposes, which will be accomplished by including certain
  transfer restrictions in New Subsidiary's Certificate of Incorporation and
  certain legends on the certificates representing the common stock, par
  value $.01 per share, of New Subsidiary (the "New Common Stock"), which New
  Common Stock will be issued to stockholders in exchange for the shares of
  the Company's common stock, par value $ .01 per share; and
 
    3. To transact such other business as may properly come before the
  Special Meeting or any adjournment thereof.
 
  The Board of Directors of the Company has fixed the close of business on
December 1, 1995 as the record date for the determination of stockholders of
the Company entitled to notice of and to vote at the Special Meeting and at any
adjournment thereof. Only holders of record on such date will be entitled to
vote at the Special Meeting. A copy of the Proxy Statement/Prospectus relating
to the Special Meeting and a Form of Proxy accompany this Notice. The Proxy
Statement/Prospectus also relates to the shares of New Common Stock that
stockholders will receive pursuant to the Merger.
 
  PLEASE COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING
RETURN ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF YOU LATER DESIRE TO REVOKE OR CHANGE YOUR PROXY FOR ANY REASON, YOU
MAY DO SO AT ANY TIME BEFORE THE VOTING BY DELIVERING TO THE COMPANY A WRITTEN
NOTICE OF REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE OR BY
ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
 
  PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR STOCK AT THIS TIME. IF THE
MERGER IS CONSUMMATED, YOU WILL RECEIVE INSTRUCTIONS REGARDING THE SURRENDER OF
YOUR STOCK CERTIFICATES.
 
                                          By Order of the Board of Directors,
 
                                                     [PASTE UP SIG]
 
                                                   R. MICHAEL LOONEY,
                                                       Secretary
 
Houston, Texas
November   , 1995
<PAGE>
 
                 SUBJECT TO COMPLETION, DATED NOVEMBER 16, 1995
 
           3,845,085 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE
 
                                       OF
 
                            REUNION INDUSTRIES, INC.
                              ONE STAMFORD LANDING
                              62 SOUTHFIELD AVENUE
                          STAMFORD, CONNECTICUT 06902
 
                               ----------------
 
                           PROXY STATEMENT/PROSPECTUS
        FOR SPECIAL MEETING OF STOCKHOLDERS OF REUNION RESOURCES COMPANY
                           TO BE HELD JANUARY 4, 1996
 
  THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THE NEW COMMON STOCK HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROXY STATEMENT/ PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
 
                               ----------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
 
                               ----------------
 
  SEE "CERTAIN SPECIAL CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS THAT
STOCKHOLDERS SHOULD CONSIDER PRIOR TO EXECUTING A PROXY OR CASTING A VOTE.
 
                               ----------------
 
        THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS NOVEMBER 16, 1995
<PAGE>
 
                           PROXY STATEMENT/PROSPECTUS
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
DESCRIPTION                                                          PAGE NUMBER
-----------                                                          -----------
<S>                                                                  <C>
Available Information...............................................       3
Summary.............................................................       4
Certain Special Considerations......................................       6
The Special Meeting.................................................       8
Proposal I. The Election of Directors...............................      10
Proposal II. The Merger.............................................      12
Ownership Information...............................................      20
Management Information..............................................      22
Certain Relationships and Related Transactions......................      27
</TABLE>
<PAGE>
 
                             AVAILABLE INFORMATION
 
  The Company is (and, following the Merger, New Subsidiary will be) subject to
the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files (and New
Subsidiary will file) reports, proxy statements and other information with the
Commission. Reports, proxy statements and other information filed by the
Company (and to be filed by New Subsidiary) may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the Regional Offices of the
Commission at 7 World Trade Center, Suite 1300, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
information may be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Existing Common Stock is, and the New Common Stock will be, listed
for quotation on the NASDAQ Small-Cap. Market and the Pacific Stock Exchange,
and reports, proxy and information statements, and other information concerning
the Company (and, following the Merger, New Subsidiary) may be inspected at
such exchanges.
 
  The Company's Annual Report on Form 10-K as filed with the Commission for the
year ended December 31, 1994, including certified financial statements and the
financial schedules, excluding exhibits thereto, as well as the Company's
Quarterly Reports on Form 10-Q, are available at no charge to stockholders upon
written or oral request to R. Michael Looney at the address set forth in the
following paragraph. The financial statements of the Company for the year ended
December 31, 1994 and other information were sent to stockholders as a part of
the Company's Annual Report on Form 10-K.
 
  This Proxy Statement/Prospectus does not contain all of the information in
the Form S-4 and exhibits thereto. Statements in this Proxy
Statement/Prospectus as to the contents of any contract, agreement or other
document are summaries only and are not necessarily complete. For complete
information as to these matters, stockholders should refer to the applicable
exhibit to the Form S-4. The Form S-4 and the exhibits thereto filed by New
Subsidiary with the Commission may be inspected at the public reference
facilities of the Commission listed above. A copy of any and all of the
information (not including the exhibits to such information unless such
exhibits are specifically incorporated by reference) in any documents
incorporated by reference in this Proxy Statement/Prospectus but not delivered
herewith shall be provided without charge to each person, including any
beneficial owner, to whom a Proxy Statement/Prospectus is delivered, upon
written or oral request of such person to R. Michael Looney, Reunion Resources
Company, 2801 Post Oak Boulevard, Suite 400, Houston, Texas 77056, telephone
number (713) 627-9277.
 
  NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR NEW SUBSIDIARY. THIS PROXY STATEMENT/PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
PURCHASE, ANY SECURITIES, OR SOLICITATION OF A PROXY, IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY OR NEW SUBSIDIARY OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
 
                                       3
<PAGE>
 
                                    SUMMARY
 
  This Proxy Statement/Prospectus is being furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of Reunion
Resources Company, a Delaware corporation (the "Company"), for use at the
special meeting of holders of the common stock, par value $.01 per share, of
the Company (the "Existing Common Stock") to be held on January 4, 1996 at
10:00 a.m., Eastern Standard Time, at the offices of Richards & O'Neil, LLP,
885 Third Avenue, New York, New York and any adjournment thereof (the "Special
Meeting"). This Proxy Statement/Prospectus and accompanying Notice of Special
Meeting of Stockholders and Form of Proxy are first being mailed to
stockholders on or about [          ], 1995.
 
  At the Special Meeting, stockholders will be asked to consider and act upon
the following proposals:
 
    (i) Proposal I: The election of five directors to the Board of Directors
  of the Company (See "Proposal I: The Election of Directors"); and
 
    (ii) Proposal II: Approval of the Merger Agreement, dated as of November
  14, 1995 (the "Merger Agreement"), between the Company and Reunion
  Industries, Inc., a Delaware corporation that is a newly-formed, wholly-
  owned subsidiary of the Company ("New Subsidiary"), pursuant to which the
  Company will be merged with and into New Subsidiary, with New Subsidiary
  being the surviving corporation (the "Merger"). The Merger is intended to
  help assure that the Company's substantial net operating loss carryforwards
  ("NOLs") will continue to be available to offset future taxable income by
  decreasing the likelihood of an "ownership change" for federal income tax
  purposes, which will be accomplished by including certain transfer
  restrictions in New Subsidiary's Certificate of Incorporation and certain
  legends on the stock certificates representing the common stock, par value
  $.01 per share, of New Subsidiary (the "New Common Stock") (collectively,
  the "Transfer Restrictions"). (See "Proposal II. The Merger.")
 
  With the exception of the Transfer Restrictions, the New Authorized Stock (as
defined below) and a new name, following the Merger New Subsidiary will be
substantially identical to the Company prior to the Merger, including with
respect to management, operations and financial condition. The directors and
officers of the Company immediately prior to the Merger will be the directors
and officers, respectively, of New Subsidiary immediately following the Merger.
Immediately following the Merger, New Subsidiary will have the same
consolidated assets, liabilities and stockholders' equity as the Company
immediately prior to the Merger. Following the Merger, New Subsidiary's
Certificate of Incorporation will contain articles identical to those in the
Company's Certificate of Incorporation, with the following exceptions: (i)
Article IV, relating to the New Authorized Stock; (ii) Article V, which
contains the Transfer Restrictions, (iii) Article I, which provides that the
corporate name of New Subsidiary is Reunion Industries, Inc.; and (iv) Section
12.8, which requires New Subsidiary to indemnify a director of the corporation
in connection with any Proceeding (as defined therein) initiated by such
director only if the initiation of such Proceeding was authorized in writing by
the Board of Directors of the corporation. Except as revised to reflect the
changes to New Subsidiary's Certificate of Incorporation described above, the
Bylaws of New Subsidiary will be substantially identical to the Company's
Bylaws. The Certificate of Incorporation of New Subsidiary authorizes New
Subsidiary to issue (i) 20,000,000 shares of New Common Stock, par value $.01
per share, compared with 8,000,000 shares of Existing Common Stock currently
authorized by the Company's Certificate of Incorporation, and (ii) 10,000,000
shares of "blank check" preferred stock, par value $.01 per share, which the
Company is not currently authorized to issue (the 12,000,000 additional shares
of common stock (the "Additional Common Stock") and the blank check preferred
stock (the "Blank Check Preferred Stock") are hereinafter sometimes
collectively referred to as the "New Authorized Stock"). See "Proposal II. The
Merger--The New Authorized Stock" and "Certain Special Considerations" for
certain factors to be considered with respect to the New Authorized Stock. The
Board of Directors of the Company (to become the Board of Directors of New
 
                                       4
<PAGE>
 
Subsidiary upon effectiveness of the Merger) does not have any present plans to
issue any of the New Authorized Stock.
 
  As a result of the Merger, each share of Existing Common Stock outstanding
immediately prior to the Merger will be converted automatically into the right
to receive an equivalent share of New Common Stock immediately following the
Merger, and each warrant or other right to purchase or receive Existing Common
Stock outstanding immediately prior to the Merger will be converted immediately
upon consummation of the Merger, as a matter of law and pursuant to the
documents governing such warrants or rights, into a similar warrant or other
right, respectively, to purchase or receive an equivalent share of New Common
Stock. The relative powers, designations, preferences, rights and
qualifications of the New Common Stock will be substantially identical in all
material respects to the relative powers, designations, preferences, rights and
qualifications of the Existing Common Stock, except as described in this Proxy
Statement/Prospectus. The stockholders of the Company will not have appraisal
rights in connection with the Merger.
 
  New Subsidiary has filed a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended (the "Securities Act"), covering up to
3,845,085 shares of New Common Stock to be issued to the Company's stockholders
in exchange for their Existing Common Stock pursuant to the Merger (the "Form
S-4"). This Proxy Statement/Prospectus constitutes the Prospectus of New
Subsidiary relating to the New Common Stock and filed as part of the Form S-4.
Following the Merger, New Subsidiary, as the successor to the Company, will be
a reporting company under Section 12 of the Exchange Act, and in accordance
therewith will file reports and other information with the Securities and
Exchange Commission (the "Commission").
 
  The Existing Common Stock is listed for quotation on the NASDAQ Small-Cap.
Market under the symbol "RUNR" and on the Pacific Stock Exchange under the
symbol "RUN". Following the Merger, the New Common Stock will be listed for
quotation on the NASDAQ Small-Cap. Market under the symbol "RUNR" and on the
Pacific Stock Exchange under the symbol "RUN".
 
  The Company, through its wholly-owned subsidiary Oneida Molded Plastics
Corporation ("Oneida"), is engaged in the manufacturing of high volume,
precision plastic products and providing engineered plastics services. Oneida
designs and produces injection molded parts and provides secondary services
such as hot stamping, welding, printing, painting and assembly of such
products. Oneida's principal products consist of specially designed and
manufactured components for printer and copier machines, microwave ovens,
camera parts, computer parts and consumer electronics and telecommunications
equipment. In addition, Oneida designs and builds custom molds at its tool
shops in order to produce component parts for specific customers. The Company
is also engaged in exploring for, developing, producing and selling crude oil
and natural gas in the United States, and in real estate development and wine
grape agricultural operations, including vineyard development and management
and the growing and marketing of wine grapes in Napa County, California.
 
                                       5
<PAGE>
 
                         CERTAIN SPECIAL CONSIDERATIONS
 
MARKET CONSIDERATIONS
 
  Following the Merger, the New Common Stock will be subject to the Transfer
Restrictions, which do not apply to the Existing Common Stock. There can be no
assurance that the market price of the New Common Stock will be comparable to
the market price of the Existing Common Stock, or that the Transfer
Restrictions will not adversely affect the market price of the New Common
Stock.
 
  The Transfer Restrictions (i) may have the effect of impeding the acquisition
of a significant or controlling interest in New Subsidiary, (ii) may render it
more difficult to effect a merger or similar transaction even if such
transaction is favored by a majority of the independent stockholders and (iii)
may serve to entrench management. (See "Proposal II. The Merger--Preservation
of Tax Benefits.") The purpose of the Transfer Restrictions is to preserve tax
benefits, however, not to insulate management from change. The Company and New
Subsidiary believe that the tax benefits of the Transfer Restrictions outweigh
any anti-takeover effect that they may have. Any anti-takeover effect of the
Transfer Restrictions will end when the Transfer Restrictions terminate, which
will occur on the earlier of: (i) the day after the third anniversary of the
effective date of the Merger; (ii) the repeal of Section 382 of the Internal
Revenue Code of 1986, as amended (the "Code") if New Subsidiary's Board of
Directors determines that the Transfer Restrictions are no longer necessary; or
(iii) the beginning of a taxable year of New Subsidiary as to which New
Subsidiary's Board of Directors determines prior to the beginning of such
taxable year that no NOLs or other tax benefits otherwise available to New
Subsidiary may be carried forward. In addition, New Subsidiary's Board, under
certain circumstances, may accelerate or extend the termination date of the
Transfer Restrictions. (See "Proposal II. The Merger--Termination of Transfer
Restrictions").
 
CONTINUATION OF NET OPERATING LOSS CARRYFORWARDS
 
  Notwithstanding the adoption of the Transfer Restrictions, New Subsidiary may
be unable to prevent every transaction that could cause an "ownership change"
for federal income tax purposes. Any such transaction may severely limit New
Subsidiary's ability to utilize the NOLs. There can be no assurance that
legislation will not be adopted that would limit New Subsidiary's ability to
utilize the NOLs in future periods. However, the Company is not aware of any
proposed legislation for changes in the tax laws that could impact the ability
of New Subsidiary to utilize the NOLs as described below.
 
ADDITIONAL COMMON STOCK
 
  Following the Merger, New Subsidiary will be authorized to issue up to
20,000,000 shares of New Common Stock. The Company is authorized to issue
8,000,000 shares of Existing Common Stock. While the Board of Directors
believes that the availability of the Additional Common Stock will give New
Subsidiary the ability to expand its capital base and provide flexibility in
concluding acquisitions and meeting other corporate needs, the authorization of
the Additional Common Stock may also have the effect of preventing or
discouraging an attempt by another person or entity to acquire control of New
Subsidiary through acquisition of shares or other transaction that has not been
approved by the Board of Directors. It is not possible to state the actual
effects of the Additional Common Stock upon the post-Merger rights of existing
stockholders of the Company unless and until the Board of Directors determines
to issue some or all of such Additional Common Stock. However, such effects
might include (i) dilution of the per share equity interest of the
stockholders, (ii) dilution of the per share voting power of the stockholders
and (iii) a reduction of existing stockholders' interests in the assets of New
Subsidiary in the event of liquidation. The Board of Directors does not have
any present plans, understandings or agreements for the issuance or use of the
Additional Common Stock. See "Proposal II. The Merger--The New Authorized
Stock".
 
