<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
REUNION INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
REUNION INDUSTRIES, INC.
ONE STAMFORD LANDING
62 SOUTHFIELD AVENUE
STAMFORD, CONNECTICUT
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 20, 1996
----------------
Notice is hereby given that the Annual Meeting of the Stockholders of
Reunion Industries, Inc. (the "Company") will be held at the Sheraton Stamford
Hotel, One First Stamford Place, Stamford, Connecticut, on Thursday, June 20,
1996, at 10:00 A.M. local time, for the following purposes.
1. To elect a board of five directors to serve until the next Annual
Meeting of stockholders or until their successors are elected; and
2. To consider and act upon such other business as may properly be
presented to the meeting.
A record of stockholders has been taken as of the close of business on May
13, 1996, and only those stockholders of record on that date will be entitled
to notice of and to vote at the meeting. A stockholders' list will be
available at, and may be inspected during, the meeting.
If you do not expect to be present at the meeting, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY in the enclosed stamped envelope which
has been provided for your convenience.
By Order of the Board of Directors
[PASTE UP SIG]
RICHARD L. EVANS,
Secretary
May 17, 1996
<PAGE>
REUNION INDUSTRIES, INC.
PROXY STATEMENT
GENERAL
This proxy statement is being mailed to stockholders commencing on or about
May 17, 1996, in connection with the solicitation by the Board of Directors of
Reunion Industries, Inc. (the "Company") of proxies to be voted at the Annual
Meeting of Stockholders to be held at the Sheraton Stamford Hotel, One First
Stamford Place, Stamford, Connecticut, on Thursday, June 20, 1996, and at any
adjournment thereof, for the purposes set forth in the accompanying Notice.
Proxies will be voted in accordance with the directions specified thereon and
otherwise in accordance with the judgment of the persons designated as
proxies. Any signed proxy on which no direction is specified will be voted for
the election of the nominees named herein to the Board of Directors. Any proxy
may be revoked at any time before its exercise by delivery to the corporate
secretary of a written revocation of the proxy or a duly executed proxy
bearing a later date.
As of May 13, 1996, the record date for the determination of stockholders
entitled to vote at the Annual Meeting, there were 3,855,085 outstanding
shares of common stock of the Company. Each share of common stock entitles the
holder to one vote on all matters presented at the Annual Meeting.
ELECTION OF DIRECTORS
At the Annual Meeting five nominees are to be elected, each director to hold
office until the next Annual Meeting of Stockholders or until his successor is
elected and qualifies. The persons named in the accompanying proxy have been
designated by the Board of Directors and, unless authority is withheld, they
intend to vote for the election of the nominees named below to the Board of
Directors. Each of the nominees has previously been elected by the
stockholders. If any nominee should become unavailable for election, the proxy
may be voted for a substitute nominee selected by the persons named in the
proxy, or the Board may be reduced accordingly; however, the Board of
Directors is not aware of any circumstances likely to render any nominee
unavailable.
NOMINEES
Certain information concerning the nominees for election as directors is set
forth below:
<TABLE>
<CAPTION>
PRINCIPAL POSITION
NAME WITH THE COMPANY AGE DIRECTOR SINCE
---- ------------------------- --- --------------
<S> <C> <C> <C>
Thomas N. Amonett.................. Director 52 1992
Charles E. Bradley, Sr./1/......... Director, President & CEO 66 1995
Thomas L. Cassidy/1/............... Director 67 1995
Franklin Myers..................... Director 43 1995/2/
John G. Poole...................... Director 53 1996
</TABLE>
- --------
/1/ Member, Compensation Committee and Audit Committee of the Board of
Directors.
/2/ Prior to his reappointment in October 1995, Mr. Myers was a Director of the
Company from July 1992 to June 1995.
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 also served as the President
of Reunion Energy Company, a wholly-owned subsidiary of the Company and then
an oil and gas operating company, from July 1, 1992 through January 1, 1996.
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. 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.
<PAGE>
CHARLES E. BRADLEY, SR. first 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
Group, Inc. ("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, Audits and Surveys, Inc., an international marketing research firm,
and Zydeco Exploration Inc., an oil and gas reserve development company. 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.
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 sought 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
alleged that 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.
While management of DBI continues to maintain that this complaint is without
merit, a tentative settlement of this suit was reached in March 1996 which
management of DBI has deemed to be in the best interests of DBI and its
shareholders. Under the terms of the settlement, which is contingent upon
court approval, among other things, the defendants would collectively pay a
total of $1,540,000 over approximately five months.
THOMAS L. CASSIDY first 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 Chatwins,
DBI, Holnam Inc., a cement manufacturing company, and Spartech Corporation, a
plastics manufacturing company.
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 the Company's 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, General Counsel and Secretary of Cooper Cameron Corporation, an oil
field manufacturing company. Prior thereto he was Senior 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 became a Director of the Company upon election at the Special
Meeting of the Stockholders of the Company held on April 19, 1996. Mr. Poole
was a co-founder of SPI with Charles E. Bradley, Sr. in 1982
2
<PAGE>
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 was a defendant in
the DBI class action suit described above in this section under the caption
"Charles E. Bradley, Sr.".
BOARD AND COMMITTEE ACTIVITY; STRUCTURE AND COMPENSATION
During 1995, the Board convened on nine regularly or specially scheduled
occasions. The Audit and Compensation Committees of the Board each held one
meeting in 1995. Each of the present directors attended all of the meetings of
the Board and of each committee on which he served during his respective
tenure in 1995.
