SCHEDULE 14A INFORMATION
         Proxy Statement Pursuant to Section 14(a) of the Securities
                             Exchange Act of 1934

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[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

                           Reunion Industries, Inc.
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               (Name of Registrant as Specified In Its Charter)

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   (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Notes:



                           REUNION INDUSTRIES, INC.
                        11 Stanwix Street - Suite 1400
                       Pittsburgh, Pennsylvania  15222


                   NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

                   To be Held Wednesday, December 15, 2004
                        

     Notice is hereby given that the Annual Meeting of the Stockholders of 
Reunion Industries, Inc., a Delaware corporation ("Reunion Industries", 
"Reunion" or "the Company"), will be held at Reunion Industries' offices, 11 
Stanwix Street, Pittsburgh, Pennsylvania 15222 on Wednesday, December 15, 
2004, at 10:00 A.M. local time, for the following purposes:

1.  To elect a board of seven directors to serve until the next Annual 
    Meeting of stockholders or until their successors are elected; 

2.  To amend the Certificate of Incorporation to increase by 10 million 
    the number of common shares authorized and eliminate preferred shares;

3.  To adopt the 2004 Stock Option Plan; and

4.  To consider and act upon such other business as may properly be
    presented to the meeting.

     Your Board of Directors recommends that you vote for all director 
nominees and all proposals.  The Board is not aware of any other proposals for 
the December 15, 2004 meeting.

     A record of stockholders has been taken as of the close of business on 
November 3, 2004, 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 envelope which has 
been provided for your convenience.


                                    By Order of the Board of Directors


                                    /s/ John M. Froehlich
                                    ----------------------------------
                                        John M. Froehlich
                                        Secretary


_______, 2004


                          REUNION INDUSTRIES, INC.
                              PROXY STATEMENT
General

     This proxy statement is being mailed to stockholders commencing on or 
about _______, 2004 in connection with the solicitation by the board of 
directors of Reunion Industries, Inc., a Delaware corporation  ("Reunion 
Industries", "Reunion" or the "Company"), of proxies to be voted at the Annual 
Meeting of Stockholders to be held at Reunion Industries' offices, 11 Stanwix 
Street, Pittsburgh, Pennsylvania 15222 on Wednesday, December 15, 2004, 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.

     Reunion Industries will pay the costs of soliciting proxies pursuant to 
this Proxy Statement.  Reunion Industries will also reimburse brokerage firms 
and other custodians, nominees, and fiduciaries for their reasonable out-of-
pocket expenses for sending management's proxy materials to stockholders and 
obtaining their proxies.

     As of November 3, 2004, the record date for the determination of 
stockholders entitled to vote at the annual meeting, there were 16,278,579 
outstanding shares of common stock of Reunion Industries.  Each share of 
common stock entitles the holder to one vote on all matters presented at the 
annual meeting.

Voting Procedures 

     As a stockholder of Reunion, you have a right to vote on certain business 
matters affecting Reunion. The proposals that will be presented at the meeting 
and upon which you are being asked to vote are discussed below under the 
section entitled "Proposals." Each share of Reunion's common stock you own 
entitles you to one vote on each proposal. 


Methods of Voting 

     You may vote by mail or in person at the meeting. 

     Voting by Mail.    By signing and returning the proxy card in the 
enclosed prepaid and addressed envelope, you are authorizing the individuals 
named on the proxy card (known as "proxies") to vote your shares at the 
meeting in the manner you indicate. We encourage you to sign and return the 
proxy card even if you plan to attend the meeting. In this way, your shares 
will be voted if you are unable to attend the meeting. If you received more 
than one proxy card, it is an indication that your shares are held in multiple 
accounts. Please sign and return all proxy cards to ensure that all of your 
shares are voted. 
 
     Voting in Person at the Meeting.    If you plan to attend the meeting and 
vote in person, we will provide you with a ballot at the meeting. If your 
shares are registered directly in your name, you are considered the 
stockholder of record and you have the right to vote in person at the meeting. 
If your shares are held in the name of your broker or other nominee, you are 
considered the beneficial owner of shares held in street name. As a beneficial 
owner, if you wish to vote at the meeting, you will need to bring with you to 
the meeting a legal proxy from your broker or other nominee authorizing you to 
vote such shares. 
 