                                       6
<PAGE>
 
 
BLANK CHECK PREFERRED STOCK
 
  Following the Merger, New Subsidiary will be authorized to issue up to
10,000,000 shares of Blank Check Preferred Stock, which the Company is not
authorized to issue. The Board of Directors believes that the authorization of
Blank Check Preferred Stock is in the best interests of New Subsidiary and its
stockholders because it will provide flexibility for financing New Subsidiary's
activities. The authorization of Blank Check Preferred Stock, however, grants
the Board of Directors broad power and discretion to establish the
designations, powers, preferences and rights of one or more series of preferred
stock of New Subsidiary. Although the Board of Directors has no present
intention of issuing any of the Blank Check Preferred Stock in the foreseeable
future, and is required to make any determination to issue any shares of Blank
Check Preferred Stock based on its judgment as to the best interests of the
stockholders and the corporation, the existence of authorized and unissued
Blank Check Preferred Stock may enable the Board of Directors of New Subsidiary
to render more difficult or to discourage an attempt to obtain control of New
Subsidiary by means of a merger, tender offer, proxy contest or otherwise. For
example, if in the due exercise of its fiduciary obligations, the Board of
Directors were to determine that a takeover proposal is not in the best
interests of the corporation and its stockholders, the Board of Directors could
cause shares of the Blank Check Preferred Stock to be issued without further
stockholder approval in one or more private offerings or other transactions
that might dilute the voting or other rights of the proposed acquirer or
insurgent stockholder or stockholder group, or create a substantial voting
block in institutional or other hands that might undertake to support the
position of the incumbent Board of Directors. Since no Blank Check Preferred
Stock has yet been authorized or issued and the issuance of the same is not
currently contemplated, it is not possible to know whether any such preferred
stock, if ever issued, would have preferences over the holders of New Common
Stock in the distribution of any assets in the event of liquidation. See
"Proposal II. The Merger--The New Authorized Stock".
 
                                       7
<PAGE>
 
                              THE SPECIAL MEETING
 
DATE, TIME, PLACE AND PURPOSE OF THE SPECIAL MEETING
 
  The Special Meeting will be held on January 4, 1996, at 10:00 a.m. Eastern
Standard Time, at the offices of Richards & O'Neil, LLP, 885 Third Avenue, New
York, New York. At the Special Meeting, the Company's stockholders will be
asked to consider and act upon the following proposals:
 
    (1) Proposal I: The election of five directors to the Board of Directors
  of the Company (See "Proposal I: The Election of Directors);
 
    (2) Proposal II: Approval of the Merger Agreement, in the form attached
  hereto as ANNEX A and incorporated herein by reference, pursuant to which
  the Company will be merged with and into New Subsidiary, a newly-formed,
  wholly-owned subsidiary of the Company, with New Subsidiary being the
  surviving corporation (See "Proposal II. The Merger"); and
 
    (3) To transact such other business as may properly come before the
  Special Meeting or any adjournment thereof.
 
  For a discussion of the tax consequences of the proposed Merger, see
"Proposal II. The Merger--Federal Income Tax Consequences". The Company and New
Subsidiary believe that no material federal or state regulatory approvals are
necessary in connection with the Merger, other than registrations in connection
with securities laws.
 
RECORD DATE; PROXY INFORMATION
 
  The Board of Directors of the Company has fixed the close of business on
December 1, 1995 as the record date (the "Record Date") for the determination
of stockholders of the Company entitled to notice of and to vote at the Special
Meeting. Only holders of record of Existing Common Stock on the Record Date
will be entitled to notice of and to vote at the Special Meeting. At the close
of business on the Record Date, there were [     ] shares of Existing Common
Stock issued and outstanding and entitled to vote at the Special Meeting. As of
such date, there were approximately [  ] holders of record of Existing Common
Stock.
 
  Stockholders are requested to complete, date, sign and promptly return the
accompanying Form of Proxy in the enclosed envelope. All shares of Existing
Common Stock represented by properly executed proxies returned to the Company
prior to or at the Special Meeting will be voted at the Special Meeting in
accordance with the instructions marked thereon, unless such proxy has been
revoked.
 
  EXECUTED PROXIES WITH NO INSTRUCTIONS INDICATED THEREON WILL BE VOTED FOR
ELECTION OF MANAGEMENT'S NOMINEES AS DIRECTORS AND FOR APPROVAL OF THE MERGER
AGREEMENT.
 
  Any stockholder who executes and delivers a proxy may unconditionally revoke
it at any time before it is voted by delivering to R. Michael Looney, Corporate
Secretary of the Company, at 2801 Post Oak Boulevard, Suite 400, Houston, Texas
77056, a written notice of revocation or a duly executed proxy bearing a later
date, or by attending the Special Meeting and voting in person (although
attendance at the Special Meeting will not, in and of itself, constitute a
revocation of a proxy).
 
  It is not anticipated that any matters other than those set forth in this
Proxy Statement/Prospectus will be brought before the Special Meeting. However,
if any other matters properly come before the Special Meeting, the persons
named as proxies will vote upon such matters in their discretion in accordance
with their best judgment.
 
                                       8
<PAGE>
 
  This Proxy Statement/Prospectus and the accompanying Notice of Special
Meeting of Stockholders and Form of Proxy are first being mailed to
stockholders on or about [           ], 1995. The proxies are being solicited
by action of the Company's Board of Directors. The Company will bear the costs
of soliciting the proxies. In addition to the use of the mails, proxies may be
solicited by personal contact, telephone or telegraph by directors, officers,
employees or representatives of the Company. The Company will reimburse brokers
or other persons holding stock in their names, or in the names of nominees, for
their reasonable expenses in forwarding proxy soliciting materials to
beneficial owners.
 
QUORUM; VOTE REQUIRED
 
  As of the Record Date, the Company had outstanding [  ] shares of Existing
Common Stock. Stockholders are entitled to one vote for each share of Existing
Common Stock held as of the Record Date on each matter voted on at the Special
Meeting. Stockholders do not have cumulative voting rights. The presence, in
person or by proxy, of the holders of a majority of the issued and outstanding
shares of Existing Common Stock entitled to vote at the Special Meeting is
necessary to constitute a quorum to transact business. Abstentions and broker
non-votes will be treated as present for determining whether a quorum has been
reached. If a quorum is not present or represented at the Special Meeting, the
stockholders that are present in person or by proxy who are entitled to vote at
the Special Meeting may, by majority vote, adjourn the Special Meeting from
time to time until a quorum is present or represented. Assuming that a quorum
is present or represented at the Special Meeting, approval of the Merger
Agreement will require the affirmative vote of the holders of a majority of the
shares of Existing Common Stock entitled to vote thereon, and the election of
each of the Director nominees will require the affirmative vote of a plurality
of the shares of Existing Common Stock entitled to vote thereon. Stockholders
will not have dissenters rights of appraisal in connection with the Merger. See
"Proposal II. The Merger--Appraisal Rights".
 
  All shares of Existing Common Stock represented by properly executed proxies
returned to the Company will be voted at the Special Meeting. Votes submitted
as abstentions on matters to be voted on at the Special Meeting will be counted
as votes against such matters. Broker non-votes will effectively be votes
against the proposed election of Directors and the Merger Agreement.
 
  Management believes that all of the shares of Existing Common Stock owned or
to be voted by directors, executive officers and Chatwins Group, Inc.
("Chatwins") (aggregating [     ] shares as of the Record Date, or
approximately [    %] of the issued and outstanding Existing Common Stock) will
be voted in favor of the election of the Director nominees and for approval of
the Merger Agreement. (See "Ownership Information--Security Ownership of
Certain Beneficial Owners and Management").
 
                                       9
<PAGE>
 
                     PROPOSAL I. THE ELECTION OF DIRECTORS
 
  The Directors of the Company immediately prior to the Merger will be the
Directors of New Subsidiary immediately after the Merger. At the Special
Meeting, the stockholders of the Company will be asked to vote for or against
the election of five Directors to the Board of Directors of the Company. The
candidates proposed by management for election at the Special Meeting, listed
in the table set forth in "Directors and Nominees" below, are Thomas N.
Amonett, Charles E. Bradley, Sr., Thomas L. Cassidy, Franklin Myers, and John
G. Poole. If elected, these candidates will comprise the entire Board of
Directors of the Company, and would hold office until their successors are duly
elected and qualified at the next annual meeting of stockholders of the Company
(or New Subsidiary, if the Merger has become effective) or until they earlier
die, resign or are removed from office in accordance with applicable law. The
persons listed as "Current Director" in the table below comprise the entire
Board of Directors of the Company as of the date of this Proxy
Statement/Prospectus.
 
  Management believes that all of the shares of Existing Common Stock owned or
to be voted by directors, executive officers and Chatwins (see "Ownership
Information--Security Ownership by Certain Beneficial Owners and Management")
will be voted in favor of the election of each of the candidates. The Company
knows of no family relationships between any director or executive officer and
any other director or executive officer of the Company. Certain biographical
information with respect to the proposed Directors as well as the current
Directors of the Company is set forth in "Directors and Nominees" below.
 
                  THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS
           A VOTE IN FAVOR OF THE ELECTION OF THE PROPOSED DIRECTORS
 
DIRECTORS AND NOMINEES
 
<TABLE>
<CAPTION>
      NAME                                       STATUS                                 AGE
      ----                                       ------                                 ---
      <S>                                   <C>                                         <C>
      Thomas N. Amonett                     Current Director                             52
      Charles E. Bradley, Sr.               Current Director                             65
      Thomas L. Cassidy                     Current Director                             66
      Franklin Myers                        Current Director                             42
      John G. Poole                         Proposed Director                            52
</TABLE>
 
  THOMAS N. AMONETT has served as a Director of the Company since July 1, 1992
and served as the President and Chief Executive Officer of the Company from
July 1, 1992 until October 26, 1995. Mr. Amonett is currently the President of
Reunion Energy Company, an oil and gas operating company and a wholly-owned
subsidiary of the Company. Prior to his affiliation with the Company, he had
been engaged in the practice of law with Fulbright & Jaworski in Houston,
Texas, where he was of counsel for more than five years. From 1982 through 1986
he served as president of Houston Oil Fields Company, a Houston-based oil and
gas exploration and production company. He also served as Chairman of the Board
of Directors of Weatherford International Incorporated, now Weatherford
Enterra, Inc., an oil field service company, from 1986 to 1989 and where he
continues to serve as a Director. Mr. Amonett also serves as a Director of
PetroCorp, Incorporated, a Houston-based oil and gas company, and Team, Inc., a
Houston based environmental services company.
 
  CHARLES E. BRADLEY, SR. took office as a Director of the Company on June 20,
1995 and was appointed President and Chief Executive Officer of the Company on
October 26, 1995. Mr. Bradley has been a Director of Chatwins since shortly
after its acquisition by Stanwich Partners, Inc. ("SPI") in 1986 and Chairman
of the Board of Chatwins since 1988. Chatwins is an industrial products
manufacturing company. Mr. Bradley was a co-founder of SPI in 1982 and has
served as its President since that time. SPI is a private investment company.
Mr. Bradley is a Director of DeVlieg-Bullard, Inc. ("DBI"), a machine tool
parts and services company, General Housewares Corp., a manufacturer and
distributor of housewares, Consumer Portfolio Services, Inc. ("CPS"), engaged
in the business of purchasing, selling and servicing retail automobile
installment sales contracts, and Audits and Surveys, Inc., an international
marketing research firm. Mr. Bradley is currently the Chairman of the Board of
DBI as well as President and acting Chief Financial Officer and a Director of
Sanitas, Inc., a currently inactive company, and a Director, President and
acting Chief Financial Officer of Texon Energy Corporation, a plastics
manufacturer holding company.
 
 
                                       10
<PAGE>
 
  Mr. Bradley was the Chairman of U.S. Metalsource Corp. ("Metalsource") when
Metalsource filed a petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of
Pennsylvania, Case Number 91-2919-JLC, on August 12, 1991. Metalsource is
engaged in the steel service center business. This bankruptcy proceeding is
currently pending. Mr. Bradley was also a Director of DeVlieg, Inc., an
affiliate of DBI ("DeVlieg"), until December 18, 1989, and served as a Vice
President of DeVlieg until December 11, 1989. Mr. Bradley is also a 41%
stockholder of DeVlieg. On August 5, 1991, DeVlieg filed a petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S.
Bankruptcy Court for the Northern District of Illinois, Case Number 91-B31744.
This bankruptcy proceeding is currently pending.
 
  On March 2, 1992, a class action suit was commenced in the U.S. District
Court of the District of Connecticut, Civil Action Number 92-592-CV117 (EBB),
by certain stockholders of DBI against DBI and named Mr. Bradley, among others,
as additional defendants. The complaint filed in this action seeks an
unspecified sum of money damages and equitable relief in connection with
alleged defective disclosures made in violation of Rule 10b-5 of the Exchange
Act, as well as Sections 11 and 12(2) of the Securities Act, with respect to
the initial public offering of Common Stock of DBI. DBI used a portion of the
proceeds of such offering to purchase certain assets of DeVlieg. The complaint
alleges disclosures made in connection with the offering were defective in that
they failed to properly describe the prospects and resources of the acquired
business and improperly estimated the value of certain of its assets. The
Company has been advised that DBI and Mr. Bradley believe that the suit is
without merit and that they intend to defend it vigorously.
 
  THOMAS L. CASSIDY took office as a Director of the Company on June 20, 1995.
Mr. Cassidy has been a Managing Director of Trust Company of the West ("TCW"),
an investment management firm, since 1984. He is also a Senior Partner in TCW
Capital, an affiliate of TCW. He is a Director of DBI, Federal Paper Board
Company, Inc., a an international forest products company, Spartech
Corporation, a plastics manufacturing company and Chatwins.
 
  FRANKLIN MYERS served as a Director of the Company from July 1, 1992 until
June 20, 1995, when he resigned contemporaneously with the sale of 1,450,000
shares of Existing Common Stock by Parkdale Holdings Corporation N.V.
("Parkdale") to Chatwins. Mr. Myers was reappointed as a Director of the
Company on October 26, 1995. On April 1, 1995, Mr. Myers became Senior Vice
President and General Counsel of Cooper Cameron Corporation, an oil field
manufacturing company. Prior thereto he was Vice President and General Counsel
of Baker Hughes Incorporated, an international oil field service and equipment
company, for more than six years. He is a Director of Convest Energy
Corporation, a Houston-based oil and gas producer.
 
  JOHN G. POOLE was a co-founder of SPI with Charles E. Bradley, Sr. in 1982
and has served as SPI's Vice President since that time. Mr. Poole has been a
Director of Chatwins since 1988, and is also a director of DBI, CPS and
Sanitas, Inc. Mr. Poole was also a Director of DeVlieg until December 18, 1989,
and served as Secretary of DeVlieg until December 11, 1989. Mr. Poole again
became a director of DeVlieg on June 22, 1993. Mr. Poole is also a 14%
stockholder of DeVlieg. On August 5, 1991, DeVlieg filed a petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S.
Bankruptcy Court for the Northern District of Illinois, Case Number 91-B31744.
This bankruptcy proceeding is currently pending. Mr. Poole is a defendant in
the DBI class action suit described above in this section under the caption
"Charles E. Bradley, Sr.".
 
DIRECTOR COMPENSATION
 
  Directors not otherwise compensated by the Company receive annual retainers
of $18,000 for service on the Board and $500 for each Board or Committee
meeting attended. Compensation paid to non-employee directors during 1994 for
service in all Board capacities aggregated $25,000.
 