The Company's operations are managed under the broad supervision and
direction of the Board of Directors, which has the ultimate responsibility for
the establishment and implementation of the Company's general operating
philosophy, objectives, goals and policies. Pursuant to delegated authority,
certain Board functions may be discharged by one or more standing committees
of the Board. The Compensation Committee, which was empaneled in October 1995
and is comprised of Mr. Bradley and Mr. Cassidy, is responsible for the
formulation and adoption of all executive compensation, benefit and insurance
programs, subject to full Board approval where legally required or in those
instances where the underlying benefit philosophy might be at variance with
preexisting Board policies. The Compensation Committee also supervises the
administration of all executive compensation and benefit programs, including
the establishment of any specific criteria against which all annual
performance based benefits are to be measured. The Audit Committee, also
empaneled in October 1995 and comprised of Messrs. Bradley and Cassidy,
assists the Board in assuring that the accounting and reporting practices of
the Company are in accordance with all applicable requirements. The Audit
Committee reviews with the auditors the scope of the proposed audit work and
meets with the auditors to discuss matters pertaining to the audit and any
other matter which the Committee or the auditors may wish to discuss. In
addition, the Audit Committee would recommend the appointment of new auditors
to the Board of Directors if future circumstances were to indicate that such
action is desirable. The Board of Directors does not maintain executive or
nominating committees. Stockholders who may wish to suggest individuals for
possible future consideration for board positions should direct
recommendations to the Board of Directors at the Company's principal offices.
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 1995 for
service in all board capacities aggregated $55,500.
VOTE REQUIRED AND VOTING PROCEDURE
The five nominees for election as directors at the 1996 Annual Meeting of
Stockholders who receive the greatest number of votes cast for election by the
holders of common stock of record at the close of business on May 13, 1996
(the "record date") shall be the duly elected directors upon completion of the
vote tabulation at the meeting, provided a majority of the outstanding shares
as of the record date are present in person or by proxy at the meeting.
Votes will be tabulated by Registrar and Transfer Company, the transfer
agent and registrar for the Company's common stock, and the results will be
certified by election inspectors who are required to resolve impartially any
interpretive questions as to the conduct of the vote. Under applicable
provisions of the Company's bylaws, any proxy containing an abstention from
voting will be sufficient to represent the shares at the meeting for purposes
of determining whether a quorum is present, but will count neither as a vote
for nor against any nominee with respect to whom the holder has abstained from
voting.
3
<PAGE>
Management of the Company believes that all of the shares of common stock to
be voted by directors, executive officers and Chatwins, aggregating 1,827,490
shares as of April 15, 1996, or approximately 47.4% of the issued and
outstanding common stock (see "Ownership Information--Security Ownership by
Certain Beneficial Owners and Management"), will be voted in favor of the
election of each of the director nominees. The Company knows of no family
relationships between any director, executive officer or nominee therefor and
any other director, executive officer or nominee therefor.
MANAGEMENT INFORMATION
EXECUTIVE OFFICER INFORMATION
The executive officers of the Company or its principal subsidiary, set forth
below, serve 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/..... Director, President and Chief Executive 66
Officer of the Company
Richard L. Evans/2/............ Executive Vice President, Chief Financial 43
Officer, and Secretary of the Company
David N. Harrington/3/......... President and Chief Operating Officer, ORC 54
</TABLE>
- --------
/1/See "Election of Directors--Nominees" for certain biographical information.
/2/Mr. Evans joined the Company as Executive Vice President and Chief
Financial Officer in October 1995. He was appointed Secretary of the
Company in December 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. Harrington has served as Chief Operating Officer of Oneida Molded
Plastics Corp. ("OMPC") (now a constituent of Oneida Rostone Corp. ("ORC"),
a wholly-owned subsidiary of the Company), since December 1989 and as its
President since October 1990. From March 1986 through December 1989, Mr.
Harrington served as Vice President and General Manager of OMPC.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for services to the
Company for the years ended December 31, 1995, 1994 and 1993, of those
individuals who were at December 31, 1995 (i) the chief executive officer and
(ii) the other Named Executives (see "Ownership Information--Security
Ownership by Certain Beneficial Owners and Management"):
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION 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>
Charles E. Bradley,
Sr./3/................. 1995 $ 0 $ 0 $13,500 0 $ 0
President and Chief
Executive Officer
Richard L. Evans/4/..... 1995 $ 33,750/4/ $ 0 $ 0 0 $ 693
Executive Vice
President, Chief
Financial Officer and
Secretary
David N. Harrington/5/.. 1995 $ 64,904/5/ $ 32,813 $15,543 $ 0 $ 672
President and Chief
Operating Officer, ORC
Thomas N. Amonett....... 1995 $173,000 $ 42,000 $ 6,000 12,000 $5,350
President and Chief
Executive 1994 $168,000 $100,800 $ 6,000 -- $3,022
Officer until 10/26/95 1993 $167,250 $ 20,000 $ 6,000 20,000 $1,906
W. Kyle Willis.......... 1995 $134,000 $ 32,500 $ 6,000 8,000 $8,929
Executive Vice
President, Treasurer
and 1994 $130,000 $ 65,000 $ 6,000 -- $2,862
Chief Financial Officer 1993 $128,750 $ 15,000 $ 6,000 14,000 $ 552
until 10/26/95
</TABLE>
- --------
/1/Includes automobile allowance, and, in the case of Mr. Harrington, certain
deferred compensation.