                                    - 1 -



     Your shares will be voted in accordance with the instructions you 
provide. If you sign and return your proxy card without providing your voting 
instructions, your shares will be voted "for" the seven named nominees for 
directors, "for" the proposal to amend the Certificate of Incorporation to 
increase the number of common shares authorized and eliminate the preferred 
shares and "for" the proposal to adopt the 2004 Stock Option Plan, and in the 
discretion of the proxies as to other matters that may properly come before 
the meeting. 


Revoking Your Proxy 

     You may revoke your proxy at any time before it is voted at the meeting. 
To do this, you must:

- enter a new vote by signing, dating and returning another proxy card at a 
later date;

- provide written notice of the revocation to Reunion's Secretary; 

- or attend the meeting and vote in person.
 

Quorum Requirement 

     A quorum, which is a majority of the outstanding shares entitled to vote 
as of the record date, November 3, 2004, must be present in order to hold the 
meeting and to conduct business. Shares are counted as being present at the 
meeting if you appear in person at the meeting or if you vote your shares by 
submitting a properly executed proxy card. Both abstentions and broker non-
votes are counted as present for the purpose of determining a quorum. 


Votes Required for the Proposals 

     The votes required and the method of calculation for the proposals to be 
considered at the meeting are as follows: 

     PROPOSAL 1 - ELECTION OF DIRECTORS.  The seven nominees receiving the 
highest number of votes, in person or by proxy, will be elected as directors. 
You may vote "for" the nominees for election as directors or you may 
"withhold" your vote with respect to one or more nominees. There is no 
cumulative voting with respect to the election of directors. If you return a 
proxy card that withholds your vote from the election of all directors, your 
shares will be counted as present for the purpose of determining a quorum but 
will not be counted in the vote on the proposal. 

     PROPOSAL 2 - AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE BY 10 
MILLION THE NUMBER OF COMMON SHARES AUTHORIZED AND ELIMINATE THE PREFERRED 
SHARES.  Approval requires the affirmative vote of a majority of the 
outstanding shares entitled to vote at the meeting. You may vote "for," 
"against," or "abstain" from the proposal to approve the increase in 
authorized common shares and the elimination of the preferred shares. 

     PROPOSAL 3 - ADOPTION OF THE 2004 STOCK OPTION PLAN.  Approval requires 
the affirmative vote of a majority of the shares present in person or by proxy 
and entitled to vote on the proposal at the meeting.  You may vote "for," 
"against," or "abstain" from the proposal to approve the adoption of the 2004 
Stock option Plan. 

                                    - 2 -



Broker Non-Votes 

     For the proposal to elect seven directors, if your shares are held in 
street name and you do not instruct your broker on how to vote your shares, 
your brokerage firm may either leave your shares unvoted or vote your shares 
on this matter. To the extent your brokerage firm votes your shares on your 
behalf on this proposal, your shares will be counted as present for the 
purpose of determining a quorum. 

     For the proposals to approve the increase the authorized common shares 
and eliminate the preferred shares and to adopt the 2004 Stock Option Plan, if 
your shares are held in street name and you do not instruct your broker on how 
to vote your shares, your brokerage firm will not have the authority to vote 
your shares, and your shares will constitute "broker non-votes." Shares 
represented by "broker non-votes" will not be considered as present and 
entitled to vote on this proposal but will be counted as present for the 
purpose of determining a quorum. 


Voting Confidentiality 

     Proxies, ballots and voting tabulations are handled on a confidential 
basis to protect your voting privacy. This information will not be disclosed 
except as required by law. 


Voting Results 

     Votes will be tabulated by Registrar and Transfer Company, the transfer 
agent and registrar for Reunion Industries' common stock, and the results will 
be certified by an election inspector who is required to resolve impartially 
any interpretive questions as to the conduct of the vote.  Results will be 
published in Reunion's Annual Report on Form 10-K for the period ended 
December 31, 2004.  You also may request the voting results by written request 
to Reunion's Secretary. 


                      PROPOSAL 1.  ELECTION OF DIRECTORS

     At the annual meeting, the stockholders of Reunion Industries will be 
asked to vote for the election of seven directors to its board of directors.  
The candidates proposed for election at the annual meeting are Thomas N. 
Amonett, Charles E. Bradley, Sr., Kimball J. Bradley, Thomas L. Cassidy, David 
E. Jackson, Joseph C. Lawyer, and John G. Poole.  If elected, the proposed 
candidates would comprise the entire board of directors of Reunion Industries, 
and would hold office until their successors are duly elected and qualified at 
the next annual meeting of stockholders of Reunion Industries or until they 
earlier die, resign or are removed from office in accordance with the 
Company's By-Laws and applicable law.