                                       11
<PAGE>
 
                            PROPOSAL II. THE MERGER
 
  At the Special Meeting, the Company's stockholders will be asked to approve
the Merger Agreement, pursuant to which the Company will be merged with and
into New Subsidiary, with New Subsidiary being the surviving corporation.
 
  The Merger Agreement must be approved by the holders of a majority of the
shares of Existing Common Stock entitled to vote on such a proposal. Management
believes that all of the shares of Existing Common Stock owned or to be voted
by directors, executive officers and Chatwins (see "--Preservation of Tax
Benefits" and "Ownership Information--Security Ownership of Certain Beneficial
Owners and Management") will be voted in favor of the Merger Agreement.
 
                        THE COMPANY'S BOARD OF DIRECTORS
                    RECOMMENDS A VOTE IN FAVOR OF THE MERGER
 
TRANSFER RESTRICTIONS
 
  The Transfer Restrictions to be implemented by the Merger are intended to
help assure that an "ownership change", as defined under the Code and the
Treasury Regulations promulgated thereunder (an "Ownership Change"), that could
severely limit the availability of the Company's NOLs will not occur. Transfer
restrictions were implemented for this same purpose in January 1989 by an
amendment to the Company's Certificate of Incorporation and remained in effect
until June 29, 1993, when they were eliminated in connection with the
Recapitalization, as defined below. See "Ownership Information--Outstanding
Warrants; Options; Other Rights".
 
  The New Common Stock to be issued by New Subsidiary in exchange for Existing
Common Stock will be deemed to be issued after the adoption of the Transfer
Restrictions, which are set forth in Article Fifth of the Certificate of
Incorporation of New Subsidiary to be in effect upon consummation of the Merger
("New Subsidiary's Certificate of Incorporation"), a copy of which is included
as ANNEX B to this Proxy Statement/Prospectus. Accordingly, the Transfer
Restrictions will apply to all shares of New Common Stock, and all New Common
Stock certificates will contain a legend informing holders and transferees of
the Transfer Restrictions.
 
PRESERVATION OF TAX BENEFITS
 
  NOLs offset taxable income in future years and eliminate income taxes
otherwise payable on such taxable income (except for purposes of calculating
alternative minimum tax liability). As of December 31, 1994, the Company's NOLs
were approximately $238.4 million. The Company's NOLs expire as follows: $9.4
million in 1998, $49.4 million in 1999 and $179.6 million during the years 2000
through 2009.
 
  On June 20, 1995, Chatwins acquired 1,450,000 shares of Existing Common Stock
("the Purchased Shares") from Parkdale (the "Chatwins Acquisition"), resulting
in the ownership by Chatwins of approximately 38% of the Existing Common Stock.
As a result of the Chatwins Acquisition and other stock transfers, the
availability of the Company's NOLs may be jeopardized (as described below) if a
change in ownership of 5% of the Existing Common Stock (or if another event
that would cause an Ownership Change) occurs in the future. Several steps were
taken in connection with the Chatwins Acquisition to assist in the preservation
of the Company's tax loss carryforwards: the 271,280 remaining shares of
Existing Common Stock owned by Parkdale as well as 66,210 shares of Existing
Common Stock (the "Myers Shares") and a warrant to purchase 75,000 shares of
Existing Common Stock (the "Myers Warrant" and, collectively with the Myers
Shares, the "Myers Securities") owned by Franklin Myers were delivered into a
3-year escrow arrangement. Each of Myers and Parkdale also entered into 3-year
standstill agreements with Chatwins regarding the purchase, sale and transfer
of Company securities and delivered to Chatwins 3-year
 
                                       12
<PAGE>
 
proxies to vote all of their respectively-owned shares of Existing Common Stock
(the "Chatwins Proxies"). Also in furtherance of the preservation of the
Company's tax loss carryforwards, Chatwins acquired from P. Dean Gesterkamp,
simultaneously with the Chatwins Acquisition, a warrant to purchase 75,000
shares of Existing Common Stock (the "Gesterkamp Warrant"). In spite of these
steps, there is a risk that, absent the Transfer Restrictions, an Ownership
Change could result if other persons acquire 5% or more of the Existing Common
Stock. In addition, the restrictions in the Parkdale and Myers agreements
expire in June 1998. Management is proposing implementation of the Transfer
Restrictions to reduce these risks.
 
  Section 382 of the Code provides that, if a corporation undergoes an
Ownership Change, its ability to use its NOLs in the future may be limited. An
Ownership Change occurs when the aggregate cumulative increase in the
percentage ownership of a corporation's capital stock owned by persons holding
5% or more of the fair market value of such stock ("5-Percent Shareholders") is
more than 50 percentage points within a three-year testing period. For purposes
of determining percentage ownership, Section 382 generally defines stock to
include all issued and outstanding stock, except certain preferred stock. In
addition, recent Treasury Regulations provide that certain stock that may be
acquired pursuant to warrants, options, rights to purchase stock, rights to
convert other instruments into stock, and options or other rights to acquire
any such interest may under certain circumstances be deemed to have been
acquired for purposes of determining the existence of an Ownership Change under
Section 382 of the Code.
 
  In determining whether the aggregate cumulative increase in the percentage
ownership of capital stock by 5-Percent Shareholders is more than 50 percentage
points in any three-year testing period, certain special rules apply. All
stockholders who are not 5-Percent Shareholders individually are aggregated
into one or more public groups, each of which is considered to be a 5-Percent
Shareholder. Ownership of stock is generally attributed to the ultimate
individual beneficial owner, and ownership by nominees, corporations,
partnerships, trusts or other entities generally is disregarded (except to the
extent used to identify different public groups or other 5-Percent
Shareholders). When 5% or more of a corporation's stock is owned by another
entity (such as a corporation, trust or partnership) at any time during the
testing period, the owners of the other entity may be treated as one or more
separate, segregated groups of stockholders that are 5-Percent Shareholders of
the corporation, depending on whether such owners indirectly own as much as 5%
of the corporation's stock. Similarly, the purchasers of any stock from the
entity may be treated as a separate, segregated group of stockholders that is a
5-Percent Shareholder.
 
  The applicable Treasury Regulations also provide that purchasers of stock
from the issuing corporation in a public offering may under certain
circumstances be considered a separate stockholder group that is treated as a
5-Percent Shareholder that previously owned no stock. The Transfer
Restrictions, accordingly, are generally designed to prohibit transfers to
persons holding or who thereafter hold sufficient New Subsidiary stock, either
directly or constructively, such that they would be treated as 5-Percent
Shareholders under the applicable Treasury Regulations and are intended to
prevent an Ownership Change and thereby preserve New Subsidiary's ability to
maximize use of the NOLS.
 
  If an Ownership Change occurs within the meaning of Code Section 382, the
amount of NOLs that a company may use to offset income in any future taxable
year is limited, in general, to an amount determined by multiplying the fair
market value of such company's outstanding capital stock on the change date by
the "long-term tax-exempt rate" (currently 5.75%), which is published monthly
by the Internal Revenue Service. For purposes of this calculation, the fair
market value of a company's outstanding capital stock is adjusted to exclude
any capital infusions occurring during the prior two years.
 
  The following is a summary of the Transfer Restrictions, which are set forth
in Article V of New Subsidiary's Certificate of Incorporation. (See Annex B).
The Transfer Restrictions apply to transfers of New Common Stock and any other
instrument that would be treated as "stock," as determined under applicable
Treasury Regulations (collectively, "Stock"). They are intended to prevent any
person or group of persons from becoming a 5-Percent Shareholder of New
Subsidiary and to prevent an increase in the percentage Stock ownership of any
existing person or group of persons that constitutes a 5-Percent Shareholder.
Under the
 
                                       13
<PAGE>
 
Transfer Restrictions, if a stockholder transfers or agrees to transfer Stock,
the transfer will be prohibited and void to the extent that it would cause the
transferee to hold a prohibited ownership percentage, which is defined under
New Subsidiary's Certificate of Incorporation by reference to complex federal
tax laws and regulations, but generally means direct and indirect ownership of
5% or more (based on value) of Stock or any other percentage that would cause a
transferee to be considered a 5-Percent Shareholder under applicable Treasury
Regulations (a "Prohibited Ownership Percentage"). A transfer is also
prohibited and void if either it would result in the transferee's ownership
percentage increasing if the transferee had held a Prohibited Ownership
Percentage within the three prior years or the transferee's ownership
percentage already exceeds the Prohibited Ownership Percentage, unless
otherwise agreed to by New Subsidiary. The Transfer Restrictions do not prevent
transfers of Stock between persons who do not hold a Prohibited Ownership
Percentage.
 
  The acquisition of Stock from an individual or entity that owns directly 5%
of the Stock would be deemed to result in the identification of a separate,
segregated "public group" which is a new 5-Percent Shareholder. Consequently,
the Transfer Restrictions will prohibit certain transfers of equity interests
by, and other actions involving, persons having a Prohibited Ownership
Percentage, unless the transfer or other action is approved by New Subsidiary's
Board of Directors in advance or permitted by a resolution of such board.
 
  The Transfer Restrictions do not apply to any transfer that has been approved
by New Subsidiary's Board of Directors if such approval is based upon a
determination by the Board that such proposed transfer will not jeopardize New
Subsidiary's full utilization of the NOLS. The Board may or may not grant any
such transfer requests based upon existing facts and circumstances at the time.
Board approval of any prohibited transfer transactions must be based upon an
opinion of counsel.
 
  In addition to voiding prohibited transfers, the Transfer Restrictions
provide a method of nullifying the effect of certain prohibited transfers after
the transfers have purportedly occurred. If such a purported transfer is made
in violation of the Transfer Restrictions, the transferee (the "Purported
Acquiror") will not be recognized as the owner of the Stock. If New Subsidiary
determines that such a purported transfer has violated the Transfer
Restrictions, it shall require the Purported Acquiror to surrender the relevant
Stock and any dividends he or she has received on them to an agent designated
by New Subsidiary (the "Agent"). The Agent will sell the Stock in an arm's
length transaction. If the Purported Acquiror has resold the Stock before
receiving New Subsidiary's demand to surrender such Stock, the Purported
Acquiror generally will be required to transfer to the Agent the proceeds of
the sale and any distributions he or she has received on the Stock. After
repaying its own expenses and reimbursing the Purported Acquiror for the price
paid for the Stock (or the fair market value of the Stock at the time of the
attempted transfer to the Purported Acquiror by gift, inheritance or similar
transfer), the Agent will pay any remaining amounts to the person who sold such
Stock to the Purported Acquiror. If the identity of the person who sold such
Stock cannot be determined through inquiry of the Purported Acquiror, the Agent
or New Subsidiary shall hold such amounts pending the determination of such
identity and, if after 90 days, such identity cannot be determined, then such
amounts may be paid over to a court or governmental agency or to a tax-exempt
entity designated under Section 501(c)(3) of the Code.
 
  The Transfer Restrictions (i) may have the effect of impeding the attempt of
a person or entity to acquire a significant or controlling interest in New
Subsidiary, (ii) may render it more difficult to effect a merger or similar
transaction even if such transaction is favored by a majority of the
independent stockholders and (iii) may serve to entrench management. Management
believes, however, that the tax benefits of the Transfer Restrictions outweigh
any other effects they may have on the Company or its shareholders. See
"Certain Special Considerations".
 
TERMINATION OF TRANSFER RESTRICTIONS
 
  The Transfer Restrictions will terminate upon the earliest to occur of: (i)
the day after the third anniversary of the Effective Date (as defined below);
(ii) the repeal of Section 382 of the Code if New Subsidiary Board of
 
                                       14
<PAGE>
 
Directors determines that the Transfer Restrictions are no longer necessary; or
(iii) the beginning of a taxable year of New Subsidiary as to which New
Subsidiary Board of Directors determines prior to the beginning of such taxable
year that no NOLs or other tax benefits otherwise available to New Subsidiary
may be carried forward (the "Expiration Date"). In addition, the Board of
Directors of New Subsidiary is authorized to accelerate or extend the
Expiration Date if the Board determines that such acceleration or extension is
reasonably necessary or desirable to preserve the NOLs or other tax benefits or
that the Transfer Restrictions are no longer necessary for the preservation
thereof.
 
MERGER STRUCTURE
 
  The Merger will be accomplished under the Delaware General Corporation Law
("DGCL") pursuant to the Merger Agreement by and between the Company and New
Subsidiary. Pursuant to the Merger Agreement, the Company will be merged with
and into New Subsidiary, with New Subsidiary being the surviving corporation.
Upon consummation of the Merger, New Subsidiary will become the successor in
interest to the Company in all respects. The Merger Agreement has been approved
by each of the Company's and New Subsidiary's Board of Directors and is
included as ANNEX A to this Proxy Statement/Prospectus. The Merger Agreement is
incorporated herein in its entirety by this reference.
 
  New Subsidiary's Board of Directors immediately after the Merger will consist
of the persons serving on the Company's Board of Directors immediately prior to
the Merger, and New Subsidiary's executive officers immediately after the
merger will consist of persons serving as the Company's executive officers
immediately prior to the Merger in their same respective positions. (See
"Proposal I. The Election of Directors--Directors" and "Management
Information--Executive Officers.") There are no material contracts between the
Company and New Subsidiary other than the Merger Agreement.
 
CONDITIONS TO CONSUMMATION OF THE MERGER
 
  Consummation of the Merger is subject to stockholder approval and receipt of
all orders, consents or approvals, governmental or otherwise, that may be
required or advisable. The Company and New Subsidiary believe that no material
federal or state regulatory approvals are necessary other than registrations in
connection with securities laws. Management believes that all of the conditions
precedent to the Merger will be satisfied prior to the anticipated Effective
Date.
 
EFFECTIVENESS OF THE MERGER
 
  The Merger will become effective immediately upon the filing of a Certificate
of Merger in accordance with the DGCL and upon the satisfaction or waiver of
the conditions to the Merger (the "Effective Date"). It is presently
contemplated that, assuming approval at the Special Meeting, the Certificate of
Merger will be filed, and the Effective Date will occur, as soon as practicable
following the Special Meeting.
 
  The Merger Agreement provides that the Company and New Subsidiary, by mutual
consent of their respective Boards of Directors, may amend, modify or
supplement the Merger Agreement, and either of the respective Boards of
Directors may terminate the Merger Agreement or abandon the Merger at any time
prior to the Effective Date, even following stockholder approval.
 
ABOUT NEW SUBSIDIARY
 
  New Subsidiary is a Delaware corporation recently formed for the sole purpose
of facilitating the Merger. Prior to the Merger, New Subsidiary will not have
carried on any business dealings, owned any material property, been subject to
any legal proceedings, nor paid out any dividends. The Company is currently the
holder of all of the issued and outstanding New Common Stock which is the only
class of stock of New Subsidiary to have been issued.
 
                                       15
<PAGE>
 
NEW SUBSIDIARY'S CERTIFICATE OF INCORPORATION AND BYLAWS
 
  New Subsidiary's Certificate of Incorporation contains articles identical to
those in the Company's Certificate of Incorporation, with the following
exceptions: (i) Article IV, relating to the New Authorized Stock; (ii) Article
V, which contains the Transfer Restrictions, (iii) Article I, which provides
that the corporate name of New Subsidiary is Reunion Industries, Inc.; and (iv)
Section 12.8, which requires New Subsidiary to indemnify a director of the
corporation in connection with any Proceeding (as defined therein) initiated by
such director only if the initiation of such Proceeding was authorized in
writing by the Board of Directors of the corporation. A copy of New
Subsidiary's Certificate of Incorporation is included as ANNEX B to this Proxy
Statement/Prospectus. Except as revised to reflect the changes to New
Subsidiary's Certificate of Incorporation described above, the Bylaws of New
Subsidiary will be substantially identical to the Company's Bylaws.
 