/2/Contributions under nondiscriminatory defined contribution plan and certain
health insurance plans of the Company and/or its subsidiaries. The Company
maintains a voluntary employee retirement plan under which employees of the
Company and its subsidiaries other than ORC 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.
/3/Mr. Bradley was appointed President and Chief Executive Officer of the
Company on October 26, 1995. His 1995 compensation consists solely of
director's fees. Effective January 1, 1996, Mr. Bradley's annual salary is
$100,000, and he will no longer receive director's fees. Mr. Bradley did
not render any services to the Company or its subsidiaries prior to 1995.
/4/Mr. Evans was appointed Executive Vice President and Chief Financial
Officer on October 26, 1995. Amounts listed in the table for Mr. Evans are
for his period of employment by the Company in 1995. His annual salary for
1995 was $135,000. Mr. Evans did not render services to the Company or its
subsidiaries prior to 1995.
/5/Mr. Harrington is an employee of Oneida Rostone Corp., the Company's
wholly-owned subsidiary, which was acquired by the Company on September 14,
1995. Amounts listed in the table for Mr. Harrington are for his period of
employment by the Company in 1995. His annual salary in 1995 was $225,000.
Mr. Harrington did not render services to the Company or its subsidiaries
prior to 1995.
5
<PAGE>
OPTION GRANTS
The following table sets forth information with respect to the options to
purchase shares of common stock granted under all stock option plans to the
Named Executives in the fiscal year ended December 31, 1995.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
PERCENT OF RATES OF STOCK
NUMBER OF TOTAL PRICE
SECURITIES OPTIONS/SARS EXERCISE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM
OPTIONS/ EMPLOYEES PRICE EXPIRATION ---------------
NAME SARS GRANTED IN FY ($/SHARE) DATE 5% ($) 10% ($)
---- ------------ ------------ -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Thomas N. Amonett....... 12,000 19% $5.00 1/12/99 $12,931 $27,846
W. Kyle Willis.......... 8,000 13% $5.00 1/12/99 $ 8,640 $18,564
</TABLE>
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth information with respect to the unexercised
options to purchase shares of common stock granted under all stock option
plans to the Named Executives and held by them at December 31, 1995.
AGGREGATED OPTION EXERCISES DURING 1995
AND OPTION VALUE AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1995 DECEMBER 31, 1995/1/
ACQUIRED VALUE ------------------------------- -------------------------------
ON EXERCISE REALIZED EXERCISABLE/2/ UNEXERCISABLE/2/ EXERCISABLE/2/ UNEXERCISABLE/2/
----------- -------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Thomas N. Amonett....... 0 $ 0 32,000 0 $ 0 $ 0
W. Kyle Willis.......... 46,500 $146,992/3/ 22,000 0 $ 0 $ 0
</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 NASDAQ Small-Cap. Market on
December 29, 1995 ($5.00) and subtracting the total exercise prices.
/2/These options, granted in December 1993 and January 1995, were originally
exercisable as follows: 50% after one year and 50% after the second year.
As a result of changes to the Board of Directors of the Company in 1995,
these options became immediately exercisable. However, all of these options
have since expired unexercised.
/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.
6
<PAGE>
ONEIDA PENSION PLAN
The Oneida Molded Plastics Corp. Employee Retirement Plan #3 (the "Oneida
Pension Plan") covers substantially all of the employees of the former Oneida
Molded Plastics Corp. (a constituent of ORC). The monthly amount payable at
age 65 is 1% of a participant's average monthly compensation for the five
highest consecutive years of compensation times years of service to a maximum
of 30 years.
The following table shows estimated annual gross benefits payable from the
Oneida Pension Plan as a single life annuity upon retirement at age 65 for
employees in the salary classifications and within three years of service
specified. Various optional forms of benefits are payable in lieu of a single
life annuity. The maximum annual benefit payable under the Oneida Pension Plan
is that permitted by applicable law or regulations.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------
REMUNERATION 15 20 25 30 35
------------ ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
125,000....... $18,750.00 $25,000.00 $31,250.00 $37,500.00 $37,500.00
150,000....... $22,500.00 $30,000.00 $37,500.00 $45,000.00 $45,000.00
175,000....... $26,250.00 $35,000.00 $43,750.00 $52,500.00 $52,500.00
200,000....... $30,000.00 $40,000.00 $50,000.00 $60,000.00 $60,000.00
225,000....... $33,750.00 $45,000.00 $56,250.00 $67,500.00 $67,500.00
250,000....... $37,500.00 $50,000.00 $62,500.00 $75,000.00 $75,000.00
300,000....... $45,000.00 $60,000.00 $75,000.00 $90,000.00 $90,000.00
400,000....... $60,000.00 $80,000.00 $100,000.00 $120,000.00 $120,000.00
450,000....... $67,500.00 $90,000.00 $112,500.00 $135,000.00 $135,000.00
500,000....... $75,000.00 $100,000.00 $125,000.00 $150,000.00 $150,000.00
</TABLE>
Mr. Harrington is eligible to participate in this plan. Mr. Harrington's
compensation for the period September 14, 1995 to December 30, 1995 (included
in the Executive Compensation table) covered by the Oneida Pension Plan is
$64,904 and the current number of years of employment for Mr. Harrington is
nine.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
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. Under the terms of these agreements if, prior to December 31, 1996,
more than 25% of the outstanding common stock of the Company is acquired by
any person other than Parkdale (a "Change-in-Control") and Mr. Amonett's or
Mr. Willis's employment is terminated for any reason within one year
thereafter, Mr. Amonett or Mr. Willis shall receive two years compensation and
benefits. The June 20, 1995 purchase by Chatwins of approximately 38% of the
Company's common stock from Parkdale constituted a Change-in-Control under
these agreements, and the termination of the employment of Mr. Amonett and Mr.