Nominees

     All persons nominated for election at the annual meeting currently are 
directors of Reunion Industries and have previously been elected by the 
stockholders.  Mr. Charles E. Bradley, Sr. is the father of Mr. Kimball J. 
Bradley. Reunion Industries knows of no other family relationships between any 
director, executive officer or nominee and any other director, executive 
officer or nominee.  There are no arrangements or understandings between any 
nominee for director and any other person pursuant to which such person was 
selected as a nominee.

                                    - 3 -



                         Principal Position with
Name                     Reunion Industries, Inc.    Age  Director Since
-----------------------  --------------------------  ---  --------------
Thomas N. Amonett(1)(2)  Director                     61       1992
Charles E. Bradley, Sr.  Director, Chairman & CEO     75       1995
Kimball J. Bradley       Director, President & COO    39       2000
Thomas L. Cassidy(1)(2)  Director                     75       1995
David E. Jackson(1)(2)   Director                     45       2003
Joseph C. Lawyer         Director and Vice Chairman   59       2000
John G. Poole            Director                     61       1996

(1) Member, Compensation Committee of the Board of Directors
(2) Member, Audit Committee of the Board of Directors

     THOMAS N. AMONETT has served as a director of Reunion Industries since 
July 1, 1992 and served as its President and Chief Executive Officer from 
July 1, 1992 until October 26, 1995.  He also served as the President of 
Reunion Energy Company, then a wholly-owned subsidiary of Reunion Industries 
in the oil and gas operating business, from July 1, 1992 until May 24, 1996.  
Mr. Amonett is President and Chief Executive Officer of Champion Technologies, 
Inc., a manufacturer and distributor of specialty chemicals and related 
services, primarily to the oil and gas industry.  From November 1998 to 
June 1999, he was President, Chief Executive Officer and a director of 
American Residential Services, Inc., a company providing equipment and 
services relating to residential heating, ventilating, air conditioning, 
plumbing, electrical and indoor air quality systems and appliances.  From July 
1996 until June 1997, Mr. Amonett was Interim President and Chief Executive 
Officer of Weatherford Enterra, Inc., an energy services and manufacturing 
company.  Mr. Amonett serves as a director of Petro Corp. Incorporated, a 
Houston-based oil and gas company, and Stelmar Shipping Ltd., an international 
provider of petroleum product and crude oil transportation services.

     CHARLES E. BRADLEY, SR. became a director of Reunion Industries on 
June 20, 1995 and was appointed President and Chief Executive Officer of 
Reunion Industries on October 26, 1995.  He became Chairman effective March 
16, 2000.  Mr. Bradley, Sr. was a co-founder of Stanwich Consulting Corp., 
formerly known as Stanwich Partners, Inc. (SPI), in 1982 and has served as its 
President since that time. SPI is a private investment company. He was a 
director of Chatwins Group, Inc. (Chatwins Group) from 1986 until its merger 
with Reunion Industries on March 16, 2000 and was Chairman of the Board of 
Chatwins Group from 1988 until the merger.  Mr. Bradley, Sr. is currently the 
President and a director of Sanitas, Inc. and Texon Energy Corporation, both 
inactive companies.  Since May 1997, he has been President and sole director 
of Stanwich Financial Services Corp. (SFSC), which, on June 25, 2001, filed a 
voluntary petition in the United States Bankruptcy Court for the District of 
Connecticut for reorganization under Chapter 11 of the United States 
Bankruptcy Code.  SFSC is in the structured settlement business.  Mr. Bradley, 
Sr. was chairman of the board of directors of DeVlieg-Bullard, Inc. when, on 
July 15, 1999, it filed a voluntary petition in the United States Bankruptcy 
Court for the Northern District of Ohio for reorganization under Chapter 11 of 
the United States Bankruptcy Code.  Mr. Bradley is the father of Kimball J. 
Bradley.

     KIMBALL J. BRADLEY became President and Chief Operating Officer of 
Reunion Industries effective May 1, 2000.  He was Executive Vice President of 
Operations of Reunion Industries following the Chatwins Group merger and was a 
Senior Vice President of Chatwins Group from August 1998 until the merger and 
a Vice President of Chatwins Group from January 1996 to August 1998.  From 
November 1995 until August 1998, Mr. Bradley was President of the Auto-Lok 
division of Chatwins Group, having served as acting President of Auto-Lok 

                                    - 4 -



beginning in August 1995.  Prior to assuming that position, he managed various 
special projects at Chatwins Group's corporate office beginning in 
November 1993 and at Chatwins Group's CP Industries division from 
February 1993 to November 1993.  Mr. Bradley is the son of Charles E. Bradley, 
Sr. 