CONVERSION OF SECURITIES IN THE MERGER
 
  Each share of Existing Common Stock outstanding immediately prior to the
Merger will be converted, by reason of the Merger, pursuant to the Merger
Agreement and without any action by the holder thereof, into the right to
receive one share of New Common Stock. The New Common Stock shall be deemed
issued by New Subsidiary after the adoption of the Transfer Restrictions set
forth in the Certificate of Incorporation of New Subsidiary. The relative
powers, designations, preferences, rights and qualifications of the New Common
Stock, as in effect immediately prior to the Merger, will be substantially
equivalent in all material respects to the Existing Common Stock so converted,
except that the New Common Stock will be subject to the Transfer Restrictions.
See "--Description of Existing Common Stock; Dividends; Transfer Agent". Upon
consummation of the Merger, Rights (see "Ownership Information--Outstanding
Warrants; Options; Other Rights") to shares of Existing Common Stock will
become Rights to shares of New Common Stock, pursuant to applicable law and the
documents governing such Rights.
 
DESCRIPTION OF EXISTING COMMON STOCK; DIVIDENDS; TRANSFER AGENT
 
  The Company is authorized to issue 8,000,000 shares of Existing Common Stock,
$.01 par value, of which [     ] were issued and outstanding as of the Record
Date. Each share of Existing Common Stock has one vote on all matters presented
to the stockholders. Since the Existing Common Stock does not have cumulative
voting rights, the holders of more than 50% of the shares may, if they choose
to do so, elect all of the directors and, in that event, the holders of the
remaining shares will not be able to elect any directors. Subject to the rights
and preferences of any preferred stock which may be designated and issued, the
holders of Existing Common Stock are entitled to dividends when and as declared
by the board of directors and are entitled on liquidation to all assets
remaining after payment of liabilities. The Existing Common Stock has no
preemptive or other subscription rights. There are no conversion rights or
sinking fund provisions with respect to the Existing Common Stock.
 
  For many years, the Company has reinvested any earnings in its business and,
accordingly, has not paid any dividends on the Existing Common Stock. Although
the Company (or New Subsidiary, if the Merger has been consummated) intends to
continue to invest any future earnings in its business, it may determine at
such future date that the payment of cash dividends would be desirable. The
payment of any such dividends would depend, among other things, upon the
earnings and financial condition of the Company (or New Subsidiary, if the
Merger has been consummated).
 
  Registrar and Transfer Company, New York, New York, is the transfer agent and
registrar for the Existing Common Stock.
 
THE NEW AUTHORIZED STOCK
 
  New Subsidiary's Certificate of Incorporation, which will survive the Merger,
authorizes New Subsidiary to issue (i) 20,000,000 shares of New Common Stock,
par value $.01 per share, and (ii) 10,000,000 shares of
 
                                       16
<PAGE>
 
Blank Check Preferred Stock, par value $.01 per share. See "Certain Special
Considerations" for certain factors stockholders should consider with respect
to the New Authorized Stock.
 
  The Board of Directors views the authorization of the Additional Common Stock
as necessary to provide financial flexibility to New Subsidiary, following the
effectiveness of the Merger, through the availability of additional shares of
common stock for possible issuance in connection with acquisitions of
properties or businesses, financings, employee and director stock incentives
and general corporate purposes. Neither the Company nor New Subsidiary has
entered into any agreement, arrangement, undertaking or understanding, written
or oral, for the issuance of any of the Additional Common Stock, nor do they
have any plans to issue any of the Additional Common Stock in the foreseeable
future. As with all of the New Common Stock, the Additional Common Stock will
have the same relative powers, designations, preferences, rights and
qualifications as the Existing Common Stock, except that the Additional Common
Stock, like all of the New Common Stock, will be subject to the Transfer
Restrictions. See "--Description of Existing Common Stock; Dividends; Transfer
Agent". Stockholders have no pre-emptive rights to purchase any Additional
Common Stock. Although it is not possible to state the actual effects of the
Additional Common Stock upon the post-Merger rights of the existing
stockholders of the Company unless and until the Board of Directors of New
Subsidiary determines to issue some or all of such Additional Common Stock,
such effects might include (i) dilution of the per share equity interest of the
stockholders, (ii) dilution of the per share voting power of the stockholders,
(iii) a reduction of existing stockholders' interests in the assets of New
Subsidiary in the event of liquidation and (iv) the prevention or discouraging
of an attempt by another person or entity to acquire control of New Subsidiary
following effectiveness of the Merger without the approval of its Board of
Directors, and a possible resulting loss of liquidity to stockholders and/or
the entrenchment of management. The authorization of the Additional Common
Stock is not being included in New Subsidiary's Certificate of Incorporation in
response to any specific effort to accumulate the Company's securities or to
obtain control of the Company by means of a merger, tender offer, solicitation
and opposition to management or otherwise.
 
  The authorization of 10,000,000 shares of Blank Check Preferred Stock will
also provide flexibility for financing New Subsidiary's activities in the
future. The term Blank Check Preferred Stock refers to stock for which the
designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof are determined by a
corporation's board of directors. Accordingly, the Board of Directors of New
Subsidiary will be able to authorize the creation and issuance of up to
10,000,000 shares of preferred stock in one or more series, with such rights,
qualifications, limitations and restrictions as may be determined in the
Board's sole discretion, with no further authorization required of the
stockholders. Although the Board of Directors of New Subsidiary has no present
intention of issuing any of the Blank Check Preferred Stock immediately
following the Merger, the existence of authorized and unissued Blank Check
Preferred Stock may enable the Board of Directors of New Subsidiary to render
more difficult or to discourage an attempt to obtain control of New Subsidiary
by means of a merger, tender offer, proxy contest or otherwise. For example, if
in the due exercise of its fiduciary obligations the Board of Directors of New
Subsidiary could cause shares of the Blank Check Preferred Stock to be issued
without further stockholder approval in one or more private offerings or other
transactions that might dilute the voting or other rights of the proposed
acquirer or insurgent stockholder or stockholder group, or create a substantial
voting block in institutional or other hands that might undertake to support
the position of the incumbent Board of Directors.
 
  Since no Blank Check Preferred Stock has yet been authorized or issued and
the issuance of such stock is not currently contemplated, it is not possible to
know whether any such preferred stock, if ever issued, would have preferences
over the holders of New Common Stock in the distribution of any assets in the
event of a liquidation.
 
MARKET FOR EXISTING COMMON STOCK AND NEW COMMON STOCK
 
  The Existing Common Stock is listed for quotation on the NASDAQ Small-Cap.
Market under the symbol "RUNR" and on the Pacific Stock Exchange under the
symbol "RUN". On November 10, 1995 the
 
                                       17
<PAGE>
 
last sale price of the Existing Common Stock as reported by the NASDAQ Small-
Cap. Market was $5.625 per share. Following the Merger, the New Common Stock
will be listed for quotation on the NASDAQ Small-Cap. Market under the symbol
"RUNR" and on the Pacific Stock Exchange under the symbol "RUN". (See "Certain
Special Considerations--Market Considerations.")
 
PRO FORMA AND COMPARATIVE FINANCIAL STATEMENTS; ACCOUNTING
 
  Pro forma and comparative financial information regarding New Subsidiary and
its consolidated subsidiaries giving effect to the Merger have not been
included herein because immediately following the consummation of the Merger,
the consolidated financial statements of New Subsidiary will be the same as the
consolidated financial statements of the Company immediately prior to the
Merger. Similarly, no selected historical pro forma and other financial data
have been included because the Merger will have no effect on the Company's
historical financial statements. The Merger will be accounted for in a manner
similar to a pooling of interests.
 
APPRAISAL RIGHTS
 
  Pursuant to Section 262 of the DGCL, no holder of the Company's securities
will have appraisal rights in connection with the Merger because the Existing
Common Stock is listed on a national securities exchange, and the Company's
stockholders will be required under the terms of the Merger Agreement to accept
shares of the surviving entity, New Subsidiary, for their Existing Common
Stock.
 
EXCHANGE OF CERTIFICATES
 
  As soon as practicable after the Effective Date, New Subsidiary will furnish
a letter of transmittal to stockholders for use in exchanging their stock
certificates (each a "Letter of Transmittal"), which will contain instructions
with respect to the surrender of Existing Common Stock certificates and the
distribution of New Common Stock certificates. The Company's stockholders
should not send in certificates until they receive the Letter of Transmittal.
 
  The Company's stockholders who fail to exchange their Existing Common Stock
certificates on or after the Effective Date by surrendering such certificates,
together with a properly completed Letter of Transmittal, to the agent
designated by the Company and New Subsidiary (the "Exchange Agent") will not
receive their New Common Stock until such time as their Existing Common Stock
certificates are later surrendered to the Exchange Agent for transfer,
accompanied by such instruments of transfer and supporting evidence as New
Subsidiary may reasonably require. Any dividends declared or distributions made
on shares of New Common Stock which such holders have a right to receive will
be retained by New Subsidiary until such holders surrender their Existing
Common Stock certificates in exchange for New Common Stock certificates or
until paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. No interest will accrue or be payable with respect to
any dividends or distributions retained on unissued New Common Stock
certificates.
 
  On the Effective Date, holders of certificates representing Existing Common
Stock will cease to have any rights with respect to such shares and each such
certificate will be deemed for all corporate purposes to evidence only the
right to receive shares of New Common Stock for which such shares may be
exchanged. The stock transfer books of the Company will be closed at the close
of business on the business day immediately preceding the Effective Date, and
the holders of record of Existing Common Stock as of the Effective Date will be
the stockholders entitled to exchange their shares of Existing Common Stock for
shares of New Common Stock as provided in the Merger Agreement. No transfer or
assignment of any shares of Existing Common Stock will take place after the
Effective Date until the certificates for such shares are exchanged pursuant to
the Merger Agreement. In the event of a transfer of ownership of any such
shares which is not registered in the stock transfer records of the Company, no
shares of New Common Stock exchangeable for such shares will be issued to the
transferee until the certificate or certificates representing
 
                                       18
<PAGE>
 
such transferred shares are delivered to the Exchange Agent together with all
documents required to evidence and effect such transfer. In addition, it will
be a condition to the issuance of any certificate for any shares of New Common
Stock in a name other than the name in which the surrendered Existing Common
Stock is registered that the person requesting the issuance of such certificate
either pay to the Exchange Agent any transfer or other taxes required by reason
of the issuance of a certificate of New Common Stock in a name other than the
registered holder of the certificate surrendered, or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
 
  In no event will the Exchange Agent, the Company or New Subsidiary be liable
to any holder of Existing Common Stock for shares of New Common Stock, or
dividends or distributions thereon, delivered in good faith to a public
official pursuant to any applicable abandoned property, escheat or similar law.
All shares of New Common Stock issued upon the surrender of shares of Existing
Common Stock shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Existing Common Stock, subject, however, to
New Subsidiary's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Date which may have
been declared or made by the Company on such shares of Existing Common Stock
prior to the Effective Date and that remain unpaid as of the Effective Date.
 
FEDERAL INCOME TAX CONSEQUENCES
 
  THE FOLLOWING DISCUSSION DOES NOT INCLUDE ANY STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES, AND DOES NOT SPECIFICALLY ADDRESS THE CONSEQUENCES TO
STOCKHOLDERS OTHER THAN INDIVIDUAL UNITED STATES CITIZENS WHO HOLD THEIR
COMPANY SECURITIES AS A CAPITAL ASSET. THIS DISCUSSION IS FOR GENERAL
INFORMATION ONLY AND EACH STOCKHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN
TAX ADVISOR AS TO THE CONSEQUENCES OF THE MERGER.
 
  For federal income tax purposes, the Merger should qualify as a tax-free
reorganization under Section 368(a) of the Code. If the Merger so qualifies,
the Company's stockholders would not recognize gain or loss upon the exchange
of their Existing Common Stock for New Common Stock. The New Common Stock
should have the same basis and holding period in the stockholders' hands as the
Existing Common Stock.
 
  No gain or loss should be recognized by the Company on the transfer of its
assets to New Subsidiary pursuant to the Merger, and no gain or loss should be
recognized by New Subsidiary on receipt of the Company's assets and New
Subsidiary's assumption of the Company's liabilities. The basis of the
Company's assets acquired by New Subsidiary in the Merger should be the same as
the basis of those assets in the Company's hands immediately prior to the
Merger, and New Subsidiary's holding period should include the Company's
holding period with respect to the assets.
 
  The Company's tax attributes generally will carry over to New Subsidiary. For
example, for purposes of the federal income tax treatment of the NOLs, subject
to certain limitations, New Subsidiary should be permitted to utilize such NOLs
to the same extent as the Company would have been so permitted. New Subsidiary
also should succeed to the Company's earnings and profits. New Subsidiary
should be treated as a continuation of the Company for purposes of computing
depreciation and for other specified purposes.
 
INTERESTS OF CERTAIN PERSONS
 
  The Company believes that the interest of the Company's management and
principal stockholders in the consummation of the Merger arises solely from
their respective positions as fiduciaries of the Company and/or their ownership
of securities of the Company, and that such parties are to receive no extra or
special benefit from the Merger that is not shared on a pro rata basis by all
other stockholders.
 
LEGAL MATTERS
 
  The validity of the shares of New Common Stock and the federal income tax
consequences of the Merger to the Company's shareholders will be passed upon
for New Subsidiary by Richards & O'Neil, LLP, New York, New York.
 
                                       19
<PAGE>
 
                             OWNERSHIP INFORMATION
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  As of September 30, 1995, the Company had outstanding 3,845,085 shares of
Existing Common Stock. Each share of Existing Common Stock is entitled to one
vote. The following table sets forth information regarding the beneficial
ownership of the Existing Common Stock at September 30, 1995, by (i) each
stockholder known to the Company to own 5% or more of the Existing Common
Stock, (ii) each Director of the Company or nominee therefor, (iii) each of the
chief executive officers and the other executive officers who were compensated
at an annualized rate of more than $100,000 in 1994 (collectively, the "Named
Executives") and (iv) all current Directors and executive officers as a group.
Except as set forth in the footnotes to the following table, each stockholder
has sole dispositive and voting power with respect to the shares of Existing
Common Stock shown as owned by him.
 
<TABLE>
<CAPTION>
                                                             AMOUNT
                                                               AND       PERCENT
                                                            NATURE OF      OF
NAME (AND ADDRESS OF 5% BENEFICIAL OWNERS)                  OWNERSHIP     CLASS
------------------------------------------                  ---------    -------
<S>                                                         <C>          <C>
Chatwins Group, Inc.
 300 Weyman Plaza, Suite 340
 Pittsburgh, PA 15236...................................... 1,862,490(1)  47.5%
Parkdale Holdings Corporation N.V.
 Nieuwestraat 4-6, P.O. Box 210
 Curacao, Netherlands Antilles.............................   271,280(2)   7.1%
Thomas N. Amonett..........................................    66,000(3)   1.7%
Charles E. Bradley, Sr..................................... 1,862,490(4)  47.5%
Thomas L. Cassidy..........................................         0      0.0%
John G. Poole..............................................         0      0.0%
Franklin Myers.............................................   141,210(5)   3.6%
W. Kyle Willis.............................................    47,000(6)   1.2%
Richard L. Evans...........................................         0      0.0%
All Current Directors and Executive Officers as a group.... 2,013,490(7)  49.9%
</TABLE>
--------
(1) Includes 75,000 shares that may be purchased pursuant to currently
    exercisable warrants, with respect to which Chatwins has dispositive power
    only, and 337,490 shares (66,210 owned by Myers and 271,280 owned by
    Parkdale) with respect to which Chatwins has sole voting power and no
    dispositive power.
(2) Parkdale has granted a proxy to Chatwins to vote these shares.
(3) Includes 32,000 shares that may be purchased pursuant to currently
    exercisable options.
(4) Includes all shares of Existing Common Stock shown as beneficially owned by
    Chatwins. Mr. Bradley is Chairman of the Board of Chatwins as well as the
    beneficial owner of more than 50% of the issued and outstanding shares of
    Chatwins and may, pursuant to Rule 13d-3 be deemed the beneficial owner of
    all shares of Existing Common Stock beneficially owned by Chatwins. Mr.
    Bradley disclaims beneficial ownership of all such shares of Common Stock.
(5) Includes a currently exercisable warrant to purchase 75,000 shares of
    Existing Common Stock. Mr. Myers has granted Chatwins a three year proxy to
    vote 66,210 shares.
(6) Includes 22,000 shares that may be purchased pursuant to currently
    exercisable stock options.
(7) Includes currently exercisable warrants and options to purchase an
    aggregate of 117,000 shares of Existing Common Stock.
 