Willis as employees of the Company on January 1, 1996 triggered their rights
to compensation and benefits under their respective agreement. Mr. Willis has
been paid a lump sum of $268,000 in full satisfaction of the Company's
obligations to him under his agreement with the Company. In lieu of a lump sum
payment Mr. Amonett has elected to continue to be paid his compensation, an
aggregate of $346,000 over two years, through December 31, 1997 and will
continue to receive employee benefits during this period. Mr. Amonett may
elect to receive a lump sum payment of the balance due him by the Company at
any time before December 31, 1997.
ORC (then Oneida Molded Plastics Corp.), a wholly-owned subsidiary of the
Company, entered into an Employment Agreement (the "Harrington Employment
Agreement"), effective as of January 1, 1995, with David N. Harrington, its
President. Pursuant to the Harrington Employment Agreement, Mr. Harrington
receives (i) an annual base salary of $225,000 in 1995, increased to $240,000
in 1996 and $255,000 in 1997, (ii) an annual cash bonus of up to 50 percent of
his annual base salary based upon ORC's actual performance for the year as
7
<PAGE>
compared to ORC's budgeted performance for the year, (iii) a monthly car
allowance of $1000 and (iv) coverage under ORC's fringe benefit plans for
executives. Mr. Harrington's annual base salary was increased to $240,000 on
January 1, 1996. In certain circumstances, Mr. Harrington is entitled to
receive up to 24 months of his base salary upon termination of his employment.
During the term of the Harrington Employment Agreement, Mr. Harrington is
required to maintain a reverse split-dollar universal life insurance policy on
his life in the amount of $2 million payable to ORC. ORC is required to
reimburse Mr. Harrington for up to $26,244 of the annual premiums paid for
such policy. If Mr. Harrington's employment is terminated for any reason other
than death, he may request that ORC assign its right to receive the proceeds
of such life insurance policy to Mr. Harrington. Effective January 1, 1995 Mr.
Harrington is eligible to earn deferred compensation at the rate of $3,333.33
per month.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for 1995:
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 executives is intended to be competitive with
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 molded plastics industry for similar
executive positions, no comparability studies were conducted for executive
salaries to be paid in 1995.
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
executives 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. The
$32,813 bonus (pro rated from September 14, 1995) award from the Company's ORC
subsidiary to Mr. Harrington in 1995 was based upon his attainment of specific
earnings objectives as set forth in his employment agreement.
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. 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.
Pursuant to applicable rules of the Securities and Exchange Commission, as
of April 15, 1996 members of the compensation committee are deemed to own
beneficially an aggregate of 1,867,490 shares, or 47.5%, of the Company's
outstanding common stock. See "Ownership Information--Security Ownership of
Certain Beneficial Owners and Management".
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
See "Election of Directors--Charles E. Bradley, Sr." "Ownership
Information--Security Ownership of Certain Beneficial Owners and Management",
and "Certain Relationships and Related Transactions--Chatwins Group, Inc. and
Affiliates" for a discussion of Mr. Bradley's relationship to Chatwins, the
Chatwins Acquisition, and Mr. Bradley's and Chatwins' relationship to the
Company.
See "Election of Directors--Thomas L. Cassidy", "Ownership Information--
Security Ownership of Certain Beneficial Owners and Management", and "Certain
Relationships and Related Transactions--Chatwins Group, Inc. and Affiliates"
for a discussion of Mr. Cassidy's relationship to Chatwins, the Chatwins
Acquisition, and Mr. Cassidy's and Chatwins' relationship to the Company.
THE COMPENSATION COMMITTEE
Charles E. Bradley, Chairman
Thomas L. Cassidy
9
<PAGE>
OWNERSHIP INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of April 15, 1996, the Company had outstanding 3,855,085 shares of common
stock. The following table sets forth information regarding the beneficial
ownership of the Company's common stock at April 15, 1996, by (i) each
stockholder known to the Company to own 5% or more of the Company's common
stock, (ii) each Director of the Company or nominee therefor, (iii) each of
the chief executive officer and the other executive officers who were
compensated at an annualized rate of more than $100,000 in 1995 (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 the Company's common stock shown as owned by him.
<TABLE>
<CAPTION>
AMOUNT AND
NAME (AND ADDRESS OF 5% NATURE PERCENT
BENEFICIAL OWNERS) OF OWNERSHIP OF CLASS
- ----------------------- ------------ --------
<S> <C> <C>
Chatwins Group, Inc.
300 Weyman Plaza, Suite
340
Pittsburgh, PA 15236.... 1,862,490/1/ 47.4%
Parkdale Holdings
Corporation N.V.
Nieuwestraat 4-6, P.O.