     THOMAS L. CASSIDY became a director of Reunion Industries on June 20, 
1995.  He was a Managing Director of Trust Company of the West, an investment 
management firm, from 1984 until his retirement in 1999.  Mr. Cassidy is a 
Partner of TCW Capital, an affiliate of Trust Company of the West.  Mr. 
Cassidy was a director of Chatwins Group from March 1993 to June 1997.

     DAVID E. JACKSON became a director of Reunion Industries on June 26, 
2003.  He is the CEO of Bingo Country Holdings, Ltd. in Toronto, Canada.  He 
has over fifteen years experience as a portfolio manager investing in 
distressed securities having worked as a portfolio manager with Avenue Capital 
Management, Oppenheimer & Co. Inc., EBF & Associates and Cargill, Inc.

     JOSEPH C. LAWYER became Vice Chairman of Reunion Industries effective May 
1, 2000.  He was President and Chief Operating Officer of Reunion Industries 
following the Chatwins Group merger and was President, Chief Executive Officer 
and a director of Chatwins Group from 1988 until the merger.  Mr. Lawyer is a 
director of Respironics, Inc., a company engaged in design, manufacture and 
sale of home and hospital respiratory medical products.

     JOHN G. POOLE became a director of Reunion Industries on April 19, 1996. 
Mr. Poole is a private investor.  He was a co-founder of Stanwich Partners 
with Charles E. Bradley, Sr. in 1982 and served as Stanwich Partners' Vice 
President until 2001.  Mr. Poole was a director of Chatwins Group from 1988 
until the merger.  He is also a director of Consumer Portfolio Services, Inc., 
engaged in the business of purchasing, selling and servicing retail automobile 
installment sales contracts.

     The Board of Directors recommends a vote for all nominees for the board 
of directors.


Board and Committee Activity

     During 2003, the board held three regularly scheduled meetings.  The 
compensation committee of the board held one meeting during 2003 and the audit 
committee held four meetings.  Each of the directors attended all of the 
meetings of the board and of each committee on which he served during 2003 
except for Mr. Amonett, who did not attend one board meeting and one audit 
committee meeting. 

     Reunion's operations are managed under the general supervision and 
direction of the board of directors, which has the ultimate responsibility for 
the establishment and implementation of Reunion'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, comprised of Messrs. Amonett (chairman), 
Cassidy and Jackson, 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.

                                    - 5 -



     The audit committee, comprised of Messrs. Amonett, Cassidy and Jackson 
(chairman), assists the board in assuring that the accounting and reporting 
practices of Reunion Industries are in accordance with all applicable 
requirements.  Each member of the audit committee meets the independence and 
financial experience requirements under the rules of both the Securities and 
Exchange Commission (SEC) and American Stock Exchange (AMEX), where the 
Company's stock is listed.  In addition, the Board has determined that David 
E. Jackson is an "audit committee financial expert" as defined by SEC rules.  
Mr. Jackson's business experience is described above under the caption 
"PROPOSAL 1.  ELECTION OF DIRECTORS".  The audit committee reviews with the 
auditors the scope of the proposed audit work and meets with the auditors to 
discuss matters relating to the audit and any other matter which the committee 
or the auditors may wish to discuss.  In addition, the audit committee 
recommends the appointment of auditors to the board of directors each year and 
would recommend the appointment of new auditors if future circumstances were 
to indicate that such action is desirable.
	
     The board of directors does not maintain executive or nominating 
committees.  Nominations for directorships are considered by the entire board. 
The board believes that, in view of the small number of directors (7) and the 
desirability of all directors, including "independent directors", 
participating in the process, it is unnecessary to have a separate nominating 
committee.  The Company does not have a formal written policy or charter 
concerning nominations.  However, in evaluating a potential nominee, including 
a nominee recommended by a stockholder, the board will consider the benefits 
to the Company of such nomination, based on the nominee's skills and 
experience related to managing a significant business, the willingness of the 
person to serve and such person's character and reputation.  Stockholders who 
wish to suggest individuals for possible future consideration for board 
positions or otherwise to communicate with the Board should direct 
recommendations and other communications to the board of directors at the 
Company's principal offices. 