                                       20
<PAGE>
 
OUTSTANDING WARRANTS; OPTIONS; OTHER RIGHTS
 
  All outstanding rights to acquire Existing Common Stock by reason of
warrants, options, rights to purchase stock, rights to convert other
instruments into stock, and options or other rights to acquire any such
interest (collectively, "Rights") will be converted immediately upon
consummation of the Merger, as a matter of law and pursuant to the documents
governing such Rights, into Rights with respect to the same number of shares of
New Common Stock and on the same terms and conditions as previously were
applicable to such Rights.
 
  As of September 30, 1995, the following categories of Rights exist with
respect to the Existing Common Stock: (i) warrants to purchase up to 150,000
shares of authorized Existing Common Stock issued under the Warrant Agreements
dated as of July 1, 1992, as amended June 28,1995, by and among the Company and
the other parties named therein; (ii) options to purchase up to 115,750 shares
of Existing Common Stock under the 1993 Incentive Stock Plan (all of which
became presently exercisable upon the Chatwins Acquisition); and (iii) the
rights of holders of shares of the common stock of the Company or the
securities of the predecessors of the Company that were outstanding prior to
the implementation of the Recapitalization (as defined below) and that have not
been exchanged for shares of Existing Common Stock pursuant to the terms of the
Recapitalization Plan to receive 44,220 shares of Existing Common Stock. The
shares covered by the Rights equal 309,970 shares in the aggregate.
 
  Effective June 29, 1993 the Articles of Incorporation of the Company (then
Buttes Gas & Oil Co.) were amended to effect a plan of recapitalization (the
"Recapitalization") pursuant to which, among other things, (i) each then
outstanding share of common stock of the Company was converted automatically
into 1/300th share of new common stock, and (ii) all fractional interests in
shares were settled in cash. The resulting shareholders of the newly-issued
common stock then received 14 additional shares for each whole share resulting
from this automatic conversion of the old shares. There remain approximately
1,036,709 unconverted pre-Recapitalization shares, representing the right to
receive approximately 44,220 shares of Existing Common Stock (or cash, in the
case of fractional shares).
 
                                       21
<PAGE>
 
                             MANAGEMENT INFORMATION
 
EXECUTIVE OFFICERS
 
  The officers of the Company immediately prior to the Merger will be the
officers of New Subsidiary immediately following the Merger. The following
individuals currently serve as executive officers of the Company (or its
principal subsidiary) at the pleasure of the Board of Directors and are subject
to annual appointment by the board at its first meeting following the annual
meeting of stockholders:
 
<TABLE>
<CAPTION>
   NAME                                          POSITION                   AGE
   ----                                          --------                   ---
   <S>                          <C>                                         <C>
   Charles E. Bradley, Sr.(1).. Current Director, President and Chief        65
                                 Executive Officer of the Company
   Richard L. Evans(2)......... Executive Vice President and Chief           43
                                 Financial Officer of the Company
   R. Michael Looney(3)........ Secretary of the Company                     50
   David N. Harrington(4)...... President and Chief Operating Officer,       54
                                 Oneida
</TABLE>
--------
 
(1) See "Proposal I. The Election of Directors--Directors" for certain
    biographical information.
(2) Mr. Evans joined the Company as Executive Vice President and Chief
    Financial Officer in October 1995. From May 1993 to September 1995, he was
    Controller of Terex Corporation, a capital goods manufacturer. From October
    1989 to May 1993 Mr. Evans was Controller of SPI. Mr. Evans was a Director,
    from August 1990, and Vice President, from September 1990, of DeVlieg until
    May 1993. On August 5, 1991, DeVlieg filed a petition for reorganization
    under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court
    for the Northern District of Illinois, Case Number 91-B31744. This
    bankruptcy proceeding is currently pending.
(3) Mr. Looney joined the Company in 1981 as director of taxes of a subsidiary
    of the Company. He has served as Secretary of the Company since February 1,
    1995.
(4) Mr. Harrington has served as Chief Operating Officer of Oneida since
    December 1989 and as President of Oneida since October 1990. From March
    1986 through December 1989, Mr. Harrington served as Vice President and
    General Manager of Oneida.
 
SUMMARY COMPENSATION TABLE
 
  The following table reflects all forms of compensation for services to the
Company for the years ended December 31, 1994, 1993 and 1992, of those
individuals who were at December 31, 1994 (i) the Chief Executive Officer and
(ii) each of the other executive officers who were compensated at an annualized
rate of more than $100,000 in 1994 (the "Named Executives"):
 
<TABLE>
<CAPTION>
                                     ANNUAL COMPENSATION        LONG-TERM COMPENSATION
                              --------------------------------- ------------------------
                                                                 STOCK
   NAME AND PRINCIPAL                            OTHER ANNUAL   OPTIONS     ALL OTHER
        POSITION         YEAR  SALARY   BONUS   COMPENSATION(1) (SHARES) COMPENSATION(2)
   ------------------    ---- -------- -------- --------------- -------  ---------------
<S>                      <C>  <C>      <C>      <C>             <C>      <C>
Thomas N. Amonett....... 1994 $168,000 $100,800     $6,000          --       $3,002
 President and CEO until 1993  167,250   20,000      6,000      20,000        1,906
 October 26, 1995        1992   75,000       --      2,500      68,000        1,415
W. Kyle Willis.......... 1994 $130,000 $ 65,000     $6,000          --       $2,862
 Executive Vice
  President, Treasurer   1993  128,750   15,000      6,000      14,000          552
 and CFO until October
  26, 1995               1992   50,000       --      2,500      51,000          249
</TABLE>
 
(footnotes on next page)
 
                                       22
<PAGE>
 
--------
(1) Includes automobile allowance.
(2) Company contributions under nondiscriminatory defined contribution plan and
    certain health insurance plans for which all employees are eligible.
 
OPTION GRANTS/EXERCISES AND YEAR-END VALUES
 
  The Company did not grant any stock options to the Chief Executive Officer or
the other Named Executive in 1994. The following table sets forth information
with respect to the unexercised options to purchase shares of Existing Common
Stock granted under all stock option plans to the Named Executives and held by
them at December 31, 1994.
 
                    AGGREGATED OPTION EXERCISES DURING 1994
                     AND OPTION VALUE AT DECEMBER 31, 1994
 
<TABLE>
<CAPTION>
                                                                                       VALUE OF UNEXERCISED
                                                        NUMBER OF UNEXERCISED        IN-THE-MONEY OPTIONS AT
                            NUMBER OF                OPTIONS AT DECEMBER 31, 1994      DECEMBER 31, 1994(1)
                         SHARES ACQUIRED  VALUE      ----------------------------- ----------------------------
                           ON EXERCISE   REALIZED    EXERCISABLE  UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE(2)
                         --------------- --------    -----------  ---------------- ----------- ----------------
<S>                      <C>             <C>         <C>          <C>              <C>         <C>
Thomas N. Amonett.......         --           --       10,000(3)       10,000             --          --
W. Kyle Willis..........      4,500      $15,335(3)    53,500           7,000       $159,867          --
</TABLE>
--------
(1) Amounts were calculated by multiplying the number of unexercised in-the-
    money options exercisable or unexercisable, as the case may be, by the
    closing sales price of the Common Stock on December 31, 1994 ($5.00) and
    subtracting the total exercise prices.
(2) These options, granted in December 1993, were originally exercisable as
    follows: 50% after one year and 50% after the second year. However, as a
    result of changes to the Board of Directors of the Company in 1995, these
    options are now immediately exercisable.
(3) Amounts were calculated by multiplying the number of options exercised by
    the market value of the Common Stock at the time of exercise and
    subtracting the exercise price.
 
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
 
  There are no employment contracts with the Named Executives. In November
1994, the Company executed agreements with Thomas N. Amonett and W. Kyle Willis
providing for compensation upon a change-in-control of the Company. If, prior
to December 31, 1996, more than 25 percent of the outstanding Existing Common
Stock is acquired by any person other than Parkdale ("Change-in-Control") and
his employment is terminated for any reason within one year following a Change-
in-Control, the agreements provide that Mr. Amonett or Mr. Willis shall receive
two years compensation and benefits. The June 20, 1995 purchase by Chatwins of
approximately 38% of the Existing Common Stock from Parkdale would trigger
these agreements in the event that the employment of Mr. Amonett or Mr. Willis
as officers of the Company is terminated prior to June 20, 1996. The Company
and each of Mr. Amonett and Mr. Willis have agreed that such a termination is
likely to occur before such time.
 
COMMITTEES
 
  New Subsidiary's Board of Directors will establish committees similar to
those currently provided for by the Company's Board of Directors, and the
members of various committees of the Company's Board of Directors immediately
prior to the Merger will be the members of the corresponding committees of New
Subsidiary's Board of Directors immediately following the Merger. As of October
26, 1995 the Board of Directors of the Company maintained a Compensation
Committee and an Audit Committee, each comprised of Charles E. Bradley, Sr. and
Thomas L. Cassidy.
 
                                       23
<PAGE>
 
COMPENSATION COMMITTEE REPORT
 
  The Compensation Committee of the Board of Directors of the Company furnished
the following report as of May 10, 1995 on executive compensation for 1994.
Effective June 20, 1995 both members of the Compensation Committee who prepared
this report, Emil Nakfoor and Mr. Myers, resigned from the Compensation
Committee and have since been replaced on the Compensation Committee by Charles
E. Bradley, Sr. and Thomas L. Cassidy.
 
  The Board of Directors pursues a philosophy of seeking to improve the
Company's performance and to maximize shareholder value by, among other things,
relating executive compensation and stock-based benefits to the Company's
performance. In general, executive financial rewards may be segregated into the
following significant components: base compensation, bonus, and stock option
and other benefit plans.
 
  Base compensation for senior executive (including the chief executive officer
and other executive officers) is intended to be competitive with or inferior to
that paid in comparably situated companies, but with a reasonable degree of
financial security and flexibility afforded to those individuals who are
regarded by the Board of Directors as acceptably discharging the levels and
types of responsibility implicit in the various senior executive positions.
While the Committee's principal concern is with establishing compensation
programs and setting executive compensation at levels which are somewhat
reflective of those prevailing in the oil and gas industry for similar
executive positions, no comparability studies were conducted for executive
salaries to be paid in 1994. However, no raises were awarded to the chief
executive officer or the other officers during 1994.
 
  Under the supervision of the Compensation Committee, annual bonuses reflect a
policy of requiring a specified level of Company performance for the year
before any bonuses are earned by senior executives, with bonuses for achieving
higher levels of performance directly related to the level achieved. In setting
performance criteria, the Committee will consider the total compensation
payable or potentially available to the chief executive and other executive
officers. While the development of any business necessarily involves numerous
factors, the Board's primary emphasis will be on encouraging management to
increase the Company's net assets and cash flow, and in certain instances,
rationalization of certain Company businesses or assets. While no objective
standards were set for the payment of bonuses during 1994, bonuses of $100,800
and $65,000, respectively, were awarded in January 1994 to the chief executive
officer and the chief financial officer in recognition of their progress in
improving the Company's balance sheet and operations during 1993.
 
  The Board of Directors is of the view that properly designed and administered
long-term, stock-based incentives for senior executives closely align the
executives' economic interests with those of stockholders and provide a direct
and continuing focus upon the goal of constantly striving to maximize
stockholder value, however, no options were granted to executive officers
during 1994. The Compensation Committee intends, with any necessary concurrence
of the Board of Directors, to continue to consider alternate forms of stock-
based incentives with a view to achieving the maximum possible performance-
based benefit to all senior executives at the least possible cost and the
greatest attainable economic efficiency to the Company, with such benefits
designed as nearly as practicable to directly align the economic interests of
professional managers with those of the Company's stockholders. However, no
stock-based incentives were granted during 1994.
 
  Pursuant to applicable rules of the Securities and Exchange Commission, (i)
the members of the Compensation Committee during 1994 were deemed to own
beneficially an aggregate of 1,807,476 shares, or 47.4%, of the Existing Common
Stock, and (ii) the current members of the Compensation Committee are deemed to
own beneficially an aggregate of 1,862,490 shares, or 47.5%, of the Existing
Common Stock. See "Ownership Information--Security Ownership of Certain
Beneficial Owners and Management".
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  Franklin Myers, a member of the Compensation Committee until his resignation
from the Board of Directors of the Company on June 20, 1995 (he has since been
reelected to the Board of Directors, but is not
 
                                       24
<PAGE>
 
currently a member of the Compensation Committee), provided consulting services
to the Company at an annual compensation rate of $150,000 during 1994 under
contractual arrangements entered in 1992 (See "Certain Relationships and
Related Transactions--Parkdale Holdings Corporation N.V.")
 
  The Company also maintains a voluntary employee retirement plan under which
employees may contribute up to 18% of their pre-tax earnings, with the Company
making matching contributions of 25% of each employee's contribution, not to
exceed 6% of each participants pre-tax earnings.
 
                           THE COMPENSATION COMMITTEE
 
                                       25
<PAGE>
 
EXISTING COMMON STOCK PERFORMANCE GRAPH
 
  The following graph illustrates the yearly percentage change in the
cumulative total shareholder return on the Existing Common Stock, compared
with the cumulative total return on (i) the Standard & Poor's 500 Stock Index
and (ii) the Dow Jones Secondary Oils Index for the five years ended December
31, 1994:
 
 
 
<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                                   -----------------------------
                                                   1989 1990 1991 1992 1993 1994
                                                   ---- ---- ---- ---- ---- ----
<S>                                                <C>  <C>  <C>  <C>  <C>  <C>
Reunion Resources Company(2)...................... 100  100   95  175  480  400
Dow Jones Secondary Oils Index(3)................. 100   83   82   82   91   88
S&P 500 (Dividends Reinvested)(4)................. 100   97  126  136  150  152
</TABLE>
--------
(1) Tabular data assumes that the value of the investment in the Company's
    common stock and each index was $100 at December 31, 1989 and that all
    dividends, if any, were reinvested.
(2) The Company's common stock was suspended from trading on the Pacific Stock
    Exchange on August 1987 until November 1990 when trading resumed. For
    purposes of this presentation, the stock price at December 31, 1989 is
    assumed to be equal to the closing stock price of the Company's common
    stock on December 31, 1990.
(3) Dow Jones Total Return Index for Secondary Oils prepared by Dow Jones &
    Company, Inc.
(4) Standard & Poor's 500 Total Return Index provided by Media General
    Financial Services, Inc.
 