Box 210
Curacao, Netherlands
Antilles............... 271,280/2/ 7.0%
Thomas N. Amonett/6/..... 34,000 0.9%
Charles E. Bradley, Sr... 1,862,490/3/ 47.4%
Thomas L. Cassidy........ 5,000 0.1%
John G. Poole............ 0 0.0%
Franklin Myers........... 141,210/4/ 3.6%
Richard L. Evans......... 1,000 0.0%
David N. Harrington...... 0 0.0%
W. Kyle Willis/6/........ 25,000 0.6%
All Current Directors and
Executive Officers as a
group................... 1,977,490/5/ 49.4%
</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 all shares of 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, under Rule 13d-3, be deemed beneficial owner of all
shares of the Company's common stock beneficially owned by Chatwins. Mr.
Bradley disclaims such beneficial ownership.
/4/Includes a currently exercisable warrant to purchase 75,000 shares of
common stock. Mr. Myers has granted Chatwins a three year proxy to vote
66,210 shares.
/5/Includes currently exercisable warrants to purchase an aggregate of 150,000
shares of common stock.
/6/Mr. Amonett's and Mr. Willis' respective tenures as executive officers of
the Company and/or its subsidiaries terminated on January 1, 1996. Mr.
Amonett remains a Director of the Company.
OWNERSHIP REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered
class of the Company's equity securities, to file reports of beneficial
ownership and changes in beneficial ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission and the Pacific Stock Exchange. Based
solely on the Company's review of the copies of such forms it has received and
written representations from certain reporting persons that they were not
required to file reports on Form 5 for specified fiscal years, the Company
believes that all its officers, directors, and greater than 10% beneficial
owners complied with all filing requirements applicable to them with respect
to transactions during 1995.
10
<PAGE>
OTHER INFORMATION
COMMON STOCK PERFORMANCE GRAPH
The following graph illustrates the yearly percentage change in the
cumulative total shareholder return on the Company's 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 (the "Industry Index") for the
five years ended December 31, 1995:/1/
FIVE YEAR TOTAL RETURN
[PASTE UP CHART]
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1990 1991 1992 1993 1994 1995
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Reunion Industries, Inc................. 100 95 175 480 400 400
Dow Jones Secondary Oils Index/2/....... 100 93.65 95.88 109.34 104.70 121.03
S&P 500 (Dividends Reinvested)/3/....... 100 130.48 140.46 154.62 156.66 215.54
</TABLE>
- --------
/1/Tabular data assumes that the value of the investment in the Company's
common stock and each index was $100 at January 1, 1991 and that all
dividends, if any, were reinvested.
/2/Dow Jones Total Return Index for Secondary Oils prepared by Dow Jones &
Company, Inc. Through November 1995, the Company was engaged in the
business of exploring for, developing, producing and selling crude oil and
natural gas in the United States. These operations have since been
discontinued by the Company, and the Company is now principally engaged in
manufacturing high volume, precision plastic products and providing
plastics services. Despite this change in principal business in late 1995,
the Company has determined that the comparative value of the performance
graph to stockholders would be best served by retaining the Secondary Oils
industry index for fiscal year 1995.
/3/Standard & Poor's 500 Total Return Index provided by Media General
Financial Services, Inc.
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Chatwins Group, Inc. and Affiliates
On June 20, 1995, Chatwins acquired 1,450,000 shares, or approximately 38%,
of the Company's common stock ("the Purchased Shares") from Parkdale (the
"Chatwins Acquisition"). In connection with the Chatwins Acquisition, the
271,280 remaining shares of the Company's common stock owned by Parkdale as
well as 66,210 shares of common stock (the "Myers Shares") and a warrant to
purchase 75,000 shares of 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 proxies to vote all of their respectively-owned shares of common stock
(the "Chatwins Proxies"). At the time of the Chatwins Acquisition, Chatwins
acquired from P. Dean Gesterkamp a warrant to purchase 75,000 shares of the
Company's common stock (the "Chatwins Warrant").
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
Director of the Company since April 19, 1996, are both Directors of Chatwins.
As a result of the Chatwins Acquisition and related transactions Chatwins has
voting control over approximately 45% of the Company's 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 Chatwins Warrant. The Chatwins
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, 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 Chatwins 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
Chatwins 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 common stock of the Company.
Because the Chatwins Warrant is security for the note Chatwins issued to Mr.
Gesterkamp when it purchased the warrant, extension of the Chatwins Warrant
was necessary to Mr. Gesterkamp's agreement to sell, rather than exercise,
this warrant. Thus, the Company believes that extending the Chatwins 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.
("CHI"), a Delaware corporation and wholly-owned subsidiary of Chatwins, all
of the issued and outstanding common stock and preferred stock of Oneida (the
"Oneida Acquisition"). The aggregate purchase price for the shares totaled
$3,107,484, which was funded entirely from internal cash reserves of the
Company. Oneida's liabilities at the time of acquisition included $4,932,940
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/Chatwins Debt") plus interest thereon at 10% per annum
from September 1, 1995 on or before September 14, 1997, or earlier from the
net proceeds, if any, of the sale of the Company's other material assets. The
Oneida/Chatwins Debt was subsequently memorialized by a Subordinated
Promissory Note issued by Oneida to Chatwins. Interest on this note is payable
monthly. 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.