Director Compensation

     Directors not otherwise compensated by Reunion 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 2003 for 
service in all board capacities aggregated $86,000.  Directors are reimbursed 
for the actual cost of any travel expenses incurred.  In addition to his 
director's fees, Mr. Poole received $42,000 for consulting services during 
2003.

     Non-employee directors of Reunion Industries are eligible for awards 
under the 1998 Stock Option Plan.  During 2003, 20,000 options were granted to 
one non-employee director.


Key Person Insurance

     As of June 29, 1994, Chatwins Group and Charles E. Bradley, Sr. agreed to 
a split-dollar life insurance arrangement.  Pursuant to this arrangement, 
Chatwins Group agreed to maintain three universal type life policies on Mr. 
Bradley, Sr. and his wife.  Chatwins Group will be reimbursed for the premiums 
it pays for such policies from either the death benefit of the policies or 
their cash surrender value.  Mr. Bradley, Sr. agreed with Chatwins Group that 
if the policy proceeds are insufficient to reimburse Chatwins Group for the 
full amount of premiums paid, he would pay the shortfall to Chatwins Group.  
This arrangement was assumed by Reunion in connection with the merger of 
Chatwins Group with and into Reunion Industries on March 16, 2000.  No 
premiums were paid by the Company in 2003.

                                    - 6 -



     As of October 24, 1994, Chatwins Group and Joseph C. Lawyer agreed to a 
split-dollar life insurance arrangement.  Pursuant to this arrangement, 
Chatwins Group agreed to maintain a universal type life policy on Mr. Lawyer. 
Chatwins Group will be reimbursed for the premiums it pays for such policy 
from either the death benefit of the policy or its cash surrender value.  Mr. 
Lawyer agreed with Chatwins Group that if the policy proceeds are insufficient 
to reimburse Chatwins Group for the full amount of premiums paid, he would pay 
the shortfall to Chatwins Group.  This arrangement was assumed by Reunion in 
connection with the merger of Chatwins Group with and into Reunion on March 
16, 2000.  No premiums were paid by the Company in 2003.

     As of December 12, 1995, Chatwins Group and John G. Poole agreed to a 
split-dollar life insurance arrangement.  Pursuant to this arrangement, 
Chatwins Group agreed to maintain two universal type life policies on Mr. 
Poole.  Chatwins Group will be reimbursed for the premiums it pays for these 
policies from either the death benefit of the policies or their cash surrender 
value.  Mr. Poole agreed with Chatwins Group that if the policy proceeds are 
insufficient to reimburse Chatwins Group for the full amount of premiums paid, 
he would pay the shortfall to Chatwins Group.  This arrangement was assumed by 
Reunion in connection with the merger of Chatwins Group with and into Reunion 
on March 16, 2000.  No premiums were paid by the Company in 2003.


Compensation Committee Interlocks and Insider Participation

     Messrs. Amonett, Cassidy and Jackson are members of the Compensation 
Committee.  Mr. Amonett served as Reunion Industries' President and Chief 
Executive Officer from July 1, 1992 until October 26, 1995. He also served as 
the President of Reunion Energy Company, then a wholly-owned subsidiary of 
Reunion Industries in the oil and gas operating business, from July 1, 1992 
until May 24, 1996.


        PROPOSAL 2.  AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE
                  THE NUMBER OF COMMON SHARES AUTHORIZED 
                     AND ELIMINATE PREFERRED SHARES

     Under the Company's Certificate of Incorporation, the authorized capital 
stock is 30,000,000 shares, of which 20,000,000 shares are designated common 
stock and 10,000,00 shares are designated preferred stock.  Proposal 2 seeks 
the approval of the stockholders for an amendment to the Certificate of 
Incorporation to increase the number of authorized shares of common stock to 
30,000,000, to eliminate the authorization to issue shares of preferred stock 
and to delete other references to preferred stock in the Certificate of 
Incorporation.  

     No shares of the preferred stock are currently outstanding.  As of May 
14, 2004, the number of shares of common stock outstanding was 16,278,519, and 
3,705,185 shares of common stock were reserved for issuance under the 
Company's existing stock option plans and upon exercise of currently 
outstanding warrants previously issued by the Company (the "Existing 
Warrants").  As a result, as of such date the Company had only 16,296 unissued 
and unreserved shares of common stock available for future issuance.