  In prior years, the Company selected a line-of-business index published by
John S. Herold, Inc. covering small domestic exploration and production
companies. The JSH Small Domestic E&P Index is no longer published to the
public and is not readily accessible to the Company's shareholders.
Accordingly, the Company has selected an index published by Dow Jones &
Company, Inc. covering small domestic oil companies whose activities include
production and exploration.
 
                                      26
<PAGE>
 
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
CHATWINS GROUP, INC.
 
  Charles E. Bradley, Sr., a Director of the Company since June 20, 1995 and
the President and Chief Executive officer of the Company since October 26,
1995, is the Chairman and a Director of Chatwins and the beneficial owner of
approximately 68% of the outstanding common stock of Chatwins. Thomas L.
Cassidy, a Director of the Company since June 20, 1995, and John G. Poole, a
nominee for election as a Director of the Company at the Special Meeting, are
both Directors of Chatwins. As a result of the Chatwins Acquisition and related
transactions (see "Proposal II. The Merger--Preservation of Tax Benefits")
Chatwins has voting control over approximately 45% of the Existing Common
Stock.
 
  On June 28, 1995, Chatwins proposed to the Board of Directors of the Company
and the Board of Directors subsequently resolved that the Company extend the
exercisability of the Myers Warrant and the Gesterkamp Warrant. The Gesterkamp
Warrant and the Myers Warrant had been scheduled to terminate by their terms on
July 1, 1995. These warrants now expire on June 30, 1999. Contemporaneously
with the Chatwins Acquisition (see "Proposal II. The Merger--Preservation of
Tax Benefits"), and in order to assist Chatwins in preserving for the Company
and the Company's stockholders the benefits of the Company's tax loss
carryforwards, Myers agreed not to exercise the Myers Warrant or transfer the
Myers Securities until June 21, 1998. The preservation of tax loss
carryforwards was also the principal goal underlying Chatwins' purchase of the
Gesterkamp Warrant. Under Section 382 of the Internal Revenue Code, the
availability of tax loss carryforwards is restricted if there is a change in
ownership of more than 50% in any 3-year period. After giving effect to the
Chatwins Acquisition, the exercise or sale of the Myers Securities and the
Gesterkamp Warrant would result in a 5.7% ownership change which, if added to
other possible ownership changes, could jeopardize the availability of
substantial amounts of the Company's tax loss carryforwards. Thus, the Company
believes that extending the Myers Warrant is fair consideration for Mr. Myers's
standstill agreement with respect to his Existing Common Stock. Because the
Gesterkamp Warrant is security for the note Chatwins issued to Mr. Gesterkamp
when it purchased the warrant, extension of the Gesterkamp Warrant was
necessary to Mr. Gesterkamp's agreement to sell, rather than exercise, the
Gesterkamp Warrant. Thus, the Company believes that extending the Gesterkamp
Warrant is fair consideration for Chatwins' agreement to purchase such warrant
from Mr. Gesterkamp.
 
  On September 14, 1995 the Company purchased from Chatwins Holdings, Inc., a
Delaware corporation and wholly-owned subsidiary of Chatwins ("CHI"), all of
the issued and outstanding common stock and preferred stock of Oneida. The
aggregate purchase price for the shares totaled $3,107,000, which was funded
entirely from internal cash reserves of the Company. Oneida's liabilities at
the time of acquisition included $4,268,000 payable to Congress Financial
Corporation and $4,933,000 payable to Chatwins. The stock purchase agreement
between the Company and Chatwins requires the Company to cause Oneida to repay
the indebtedness to Chatwins (the "Oneida Debt") plus interest thereon at 10%
per annum from September 1, 1995 on or before the second anniversary of the
closing date of the Oneida purchase, or earlier from the net proceeds, if any,
of the sale of the Company's other material assets. The financial terms of the
Oneida transaction were determined based on Oneida's financial position and
results of operations at and for the six months ended June 30, 1995. The terms
of the transaction were approved by the unanimous vote of the directors of the
Company at the time with Messrs. Bradley and Cassidy abstaining. Prudential
Securities Incorporated acted as financial advisor to the Company in connection
with the Oneida transaction and rendered its opinion to the Board of Directors
of the Company that the consideration paid by the Company was fair to the
Company from a financial point of view.
 
  On November 1, 1995 and November 2, 1995, respectively, Mr. Bradley made
loans of $800,000 and $500,000 to the Company, which the Company then advanced
to Oneida and Oneida used these funds to repay a portion of the Oneida Debt to
Chatwins. It is intended that the Company will enter into an agreement with Mr.
Bradley whereby the Company will agree to cause Oneida to repay this $1,300,000
to Mr. Bradley on the same terms that the Company had previously agreed to
cause Oneida to pay the Oneida Debt to Chatwins.
 
                                       27
<PAGE>
 
  Chatwins has recently proposed to the Company a merger of Rostone
Corporation, a manufacturer of thermoset plastic products and an indirect
subsidiary of Chatwins and SPI, with and into Oneida. Chatwins and the Company
are currently negotiating the possible terms of such a merger. Chatwins has
informed the Company that it intends to propose a series of further
transactions to the Board of Directors of the Company, including sales by the
Company of certain of the Company's real estate and oil and gas assets and the
acquisition of additional assets or businesses by the Company. Following the
third anniversary of the Chatwins Acquisition, Chatwins may consider proposing
the merger of itself with and into the Company. Each of the transactions that
Chatwins may propose in which it has an interest separate from that of the
Company will be subject to approvals by the Boards of Directors of the Company
and Chatwins and compliance by Chatwins with the covenants in its financing
agreements. There can be no assurance that any transaction will be proposed or
that any proposed transaction will be consummated.
 
PARKDALE HOLDINGS CORPORATION N.V.
 
  Parkdale became the Company's largest stockholder in 1988 in connection with
reorganization financing provided by it to facilitate the Company's discharge
from bankruptcy. During the next several years the Company experienced
progressively larger losses, and cash balances had become critically depleted
by mid-1992. Representatives of Parkdale approached Franklin Myers, who had
served as outside counsel to the Company for a number of years before its 1985
bankruptcy filing, about the possibility of Mr. Myers becoming its agent and
attorney-in-fact to represent its stockholdings in the Company. When Mr. Myers
agreed in June 1992 to undertake the proposed assignment, he agreed to do so
based upon the stated premises that he would do so only if he were to be given
exclusive voting and investment control over Parkdale's stockholdings and if he
were to take affirmative actions on Parkdale's behalf in an effort to increase
the value of the Company for the benefit of stockholders generally, he would
expect to be retained by the Company as a financial consultant and compensated
through both cash and equity inducements of substantial magnitude. Consistent
with these understandings, Mr. Myers was so retained immediately following the
ouster of the incumbent board of directors at the 1992 annual meeting of
stockholders. Under the terms of his consulting arrangement (which was
cancelled effective January 1, 1995), the Company paid Mr. Myers an annual
fixed consulting fee of $150,000 and awarded him options and warrants in 1992
covering the right to purchase up to 112,500 shares of the Existing Common
Stock at a purchase price of $1.56 per share, the average market price for the
Existing Common Stock in June 1992.
 
  Notwithstanding the apparent (or actual) conflict of interest which may have
existed with respect to the financial arrangements between the Company and Mr.
Myers, the Board of Directors is of the opinion that these arrangements were as
favorable to the Company as any which could have been negotiated at arm's
length with similarly situated third parties under the same circumstances. In
connection with the Chatwins Acquisition, Mr. Myers gave Chatwins a three-year
proxy to vote all of his Existing Common Stock, and entered into a standstill
agreement with respect to his Company securities. Contemporaneously with the
Chatwins Acquisition, Mr. Myers resigned as a Director of the Company. On
October 26, 1995, he was appointed to the Board of Directors to fill the
vacancy created by the resignation of W. Kyle Willis from the Board of
Directors.
 
                                       28
<PAGE>
 
                       DEADLINE FOR STOCKHOLDER PROPOSALS
 
  Proposals of stockholders of the Company intended to be presented at the 1996
annual meeting of stockholders must be received by R. Michael Looney, Secretary
of the Company, by February 4, 1996 for inclusion in the proxy statement and
form of proxy relating to the 1996 annual meeting to be held by the Company or,
if the Merger has been consummated, New Subsidiary.
 
                                          By Order of the Board of Directors,
 
                                            [Paste Up Sig]
 
                                          R. Michael Looney
                                          CORPORATE SECRETARY
 
Houston, Texas
November 16, 1995
 
                                       29
<PAGE>
 
                                    ANNEX A


                                      TO


                          PROXY STATEMENT/PROSPECTUS


<PAGE>
 
                               MERGER AGREEMENT

     THIS MERGER AGREEMENT, dated as of November 14, 1995 (the "Agreement"), is 
by and between REUNION RESOURCES COMPANY, a Delaware corporation ("Reunion") and
REUNION INDUSTRIES, INC., a Delaware corporation ("New Reunion").

                             W I T N E S S E T H :

     WHEREAS, the respective Boards of Directors of Reunion and New Reunion deem
it advisable that Reunion merge with and into New Reunion (the "Merger"), upon 
the terms and conditions herein and in accordance with the laws of the State of 
Delaware, and that the shares of stock of each of Reunion and New Reunion shall 
be converted upon the Merger as set forth herein.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

SECTION 1. TERMS

     1.1. At the Effective Time (as hereinafter defined) of the Merger, Reunion 
shall be merged with and into New Reunion, with New Reunion as the surviving 
corporation (hereinafter also referred to as the "Surviving Corporation").

     1.2. The Surviving Corporation shall be named "Reunion Industries, Inc.".

     1.3. At the Effective Time, each share of Common Stock of Reunion issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Merger, be converted into one share of Common Stock of the Surviving
Corporation. Each share of Common Stock of New Reunion issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action by the holder thereof, be cancelled.

     1.4. If any certificate representing stock of the Surviving Corporation is 
to be issued in a name other than that in which a surrendered certificate 
theretofore representing stock of Reunion is registered, it shall be a condition
of such issuance that the surrendered certificate shall be properly endorsed or 
otherwise in proper form for transfer and that the person requesting such 
issuance shall either pay to the Surviving Corporation or its transfer agent any
transfer or other taxes required by reason of the issuance of a certificate or 
certificates representing the Surviving Corporation stock in a name other than 
that of the registered holder of the certificate surrendered, or establish to 
the

<PAGE>
 
satisfaction of the Surviving Corporation or its transfer agent that such tax 
has been paid or is not applicable.

     1.5. Upon and after the Effective Time, the Surviving Corporation shall 
possess all the rights, privileges, powers and franchises, and be subject to all
the restrictions, disabilities and duties, of the Constituent Corporations (as 
hereinafter defined); and all rights, privileges, powers and franchises of the 
Constituent Corporations shall be vested in and be the property of the Surviving
Corporation; and all debts, liabilities and duties of the Constituent 
Corporations shall thenceforth attach to the Surviving Corporation and may be 
enforced against it to the same extent as if said debts, liabilities and duties 
have been incurred or contracted by it.

SECTION 2. EFFECTIVE TIME

     2.1. Subsequent to the execution of this Agreement, Reunion and New Reunion
(collectively, the "Constituent Corporations") shall each submit this Agreement 
to their respective stockholders for their approval pursuant to the applicable 
provisions of the General Corporation Law of the State of Delaware.

     2.2. Following approval of this Agreement in accordance with Section 2.1 
above, and provided that:

          (a) the conditions specified in Section 5.1 hereof have been 
     fulfilled or waived; and

          (b) this Agreement has not been terminated and abandoned pursuant to 
     Section 5.3 hereof; the Surviving Corporation will cause a Certificate of
     Merger to be executed, acknowledged and filed with the Secretary of the
     State of Delaware as provided in Section 251 of the General Corporation Law
     of the State of Delaware and a copy of the Certificate of Merger, certified
     by the Secretary of State of the State of Delaware, to be recorded in the
     Office of the Recorder of Deeds of New Castle County, all in accordance
     with the provisions of Section 103 of the General Corporation Law of the
     State of Delaware.

     2.3. The Merger shall become effective immediately upon the filing of the 
Certificate of Merger with the Secretary of State of the State of Delaware (the 
date and time of such filing being herein referred to as the "Effective Time").

                                       2


<PAGE>
 
SECTION 3. COVENANTS AND AGREEMENTS

     3.1. Reunion covenants and agrees that it will, as sole stockholder of New 
Reunion, vote the Common Stock of New Reunion owned by it to approve this 
Agreement as provided by law.

     3.2. New Reunion covenants and agrees that as the Surviving Corporation it 
shall be liable for all the obligations of the Constituent Corporations 
outstanding as of the Effective Time and hereby expressly assumes all such 
obligations as of the Effective Time.

SECTION 4. CERTIFICATE OF INCORPORATION AND BYLAWS; BOARD OF DIRECTORS

     4.1. The Certificate of Incorporation of New Reunion as constituted at the 
Effective Time shall thereafter be the Certificate of Incorporation of the 
Surviving Corporation until such time as it shall be amended as provided by law.

     4.2. The Bylaws of New Reunion shall be the bylaws of the Surviving 
Corporation, subject to alteration, amendment or repeal from time to time by the
Board of Directors or the stockholders of the Surviving Corporation.

     4.3. From and after the Effective Time the members of the Board of 
Directors of the Surviving Corporation shall consist of the members of the Board
of Directors of Reunion immediately prior to the Effective Time, to hold office
until the expiration of their then current terms and until their respective
successors shall be elected.

     4.4. From and after the Effective Time, the officers of New Reunion shall 
consist of the officers of Reunion immediately prior to the Effective Time, to 
hold office until the next annual meeting of the stockholders of New Reunion and
until their respective successors are elected and appointed.

SECTION 5. CONDITIONS, AMENDMENT AND TERMINATION

     5.1. The respective obligations of the Constituent Corporations to 
consummate the Merger under this Agreement are subject to the following 
conditions, any and all of which (other than paragraph (d)) may be waived by the
party for whose benefit they are included:

                                       3
<PAGE>
 
          (a) All third party consents which are required in order to consummate
     the Merger and to effectuate the contemplated transactions incidental or
     related thereto shall have been obtained;

          (b) The Common Stock of the Surviving Corporation shall have been 
     approved for quotation on the NASDAQ Small-Cap. Market and the Pacific
     Stock Exchange;

          (c) Reunion shall have received a ruling of the Internal Revenue 
     Service or an opinion of counsel in form and substance satisfactory to
     Reunion as to the tax treatment of the Merger; and
 
          (d) Each of the Constituent Corporations shall have received the 
     approval of its stockholders as required under Delaware law.

     5.2. To the fullest extent permitted by applicable law, the Constituent 
Corporations, by mutual consent of their respective Boards of Directors, may 
amend, modify or supplement this Agreement in such a manner as may be agreed 
upon by them in writing at any time prior to the Effective Time, even though the
Agreement shall have been approved by the stockholders of the Constituent 
Corporations or of either thereof.

     5.3. This Agreement may be terminated and the Merger abandoned for any 
reason by resolution adopted by either of the respective Boards of Directors of 
the Constituent Corporations at any time prior to the Effective Time, even 
though this Agreement shall have been approved by the stockholders of the 
Constituent Corporations or of either thereof.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by 
their respective officers thereunto duly authorized and their respective 
corporate seals affixed, all as of the day and year first above written.

                                       REUNION RESOURCES COMPANY


                                       By: 
                                          --------------------------------
                                       Its:

                                       REUNION INDUSTRIES, INC.


                                       By:
                                          --------------------------------
                                       Its:

                                       4

<PAGE>
 
                                    ANNEX B



                                      TO



                          PROXY STATEMENT/PROSPECTUS



<PAGE>
 
                          CERTIFICATE OF INCORPORATION
                                       OF
                            REUNION INDUSTRIES, INC.