12
<PAGE>
On February 2, 1996, Rostone Corporation ("Rostone"), a Delaware
corporation, was merged with and into Oneida, a wholly-owned subsidiary of the
Company (the "Rostone/Oneida Merger"), pursuant to a Merger Agreement (the
"Rostone/Oneida Agreement") dated as of December 22, 1995. Pursuant to the
Rostone/Oneida Agreement Oneida, as the surviving corporation, changed its
name to Oneida Rostone Corp. ("ORC"). The purchase price payable by ORC under
the Rostone/Oneida Agreement to the stockholders of Rostone is an amount up to
$4,000,503 as follows: (i) $503 in 1996, (ii) up to $2,000,000 in 1997 if
Rostone achieves specified levels of earnings before interest and taxes (as
provided in the Rostone/Oneida Agreement) for the calendar year 1996 and (iii)
up to $2,000,000 in 1998 if Rostone achieves specified levels of earnings
before interest and taxes (as provided in the Rostone/Oneida Agreement) for
the calendar year 1997. Under the terms of ORC's Loan Facility (described
below), all such payments may only be made from equity contributions the
Company may provide to ORC. The financial terms of the transaction were
determined based on Rostone's financial position and results of operations for
the fiscal year ended December 31, 1994 and for the eleven months ended
November 30, 1995. The terms of the Rostone/Oneida Merger were approved by the
unanimous vote of the directors of the Company, including by all disinterested
directors.
In connection with the Oneida Acquisition and the Rostone/Oneida Merger, the
Company hired Prudential Securities Incorporated ("Prudential") to act as its
financial advisor and to provide opinions as to the fairness of the
consideration paid by the Company in connection with each of the Oneida
Acquisition (the "Oneida Consideration") and the Rostone/Oneida Merger (the
"Rostone Merger Consideration"). Prudential has issued its opinions, dated
September 7, 1995 and January 15, 1996, respectively, that, as of such dates,
the Oneida Consideration and the Rostone Merger Consideration paid by the
Company were fair to the Company from a financial point of view. In the case
of the Oneida Consideration, Prudential based its opinion of fairness on,
among other factors, its review of (i) certain of Oneida's historical
financial data and certain internal financial statements and other financial
and operating data of Oneida prepared by the management of Oneida, (ii)
Oneida's projections as to future financial performance, (iii) industry data
relating to Oneida's business, (iv) the financial terms of the Purchase
Agreement relating to the Oneida Acquisition (the "Oneida Agreement") as
compared to the financial terms of certain other transactions deemed relevant
by Prudential, (v) publicly available information concerning certain other
companies deemed comparable to Oneida by Prudential and the trading history of
the stock of each such company, (vi) the Oneida Agreement and certain related
documents, and (vii) such other factors as Prudential deemed relevant to its
opinion. In the case of the Rostone Merger Consideration, Prudential based its
opinion of fairness on, among other factors, its review of (i) Rostone's
historical financial data and other information regarding Rostone prepared by
Rostone's and the Company's management, (ii) financial projections prepared by
Rostone's and the Company's management, relating to the sales, earning and
prospects for Rostone's business, (iii) the financial terms of a draft of the
Rostone/Oneida Agreement dated January 3, 1996, (iv) the financial terms of
certain other transactions deemed relevant by Prudential, (v) publicly
available information concerning certain other companies that Prudential
deemed comparable to Rostone, and the trading history of the common stock of
each such company, and (vi) discussions with senior officers of Rostone and
the Company concerning the financial condition and prospects for Rostone. The
Oneida Consideration and the Rostone Merger Consideration were initially
determined by the respective parties to those transactions, with Prudential
thereafter rendering its opinion as to the fairness thereof from a financial
point of view. No instructions or limitations were given to or imposed upon
the scope of Prudential's investigation related to the opinions. In rendering
its opinions, Prudential relied without independent verification upon the
accuracy and completeness of the financial and other information publicly
available and provided to it by the Company, by Oneida, and by Rostone, and
did not make or obtain any independent appraisals of the properties,
facilities or other assets of Oneida or Rostone.
Prudential is a nationally-recognized investment banking firm. As part of
its investment banking business, it is engaged in the valuation of businesses
and their securities in connection with mergers and acquisitions, negotiated
and competitively bid underwritings, secondary distributions of listed and
unlisted securities, and private placements and valuations for estate,
corporate and other purposes. Prudential also acts as financial advisor in
connection with tender offers and mergers and acquisitions, and conducts
trading in listed and unlisted securities. Prudential was selected by the
management of the Company on the basis of its reputation and
13
<PAGE>
experience. In the ordinary course of business Prudential may trade the common
stock of the Company for its own account and for the accounts of customers,
and accordingly at any time may hold a long or short position in the common
stock of the Company, and certain accounts of Prudential's customers hold
common stock of the Company.
For its services in rendering its opinions, the Company has paid
Prudential's fees totalling $300,000 and has reimbursed Prudential for $52,185
aggregate expenses incurred in rendering its opinions. The Company has agreed
to indemnify Prudential against certain liabilities which Prudential may incur
arising out of its issuance of the opinions. The complete texts of
Prudential's opinions are available for inspection and copying at the
principal executive offices of the Company during its regular business hours
by any interested equity holder of the Company or his representative who has
been so designated in writing.
Contemporaneous with the Rostone acquisition, ORC and its wholly-owned
subsidiary, Oneida Molded Plastics Corp. of North Carolina ("OMPC-NC"),
amended and restated the terms of their secured credit facility (the "Loan
Facility") with Congress Financial Corporation ("Congress") to provide for
term loans in an aggregate principal amount of $6,600,000 and revolving loans
initially in an aggregate principal amount of up to $9,400,000. The loan
proceeds borrowed on February 2, 1996 were primarily used to refinance
Rostone's bank and institutional debt.
In the Rostone/Oneida Merger, ORC acquired 100% of the preferred and common
stock of Rostone from CGI Investment Corp. ("CGII") a company owned 51% by SPI
and 49% by Chatwins. Charles E. Bradley, Sr., a Director and President and
Chief Executive Officer of the Company, John G. Poole, a Director of the
Company, and Richard L. Evans, Executive Vice President, Chief Financial
Officer and Secretary of the Company, are officers, directors and/or
shareholders of SPI. Prior to the Rostone/Oneida Merger certain officers of
Oneida were also serving as officers of Rostone and CGII.
Prior to the Rostone/Oneida Merger, Rostone was indebted to CGII pursuant to
a $250,000 promissory note dated May 21, 1993. The note, which had an
outstanding balance of $367,742 (principal and accrued interest) on February
2, 1996 and continues as an obligation of ORC, is subordinated to the prior
payment of indebtedness owing by ORC to Congress, except that if certain
conditions are met, regularly scheduled monthly interest payments may be paid
when due.
As of February 2, 1996 the outstanding balance of the Oneida/Chatwins Debt
was $3,553,952 (principal and accrued interest), which continues as an
obligation of ORC and is subordinated to the prior payment of indebtedness
owing by ORC to Congress, except that if certain conditions are met, regularly
scheduled monthly interest payments may be paid when due and principal may be
paid out of equity or subordinated loans that may be advanced by the Company
to ORC.
Prior to the Rostone/Oneida Merger, Rostone was the lessee of certain
equipment beneficially owned by Chatwins and Mr. Bradley. Chatwins and Mr.
Bradley share the risks and benefits under the lease pro rata in proportion to
the purchase price of the equipment paid to the equipment manufacturer by each
(57% for Chatwins and 43% for Mr. Bradley). At any time during the lease term
Rostone (ORC) may purchase the equipment upon the payment of the amount which,
when combined with its prior lease payments, will return to Chatwins and Mr.
Bradley the amounts paid by each of them to the manufacturer plus interest
thereon at 13.5% per annum, compounded monthly from the date of each co-
venturer's payment to the equipment manufacturer. Chatwins and Mr. Bradley's
rights to payment under the lease are subordinated to the prior payment of
indebtedness owing by ORC to Congress, except that if certain conditions are
met, regularly scheduled monthly lease payments may be made when due and the
amount due on exercise of ORC's purchase option may be paid out of the
proceeds of purchase money financing provided by a non-affiliate of ORC and
permitted under the terms of the Loan Facility.
On November 1, 1995 and November 2, 1995, respectively, Mr. Bradley made
loans of $850,000 and $500,000 to the Company, which the Company then used as
part of a $1,550,000 loan it advanced to Oneida evidenced by a 10% promissory
note of Oneida payable November 2, 1997. Oneida used these funds to repay a
14
<PAGE>
portion of the Oneida/Chatwins Debt. The Company issued two notes to Mr.
Bradley for the $1,350,000 he advanced, each bearing interest at a rate of 10%
per annum and each due and payable on September 14, 1997. According to the
terms of these notes, should the Company sell any of its material assets it
will prepay the notes in an amount equal to the proceeds of such sale which
remain (if any) after the Company loans to ORC a portion of the net proceeds
of such sale in an amount sufficient to permit ORC to repay the
Oneida/Chatwins Debt. The Company's rights to payment under the $1,550,000
note issued by ORC are subordinated to the prior payment of indebtedness owing
by ORC to Congress, except that if certain conditions are met, regularly
scheduled monthly interest payments may be paid when due.
To facilitate the closing of the Rostone/Oneida Merger and the Loan
Facility, Mr. Bradley entered into several financial arrangements with
Congress and an existing creditor of Rostone. To induce Congress to consummate
the Loan Facility, Mr. Bradley guaranteed the obligations of ORC and OMPC-NC
under the Loan Facility subject to a cap of $4 million, which cap declines
over time to $2 million. Mr. Bradley will receive a credit support fee from
ORC and OMPC-NC in an aggregate amount equal to one percent (1%) per annum of
the amount guaranteed, payable monthly. Mr. Bradley's rights to payment of the
monthly installments of the credit support fee are subordinated to the prior
payment of indebtedness owing by ORC to Congress, except that if certain
conditions are met, the monthly installments may be paid when due. As a
further inducement to Congress, Mr. Bradley entered into an environmental
indemnity agreement pursuant to which Mr. Bradley agreed to indemnify Congress
against liabilities that may arise from environmental problems that may be
associated with ORC's existing properties and to reimburse Congress for
certain investigatory and cleanup costs that Congress may incur should
Congress request that those activities be performed by ORC and should ORC fail
to perform them.
To induce an existing creditor of Rostone to permit the Rostone/Oneida
Merger and Loan Facility to be consummated, Mr. Bradley agreed to purchase
from this creditor 50% of the $2,034,225 owing to him by Rostone on February
2, 1996 if this indebtedness were restated to provide for quarterly
amortization over a two year period with interest at 10% per annum payable
quarterly subject, however, to a subordination agreement with Congress. As a
result of this transaction, Mr. Bradley and the creditor each holds a note
from ORC in the amount of $1,017,112.50 bearing interest at 10% per annum
which is subordinated to the prior payment of indebtedness owing by ORC to
Congress, except that if certain conditions are met, regularly scheduled
payments of interest may be paid when due.