                                   ARTICLE I

                                      NAME

          The name of the Corporation is Reunion Industries, Inc.


                                   ARTICLE II

                            REGISTERED OFFICE/AGENT

          The registered office of the Corporation in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle, Delaware 19801.  The name of its registered agent at such address
is The Corporation Trust Company.


                                  ARTICLE III

                                    PURPOSES

          The purposes of the Corporation are to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

                                   ARTICLE IV

                                 CAPITAL STOCK

          Section 4.1 Authorized Stock.  The total number of shares of all
classes of stock which the Corporation shall have authority to issue is Thirty
Million (30,000,000), of which 20,000,000 shares shall be of a class designated
"common stock", having a par value of $.01 per share (the "Common Stock"), and
Ten Million (10,000,000) shares shall be of a class designated "preferred
stock", par value $.01 per share (the "Preferred Stock").  Any and all stock
issued by the Corporation shall be deemed issued after the adoption of the
transfer restrictions set forth in Article Fifth hereof.
<PAGE>
 
          Section 4.2 Common Stock.    Except as otherwise provided in this
Certificate of Incorporation or by law, each holder of Common Stock shall be
entitled to one vote for each share held.  The holders of the Common Stock shall
be entitled to receive, when and as declared by the Board of Directors, out of
funds legally available therefor, dividends payable in cash, stock or otherwise.
On any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the remaining net assets of the Corporation shall be
distributed pro rata to the holders of the Common Stock in accordance with their
respective rights and interest.

          Section 4.3 Preferred Stock. Preferred Stock may be issued in one or
more series as may be determined from time to time by the Board of Directors.
All shares of any one series of Preferred Stock will be identical except as to
the date of issue and the dates from which dividends on shares of the series
issued on different dates will cumulate, if cumulative.  Authority is hereby
expressly granted to the Board of Directors to authorize the issuance of one or
more series of Preferred Stock, and to fix by resolution or resolutions
providing for the issue of each such series the powers, including the voting
powers (but no greater than one vote per share), designations, preferences, and
relative, participating, optional, redemption, conversion, exchange or other
special rights, and qualifications, limitations or restrictions of such series,
and the number of shares in each series, to the full extent now or hereafter
permitted by law.

                                   ARTICLE V

                       RESTRICTIONS ON TRANSFERS OF STOCK

          Section 5.1 Prohibited Transfers.  In order to preserve the net
operating loss carryovers (including any "net unrealized built-in loss," as
defined under applicable law), capital loss carryovers, general business credit
carryovers, alternative minimum tax credit carryovers and foreign tax credit
carryovers (the "Tax Benefits") to which the Corporation is entitled pursuant to
the Internal Revenue Code of 1986, as amended, or any successor statute
(collectively, the "Code") and the Treasury Regulations promulgated thereunder
(the "Treasury Regulations"), the following restrictions shall apply until the
date which is the earlier of (x) the day after the third (3rd) anniversary of
the effectiveness of the merger of Reunion Resources Company, a Delaware
corporation, with and into the Corporation (the "Merger"), (y) the repeal of
Section 382 of the Code if the Board of Directors determines that the
restrictions are no longer necessary, and (z) the beginning of a taxable year of
the Corporation as to which the Board of Directors determined prior to the
beginning of such taxable year that no Tax Benefits may be carried forward,
unless the Board of Directors shall fix an earlier or later date in accordance
with Section 5.7 of this Article Fifth (such date is sometimes referred to
herein as the "Expiration Date"):

                                       2
<PAGE>
 
          (1)  For purposes of this Article Fifth, (a) a "Prohibited Ownership
Percentage" shall mean any ownership of the Corporation's stock that would cause
a Person or Public Group to be a "5-percent shareholder" of the Corporation
within the meaning of Treasury Regulation Section 1.382-2T(g)(1); (b) a "Public
Group" shall have the meaning contained in Treasury Regulation Section 1.383-
2T(f)(13); (c) a "Person" shall mean any individual, corporation, estate, trust,
association, company, partnership, limited liability company, joint venture, or
similar organization (including the Corporation); (d) "Transfer" refers to any
means of conveying legal or beneficial ownership of shares of stock of the
Corporation, whether such means are direct or indirect, voluntary or
involuntary, including, without limitation, the issuance by the Corporation of
shares of stock of the Corporation (without regard to whether such shares are
treasury shares or new shares) and the transfer of ownership of any entity that
owns shares of stock of the Corporation; and "Transferee" means any Person to
whom stock of the Corporation is Transferred.

          (2)  From and after the effectiveness of the Merger, no Person shall
Transfer any shares of stock of the Corporation (other than stock described in
Section 1504(a)(4) of the Code, or stock that is not so described solely because
it is entitled to vote as a result of dividend arrearages) to any other Person
to the extent that such Transfer, if effective, (i) would cause the Transferee
or any Person or Public Group to have a Prohibited Ownership Percentage; (ii)
would increase the ownership percentage of any Transferee or any Person or
Public Group having a Prohibited Ownership Percentage; or (iii) would create a
new Public Group under Treasury Regulation Section 1.382-2T(j)(3)(i).

          (3)  Any Transfer of shares of stock of the Corporation that would
otherwise be prohibited pursuant to the preceding subsection, including but not
limited to the issuance of stock by the Corporation pursuant to the exercise of
any warrants, options or other rights to acquire stock in the Corporation, shall
nonetheless be permitted if information relating to a specific proposed
transaction is presented to the Board of Directors and the Board determines
that, based on the facts in existence at the time of such determination, such
transaction will not jeopardize the Corporation's full utilization of the Tax
Benefits, based upon an opinion of legal counsel selected by the Board to that
effect.  Nothing in this subsection will be construed to limit or restrict the
Board of Directors in the exercise of its fiduciary duties under applicable law.

          (4)  Within 10 days after the Expiration Date, the Board of Directors
shall cause a written notice to be mailed to the Stockholders of the Corporation
informing said Stockholders of the expiration of the restrictions contained in
this Article Fifth.

          Section 5.2  Attempted Transfer in Violation of Transfer Restrictions.
Unless approval of the Board of Directors is obtained as provided in subsection
(3) of Section 5.1 of this Article Fifth, any attempted Transfer of shares of
stock of the Corporation in excess of the shares that could be Transferred to
the Transferee without restriction under subsection (2)

                                       3
<PAGE>
 
of Section 5.1 of this Article Fifth is not effective to Transfer ownership of
such excess shares (the "Prohibited Shares") to the purported acquiror thereof
(the "Purported Acquiror"), who shall not be entitled to any rights as a
Stockholder of the Corporation with respect to the Prohibited Shares (including,
without limitation, the right to vote or to receive dividends with respect
thereto).  All rights with respect to the Prohibited Shares shall remain the
property of the Person who initially purported to Transfer the Prohibited Shares
to the Purported Acquiror (the "Initial Transferor") until such time as the
Prohibited Shares are resold as set forth below in subsection (1) or subsection
(2) of this Section 5.2.  The Purported Acquiror, by acquiring ownership of
shares of stock of the Corporation that are not Prohibited Shares, shall be
deemed to have consented to all the provisions of this Article Fifth and to have
agreed to act as provided in the following subsection (1).  The Corporation and
the Board of Directors shall be fully protected in relying in good faith upon
the information, opinions, reports or statements of the chief executive officer,
the chief financial officer, or the chief accounting officer of the Corporation
or of the Corporation's legal counsel, independent auditors, transfer agent,
investment bankers, and other employees and agents in making the determinations
and findings contemplated by this Section 5.2, and neither the Corporation nor
the Board of Directors shall be responsible for any good faith errors made in
connection therewith.

          (1)  Upon demand by the Corporation, the Purported Acquiror shall
transfer any certificate or other evidence of the Purported Acquiror's
possession or control of the Prohibited Shares, along with any dividends and
other distributions paid by the Corporation with respect to the Prohibited
Shares that were received by the Purported Acquiror (the "Prohibited
Distributions"), to an agent designated by the Corporation (the "Agent").  If
the Purported Acquiror has sold the Prohibited Shares to an unrelated party in
an arms-length transaction after purportedly acquiring them, the Purported
Acquiror shall be deemed to have sold the Prohibited Shares as agent for the
Initial Transferor, and in lieu of transferring the Prohibited Shares and
Prohibited Distributions to the Agent shall transfer to the Agent the Prohibited
Distributions and the proceeds of such sale (the "Resale Proceeds"), except to
the extent that the Agent grants written permission to the Purported Acquiror to
retain a portion of the Resale Proceeds not exceeding the amount that would have
been payable by the Agent to the Purported Acquiror pursuant to the following
subsection (2) if the Prohibited Shares had been sold by the Agent rather than
by the Purported Acquiror.  Any purported transfer of the Prohibited Shares by
the Purported Acquiror other than a transfer described in one of the two
preceding sentences shall not be effective to transfer any ownership of the
Prohibited Shares.

          (2)  The Agent shall sell in an arms-length transaction (through the
NASDAQ Small Cap. Market or the Pacific Stock Exchange, if possible) any
Prohibited Shares transferred to the Agent by the Purported Acquiror, and the
proceeds of such sale (the "Sale Proceeds"), or the Resale Proceeds, if
applicable, shall be allocated, after reimbursement to the Agent of its
expenses, to the Purported Acquiror up to the following amount: (i) where

                                       4
<PAGE>
 
applicable, the purported purchase price paid or value of consideration
surrendered by the Purported Acquiror for the Prohibited Shares, or (ii) where
the purported Transfer of the Prohibited Shares to the Purported Acquiror was by
gift, inheritance, or any similar purported Transfer, the fair market value of
the Prohibited Shares at the time of such purported Transfer.  Subject to the
succeeding provisions of this subsection, any Resale Proceeds or Sales Proceeds
in excess of the Agent's expenses and the amount allocable to the Purported
Acquiror pursuant to the preceding sentence, together with any Prohibited
Distributions, shall be the property of the Initial Transferor.  If the identity
of the Initial Transferor cannot be determined by the Agent through inquiry made
to the Purported Acquiror, the Agent or the Corporation shall hold such amounts
pending the determination of the identity of the Initial Transferor.  The Agent
may also take, but is not required to take, any reasonable actions to attempt to
identify the Initial Transferor.  If after ninety (90) days following the date
the Prohibited Shares were transferred to the Agent the Initial Transferor has
not been identified, any amounts due to the Initial Transferor pursuant to this
subsection may be paid over to a court or governmental agency, if applicable law
permits, or otherwise shall be transferred to an entity designated by the
Corporation that is described in Section 501(c)(3) of the Code.  In no event
shall any such amounts due to the Initial Transferor inure to the benefit of the
Corporation or the Agent, but such amounts may be used to cover expenses
incurred by the Agent in attempting to identify the Initial Transferor.

          Section 5.3  Prompt Enforcement Against Purported Acquiror.  Within
thirty (30) business days of learning of the purported Transfer of Prohibited
Shares to a Purported Acquiror, the Corporation through its Secretary shall
demand that the Purported Acquiror surrender to the Agent the certificates
representing the Prohibited Shares, or any Resale Proceeds, and any Prohibited
Distributions, and if such surrender is not made by the Purported Acquiror
within thirty (30) business days from the date of such demand, the Corporation
shall institute legal proceedings to compel such transfer; provided, however,
that nothing in this Section 5.3 shall preclude the Corporation in its
discretion from immediately bringing legal proceedings without a prior demand,
and provided further that failure of the Corporation to act within the time
periods set out in this Section 5.3 shall not constitute a waiver of any right
of the Corporation to compel any transfer required by subsection (1) of Section
5.2.

          Section 5.4  Additional Actions to Prevent Violation or Attempted
Violation.  Upon a determination by the Board of Directors that there has been
or is threatened a purported Transfer of Prohibited Shares to a Purported
Acquiror, the Board of Directors may take such action in addition to any action
required by the preceding paragraph as it deems advisable to give effect to the
provisions of this Article Fifth, including, without limitation, refusing to
give effect on the books of this Corporation to such purported Transfer or
instituting proceedings to enjoin such purported Transfer.  Notwithstanding the
foregoing sentence, the Board of Directors shall take no action which would
prohibit the settlement of

                                       5
<PAGE>
 
transactions entered into through the NASDAQ Small Cap. Market, the Pacific
Stock Exchange, or other market or exchange on which the Corporation has listed
its securities.

          Section 5.5  Obligation to Provide Information.  The Corporation may
require as a condition to the registration of the Transfer of any shares of its
stock that the proposed Transferee furnish to the Corporation all information
reasonably requested by the Corporation with respect to all the proposed
Transferee's direct or indirect ownership interest in, or options to acquire,
stock of the Corporation.

          Section 5.6  Legends.  All certificates evidencing ownership of shares
of stock of this Corporation that are subject to the restrictions on Transfer
contained in this Article Fifth shall bear a conspicuous legend referencing the
restrictions set forth in this Article Fifth.

          Section 5.7  Further Actions.  Nothing contained in this Article Fifth
shall limit the authority of the Board of Directors to take such other action to
the extent permitted by law as it deems necessary or advisable to protect the
Corporation and the interests of the holders of its securities in preserving the
Tax Benefits.  Without limiting the generality of the foregoing, in the event of
a change in law making one or more of the following actions necessary or
desirable or in the event that the Board of Directors believes that such actions
are in the best interest of the Corporation and its Stockholders, the Board of
Directors may accelerate or extend the Expiration Date; provided that the Board
of Directors shall determine in writing that any such acceleration or extension
is reasonably necessary or desirable to preserve the Tax Benefits under the Code
and the regulations thereunder or that the continuation of these restrictions is
no longer reasonably necessary for the preservation of the Tax Benefits, which
determination shall be based upon an opinion of legal counsel to the Corporation
and which determination shall be filed with the Secretary of the Corporation and
mailed by the Secretary to the Stockholders of this Corporation within ten days
after the date of any such determination.  In addition, the Board of Directors
may, to the extent permitted by law, from time to time establish, modify, amend
or rescind Bylaws, regulations and procedures of the Corporation not
inconsistent with the express provisions of this Article Fifth for purposes of
determining whether any acquisition of stock of the Corporation would jeopardize
the Corporation's ability to preserve and use the Tax Benefits, and for the
orderly application, administration and implementation of the provisions of this
Article Fifth.  Such procedures and regulations shall be kept on file with the
Secretary of the Corporation and with its transfer agent and shall be made
available for inspection by the public and, upon request, shall be mailed to any
holder of stock of the Corporation.

                                       6
<PAGE>
 
                                 ARTICLE VI

                               BOARD OF DIRECTORS

          Except as otherwise provided by law, the business and affairs of the
Corporation shall be managed by, or under the direction of, its Board of
Directors.  The number of directors of the Corporation shall be fixed by, and in
the manner provided in, the Corporation's Bylaws, but shall not be fewer than
three nor more than 12.  None of the directors need be a stockholder of the
Corporation or a resident of the State of Delaware.  Elections of directors need
not be by written ballot unless the Corporation's Bylaws provide otherwise.
Without limiting the rights, powers, privileges and discretionary authority
conferred by the Delaware General Corporation Law (the "DGCL") or other
applicable law, the Board of Directors is expressly authorized to adopt, amend
or repeal the Bylaws of the Corporation.