Effective April 1, 1996, the Company subleased from SPI approximately 1,500
square feet of office space in Stamford, Connecticut for its corporate
offices. Charles E. Bradley, Sr., a Director and President and Chief Executive
Officer of the Company, John G. Poole, a Director of the Company, and Richard
L. Evans, Executive Vice President, Chief Financial Officer and Secretary of
the Company, are officers, directors and/or shareholders of SPI. The terms of
this sublease are at least as favorable to the Company as would be the case in
an arm's length transaction.
Following the third anniversary of the Chatwins Acquisition, Chatwins may
propose the merger of itself with and into the Company. Any transaction that
Chatwins may propose in which it has an interest separate from that of the
Company will be subject to approval by the Boards of Directors of the Company
and of 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
15
<PAGE>
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 Company's common stock at a purchase
price of $1.56 per share, the average market price for the 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 currently-owned 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.
AUDITORS
On October 26, 1995, the Company's Board of Directors engaged Price
Waterhouse LLP ("PW") as principal accountant to audit the Company's
consolidated financial statements for the year ending December 31, 1995. PW
has been the independent accountant for Oneida, which was acquired by the
Company on September 14, 1995, since 1988. Because Oneida was expected to
represent more than 50% of the revenues for 1995 and a significant percentage
of the Company's assets at year end, the Board concluded that it should engage
PW as principal accountant for the Company.
Arthur Anderson LLP ("AA"), which had served as the Company's principal
accountant since 1992, was not reappointed by the Company's Board of Directors
as principal accountant but continues to serve as independent accountants for
the Company's discontinued oil and gas operations.
The audit reports of AA on the Company's financial statements for 1994 and
1993 did not contain an adverse opinion, nor were such reports qualified or
modified as to uncertainty, audit scope or accounting principles. During the
Company's two most recent fiscal years and subsequent interim periods
preceding the replacement of AA, the Company had no disagreements with AA on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure. During the Company's two most
recent fiscal years and subsequent interim periods preceding the retention of
PW, neither the Company nor anyone on the Company's behalf consulted PW
regarding any matter.
While management anticipates that PW will continue to act as the Company's
principal accountant during 1996 and subsequent years, no formal action is
proposed to be taken at the Annual Meeting with respect to the employment of
PW inasmuch as no such action is legally required. Representatives of PW plan
to attend the Annual Meeting and will be available to answer appropriate
questions. Its representatives also will have an opportunity to make a
statement at the meeting if they so desire, although it is not expected that
any statement will be made.
LIMITATION ON INCORPORATION BY REFERENCE
Notwithstanding any reference in prior or future filings of the Company with
the Securities and Exchange Commission which purports to incorporate this
proxy statement by reference into another filing, such incorporation shall not
include any material included herein under the captions "Management
Information-- Compensation Committee Report" or "Other Information--Common
Stock Performance Graph".
16
<PAGE>
OTHER MATTERS
The Annual Report to Stockholders covering the year ended December 31, 1995
has been mailed with this Proxy Statement to each stockholder entitled to vote
at the Annual Meeting.
Any stockholder who wishes to submit a proposal for action to be included in
the Proxy Statement and form of Proxy relating to the Company's 1997 Annual
Meeting of Stockholders is required to submit such proposals to the Company on
or before January 10, 1997.
The cost of soliciting proxies in the accompanying form will be borne by the
Company.
The persons designated as proxies to vote shares at the meeting intend to
exercise their judgment in voting such shares on other matters that may
properly come before the meeting. Management does not expect that any matters
other than those referred to in this proxy statement will be presented for
action at the meeting.
By Order of the Board of Directors
[PASTE UP SIG]
RICHARD L. EVANS
Secretary
May 17, 1996
17
<PAGE>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
REVOCABLE PROXY
REUNION INDUSTRIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 20, 1996
The undersigned stockholder of Reunion Industries, Inc. (the "Company") hereby
appoints Charles E. Bradley, Sr., Thomas L. Cassidy, or Franklin Myers, or any
of them, attorneys and proxies of the undersigned, each with full power of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Stockholders of the Company to be held at the Sheraton Stamford Hotel, One First
Stamford Place, Stamford, Connecticut, on Thursday, June 20, 1996, at 10:00
a.m., local time, and at any adjournments thereof, all of the shares of common
stock in the name of the undersigned or which the undersigned may be entitled to
vote:
1. The election as directors (except as indicated below) of all nominees.
[ ] FOR
[ ] WITHHOLD
[ ] FOR ALL EXCEPT
THOMAS N. AMONETT, FRANKLIN MYERS, JOHN G. POOLE, THOMAS L. CASSIDY, CHARLES E.
BRADLEY, SR.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE
BOX "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
- -------------------------------------------------------------------------------
2. In their discretion, upon such other matters as may properly come before the
meeting; hereby revoking any proxy or proxies heretofore given by the
undersigned.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
PLEASE CHECK BOX IF YOU PLAN TO ATTEND ANNUAL MEETING: [ ]
The Board of Directors recommends a vote FOR the nominees named above; if no
specification is made, the shares will be voted for such nominees.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished herewith.
Signature should agree with name printed hereon. If Stock is held in the name
of more than one person, EACH joint owner should sign. Executors,
administrators, trustees, guardians and attorneys should indicate the capacity
in which they sign. Attorneys should submit powers of attorney.
Please be sure to sign and date this Proxy in the box below.
Date
---------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
Stockholder sign above Co-holder (if any) sign above
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
REUNION INDUSTRIES, INC.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