                                  ARTICLE VII

                                  STOCKHOLDERS

          Stockholder action that must or may be taken at an annual or special
meeting of the stockholders, with prior notice and a vote, may instead be taken
without a meeting, without prior notice and without a vote if a written consent
or consents, setting forth the action taken, shall be signed by the holders of
no less than the number of shares of capital stock required to authorize or take
such action at an annual or special meeting of the stockholders.  Meetings of
stockholders may be held within or without the State of Delaware as the Bylaws
may provide.  In addition to such special meetings as are provided by law or
this Certificate of Incorporation, special meetings of the stockholders may be
called only by (a) the Board of Directors pursuant to a resolution adopted by a
majority of the Board of Directors then in office, (b) the Chairman of the
Board, (c) the President of the Corporation or (d) the holders of not less than
30% of the total voting power of all shares of stock of the Corporation entitled
to vote in the election of directors.  The books of the Corporation may be kept
(subject to any provision contained in the DGCL) outside the State of Delaware
at such place(s) as may be designated from time to time by the Board of
Directors or in the Bylaws of the Corporation.


                                  ARTICLE VIII

                              NO PREEMPTIVE RIGHTS

          No stockholder shall be entitled, as a matter of right, to subscribe
for or acquire additional, unissued or treasury shares of any class of capital
stock of the Corporation whether now or hereafter authorized, or any bonds,
debentures or other

                                       7
<PAGE>
 
securities convertible into, or carrying a right to subscribe to or acquire such
shares, but any shares or other securities convertible into, or carrying a right
to subscribe to or acquire such shares may be issued or disposed of by the Board
of Directors to such persons and on such terms as in its discretion it shall
deem advisable.


                                   ARTICLE IX

                              NO CUMULATIVE VOTING

          At each election of directors, every stockholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected and
for whose election he is entitled to cast a vote.  No stockholder shall have the
right to cumulate his votes in any election of directors.


                                   ARTICLE X

                     BUSINESS COMBINATIONS WITH AFFILIATES

          The Corporation hereby elects not to be governed by Section 203 of the
DGCL which restricts business combination transactions with Interested
Stockholders (as defined therein).


                                   ARTICLE XI

                           LIMITED DIRECTOR LIABILITY

          A director of the corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involved intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL for unlawful
payment of dividends or improper redemption of stock, or (iv) for any
transaction from which the director derived an improper personal benefit.  If
the DGCL is hereafter amended to authorize the further elimination or limitation
of the liability of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the DGCL, as
amended.  Any repeal or modification of this paragraph by the stockholders of
the Corporation shall be

                                       8
<PAGE>
 
prospective only, and shall not adversely affect any limitation on the personal
liability of a director of the Corporation existing at the time of such repeal
or modification.

                                  ARTICLE XII

                                INDEMNIFICATION

          Section 12.1 Mandatory Indemnification.  Each person who at any time
is or was a director of the Corporation, and is threatened to be or is made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative (a
"Proceeding"), by reason of the fact that such person is or was a director of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, member, employee, trustee,
agent or similar functionary of another domestic or foreign corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other for-profit or non-profit enterprise, whether the basis of a Proceeding is
alleged action in such person's official capacity or in another capacity while
holding such office, shall be indemnified and held harmless by the Corporation
to the fullest extent authorized by the DGCL, or any other applicable law as may
from time to time be in effect (but, in the case of any such amendment or
enactment, only to the extent that such amendment or law permits the Corporation
to provide broader indemnification rights than such law prior to such amendment
or enactment permitted the Corporation to provide), against all expense,
liability and loss (including, without limitation, court costs and attorneys'
fees, judgments, fines, excise taxes or penalties, and amounts paid or to be
paid in settlement) actually and reasonably incurred or suffered by such person
in connection with a Proceeding, and such indemnification shall continue as to a
person who has ceased to be a director of the Corporation or a director,
officer, partner, venturer, proprietor, member, employee, trustee, agent or
similar functionary of another domestic or foreign corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan or other for-
profit or non-profit enterprise, and shall inure to the benefit of such person's
heirs, executors and administrators.  The Corporation's obligations under this
Section 12.1 include, but are not limited to, the convening of any meeting, and
the consideration of any matter thereby, required by statute in order to
determine the eligibility of any person for indemnification.

          Section 12.2 Prepayment of Expenses. Expenses incurred by a director
of the Corporation in defending a Proceeding shall be paid by the Corporation in
advance of the final disposition of such Proceeding to the fullest extent
permitted by, and only in compliance with, the DGCL or any other applicable laws
as may from time to time be in effect, including, without limitation, any
provision of the DGCL which requires, as a condition precedent to such expense
advancement, the delivery to the Corporation of an undertaking, by or on behalf
of such director, to repay all amounts so advanced if it shall ultimately be
determined that such director is not entitled to be indemnified under Section
12.1 or

                                       9
<PAGE>
 
otherwise.  Repayments of all amounts so advanced shall be upon such terms and
conditions, if any, as the Corporation's Board of Directors deems appropriate.

          Section 12.3 Vesting.  The Corporation's obligation to indemnify and
to prepay expenses under Sections 12.1 and 12.2 shall arise, and all rights
granted to the Corporation's directors hereunder shall vest at the time of the
occurrence of the transaction or event to which a Proceeding relates, or at the
time that the action or conduct to which such Proceeding relates was first taken
or engaged in (or omitted to be taken or engaged in), regardless of when such
Proceeding is first threatened, commenced or completed.  Notwithstanding any
other provision of this Certificate of Incorporation or the Bylaws of the
Corporation, no action taken by the Corporation, either by amendment of this
Certificate of Incorporation or the Bylaws of the Corporation or otherwise,
shall diminish or adversely affect any rights to indemnification or prepayment
of expenses granted under Sections 12.1 and 12.2 which shall have become vested
as aforesaid prior to the date that such amendment or other corporate action is
effective or taken, whichever is later.

          Section 12.4 Enforcement.  If a claim under Section 12.1 or Section
12.2 or both Sections 12.1 and 12.2 is not paid in full by the Corporation
within 30 days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit in a court of competent
jurisdiction against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall also be entitled to
be paid the expense of prosecuting such claim.  It shall be a defense to any
such suit (other than a suit brought to enforce a claim for expenses incurred in
defending any Proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct that make it permissible under the
DGCL or other applicable law to indemnity the claimant for the amount claimed,
but the burden of proving such defense shall be on the Corporation.  The failure
of the Corporation (including its Board of Directors, independent legal counsel
or stockholders) to have made a determination prior to the commencement of such
suit as to whether indemnification is proper in the circumstances based on the
applicable standard of conduct set forth in the DGCL or other applicable law
shall neither be a defense to the action nor create a presumption that the
claimant has not met the applicable standard of conduct.  The termination of any
Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal Proceeding, had reasonable cause
to believe that his conduct was unlawful.

                                      10
<PAGE>
 
          Section 12.5 Nonexclusive.  The indemnification provided by this
Article XII shall not be deemed exclusive of any other rights to which a person
seeking indemnification may be entitled under any statute, bylaw, other
provisions of this Certificate of Incorporation, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.

          Section 12.6 Permissive Indemnification.  The rights to
indemnification and prepayment of expenses which are conferred on the
Corporation's directors by Sections 12.1 and 12.2 may also be conferred on any
officer, employee or agent of the Corporation if, and to the extent, authorized
by the Board of Directors.

          Section 12.7 Insurance.  The Corporation shall have power to purchase
and maintain insurance, at its expense, on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, partner, venturer,
proprietor, member, employee, trustee, agent or similar functionary of another
domestic or foreign corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other for-profit or non-profit
enterprise against any expense, liability or loss asserted against such person
and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnity such person against such expense, liability or loss under the
Corporation's Bylaws, the provisions of this Article XII, the DGCL or other
applicable law.

          Section 12.8 Condition to Mandatory Indemnification. Subject to the
first sentence of Section 12.4 hereof, the Corporation shall be required to
indemnify a director of the Corporation pursuant to Section 12.1 hereof in
connection with a Proceeding (or part thereof) initiated by such director only
if the initiation of such Proceeding (or part thereof) by the director was
authorized in writing by the Board of Directors of the Corporation.

                                  ARTICLE XIII

                                   COMPROMISE

          Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the

                                      11
<PAGE>
 
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs.  If a majority in number representing three-
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.


                                  ARTICLE XIV

                                  INCORPORATOR

          The name and mailing address of the incorporator is:

                               Charles R. Umpleby
                             Richards & O'Neil, LLP
                                885 Third Avenue
                         New York, New York 10022-4873

          I, the undersigned, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring under the
penalties of perjury that this is my act and deed and that the facts stated
herein are true, and accordingly have hereunto set my hand this ____ day of
November 1995.



                                    -------------------------------------- 
                                    Charles R. Umpleby
 

                                      12
<PAGE>
 
                PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
  New Subsidiary's Certificate of Incorporation and Bylaws provide that present
and former directors of New Subsidiary, or persons serving at the request of
the corporation, shall be indemnified and held harmless by the corporation to
the fullest extent authorized by the Delaware General Corporation Law against
all losses, liabilities, and expenses incurred in connection with any
threatened, pending, or completed action suit or proceeding instituted against
such person by virtue of his or her position as a director of the corporation
or person serving at the request of the corporation. Generally, Delaware
General Corporation Law Section 145 permits such indemnification where the
party seeking indemnification acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, or,
in the case of any criminal action or proceeding, where such person had no
reasonable cause to believe his conduct was unlawful. A similar standard of
care is applicable in the case of derivative actions except that
indemnification only extends to expenses (including attorneys' fees) incurred
in connection with defense or settlement of such an action and then, where the
person is adjudged to be liable to the corporation, only if and to the extent
that the Court of Chancery of the State of Delaware or the court in which such
action was brought determines that such person is fairly and reasonably
entitled to such indemnity and then only for such expenses as the court shall
deem proper.
 
  Section 145 further provides that where a director, officer, employee or
agent of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding he shall be indemnified against
expenses, including attorneys' fees, incurred in connection therewith.
 
  The indemnification provisions of the Certificate of Incorporation and Bylaws
of New Subsidiary differ from those of the Company only insofar as one new
section has been added (See Section 12.8 of New Subsidiary's Certificate of
Incorporation, attached as ANNEX B hereto) which provides that the corporation
shall be required to indemnify a director in connection with a Proceeding (as
defined therein) initiated by such director only if the initiation of such
Proceeding by the director was authorized in writing by the Board of Directors.
 
  The Company maintains insurance policies under which directors and officers
are insured, within the limits and subject to the limitations of the policies,
against expenses in connection with the defense of actions, suits or
proceedings, and certain liabilities that might be imposed as a result of such
actions, suits or proceedings, to which they are parties by reason of being or
having been directors or officers of the Company. These policies will be
maintained by New Subsidiary.
 
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
  (a) Exhibits
 
<TABLE>
<CAPTION>
 EXHIBIT NO.                       DESCRIPTION OF EXHIBIT
 -----------                       ----------------------
 <C>         <S>
      2.1    --Merger Agreement by and between Reunion Resources Company and
               Reunion Industries, Inc. (incorporated by reference to Annex A to
               the Proxy Statement/Prospectus)
      3.1    --Form of Certificate of Incorporation of Reunion Industries, Inc.
               (incorporated by reference to Annex B to the Proxy
               Statement/Prospectus)
      3.2    --Form of Bylaws of Reunion Industries, Inc.
     *4.1    --Form of Specimen Stock Certificate evidencing the Common Stock,
               par value $.01 per share, of Reunion Industries, Inc.
     *5.1    --Opinion of Richards & O'Neil, LLP
     *8.1    --Opinion of Richards & O'Neil, LLP
    *24.1    --Consents of Richards & O'Neil, LLP (included in Exhibits 5.1 and
               8.1)
     25.1    --Power of Attorney (included on signature pages hereto)
</TABLE>
--------
* Exhibit to be filed by amendment.
 
                                      II-1
<PAGE>
 
ITEM 22. UNDERTAKINGS.
 
  The undersigned Registrant hereby undertakes:
 
    (1) To file, during any period in which offers or sales are being made, a
  post-effective amendment to this registration statement;
 
      (i) To include any prospectus required by Section 10(a)(3) of the
    Securities Act of 1933;
 
      (ii) To reflect in the prospectus any facts or events arising after
    the effective date of the registration statement (or the most recent
    post-effective amendment thereof) which, individually or in the
    aggregate, represent a fundamental change in the information set forth
    in the registration statement. Notwithstanding the foregoing, any
    increase or decrease in volume of securities offered (if the total
    dollar value of securities offered would not exceed that which was
    registered) and any deviation from the low or high and of the estimated
    maximum offering range may be reflected in the form of prospectus filed
    with the Commission pursuant to Rule 424(b) if, in the aggregate, the
    changes in volume and price represent no more than 20 percent change in
    the maximum aggregate offering price set forth in the "Calculation of
    Registration Fee" table in the effective registration statement.
 
      (iii) To include any material information with respect to the plan of
    distribution not previously disclosed in the registration statement or
    any material change to such information in the registration statement.
 
    (2) That, for the purpose of determining any liability under the
  Securities Act of 1933, each such post-effective amendment shall be deemed
  to be a new registration statement relating to the securities offered
  therein, and the offering of such securities at that time shall be deemed
  to be the initial bona fide offering thereof.
 
    (3) To remove from registration by means of a post-effective amendment
  any of the securities being registered which remain unsold at the
  termination of the offer.
 
  The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
 
  The Registrant undertakes that every prospectus (i) that is filed pursuant to
the paragraph immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
 
  Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
 
                                      II-2
<PAGE>
 
  The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
 
  The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
 
                                      II-3
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas
on the 16th day of November, 1995.
 
                                          REUNION INDUSTRIES, INC.
 
                                          By /s/ Charles E. Bradley, Sr.
                                            ___________________________________
 
                                            Charles E. Bradley, Sr.
                                            President and Chief Executive
                                            Officer
 
                               POWER OF ATTORNEY
 
  KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Charles E. Bradley, Sr. his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign
any or all amendments to this Registration Statement, and to file the same,
with all Exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
 
  Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
as of this 16th day of November, 1995.
 
<TABLE>
<CAPTION>
             SIGNATURE                           TITLE                    DATE
             ---------                           -----                    ----
 
<S>                                  <C>                           <C>
  /s/  Charles E. Bradley, Sr.       President, Chief Executive    November 16, 1995
____________________________________ Officer, Director
      Charles E. Bradley, Sr.
    /s/   Thomas N. Amonett          Director                      November 16, 1995
____________________________________
         Thomas N. Amonett
    /s/   Thomas L. Cassidy          Director                      November 16, 1995
____________________________________
         Thomas L. Cassidy
     /s/   Franklin Myers            Director                      November 16, 1995
____________________________________
           Franklin Myers
    /s/   Richard L. Evans           Executive Vice President and  November 16, 1995
____________________________________ Chief Financial Officer
          Richard L. Evans
</TABLE>
 
                                      II-4
<PAGE>
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
 EXHIBITS                     DESCRIPTION OF EXHIBIT                       PAGE
 --------                     ----------------------                       ----
 <C>      <S>                                                              <C>
    2.1   --Merger Agreement by and between Reunion Resources Company
            and Reunion Industries, Inc. (incorporated by reference to
            Annex A to the Proxy Statement/Prospectus)
    3.1   --Form of Certificate of Incorporation of Reunion Industries
            Incorporated (incorporated by reference to Annex B to the
            Proxy Statement/Prospectus)
    3.2   --Form of Bylaws of Reunion Industries, Inc.
   *4.1   --Form of Specimen Stock Certificate evidencing the Common
            Stock, par value $.01 per share, of Reunion Industries, Inc.
   *5.1   --Opinion of Richards & O'Neil, LLP
   *8.1   --Opinion of Richards & O'Neil, LLP
  *24.1   --Consents of Richards & O'Neil, LLP (included in Exhibits 5.1
            and 8.1)
   25.1   --Power of Attorney (included on signature pages hereto)
</TABLE>
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* Exhibit to be filed by amendment.