     The Company needs to increase its authorized common shares for the 
following reasons and purposes:

1.   Proposal 3 in this Proxy Statement seeks approval for the adoption of the 
2004 Stock Option Plan of Reunion Industries, Inc.  Such plan, if approved, 
would authorize the granting of options to key employees, non-employee 
directors and consultants of the Company, to purchase up to 1,000,000 shares 
of the Company's common stock at a price per share not less than the Fair 
Market Value per share of such stock on the respective dates of grant.  

                                    - 7 -


2.   In connection with a $1,000,000 loan made to the Company by LC Capital 
Master Fund Ltd. ("LCC") in December, 2003, the Company has agreed to issue to 
LCC a warrant to purchase 250,000 shares of common stock at an exercise price 
of $0.01 per share (the "Proposed LCC December Financing Warrant"), provided 
that this proposal is approved.

3.   The Company's loan agreement with its senior secured lender, Congress 
Financial Corporation ("Congress Financial"), provides for a loan facility of 
up to $25,000,000 (the "Loan Facility").  The amount within that limit which 
the Company may borrow at any time under the Loan Facility is based upon a 
formula related to the value of the collateral securing the loan.  The amount 
outstanding under the Loan Facility on May 21, 2004 was $10.8 million.  LCC 
and WebFinancial Corporation ("WFC") have purchased a junior participation 
interest of $1,500,000 each in the Loan Facility.  The investments by LCC and 
WFC in the Loan Facility have increased the amount which the Company may 
currently borrow under such Facility, subject to the overall borrowing 
limitation of $25,000,000, which will not increase.  In consideration of such 
investments, the Company agreed to issue warrants to LCC and WFC to purchase 
750,000 shares of common stock (375,000 shares each) at a price of $0.01 per 
share (the "Proposed Loan Facility Warrants"), provided that this proposal is 
approved.

     The Existing Warrants issued by the Company, as well as the Proposed LCC 
December Financing Warrant and the Proposed Loan Facility Warrants, contain or 
will contain anti-dilution rights, which entitle or will entitle the holders 
of such warrants to an increase in the number of shares subject to such 
warrants and/or a decrease in the exercise price thereof upon the occurrence 
of certain events, including the Company's issuance of common stock, or 
options or warrants to purchase common stock, at a price less than the fair 
market value of such stock on the date of issuance or grant.  The issuance of 
the Proposed LCC December Financing Warrant and the Proposed Loan Facility 
Warrants would trigger these anti-dilution rights under the Existing Warrants, 
resulting in an estimated increase of 146,000 in the number of shares subject 
to such warrants and an insignificant decrease in the exercise price of such 
warrants (assuming the fair market value per share on the date of issuance of 
the Proposed LCC December Financing Warrant and the Proposed Loan Facility 
Warrants is the same as the closing price of the common stock on July 28, 2004 
($0.45 per share)).

     The purpose of the loans provided to the Company by LCC in December 2003 
and by LCC and WFC in May, 2004 was to obtain much needed working capital, and 
the Company used the loan proceeds for that purpose.  These loans, being 
subordinate to the Company?s senior secured debt, involve substantial risk to 
LCC and WFC.   Accordingly, as additional consideration for the loans and the 
related risk, LCC required the Company to agree to issue the Proposed LCC 
December Financing Warrant, and LCC and WFC required the Company to agree to 
issue the Proposed Loan Facility Warrants, in each case at an exercise price 
of $0.01 per share and subject to stockholder approval of this Proposal 2.

     In the event that the proposal to increase the number of common shares is 
not approved, the Company will not have sufficient authorized unissued and 
unreserved shares of common stock to implement the 2004 Stock Option Plan or 
to issue the Proposed LCC December Financing Warrant or the Proposed Loan 
Facility Warrants.  In such event, Kimball J. Bradley, the Company's President 
and a director, has agreed to sell and transfer, for $0.01 per share, 625,000 
of his shares of the Company's common stock to LCC and 375,000 such shares to 
WFC.

     The issuance of the Proposed LCC December Financing Warrant and the 
Proposed Loan Facility Warrants would be made in private offerings and would 
not be registered with the SEC.  However, each holder of such warrants would 
be granted registration rights by the Company.

                                    - 8 -




     Under the Certificate of Incorporation, the holders of the Company's 
common stock do not have preemptive rights.

     Representatives of Mahoney Cohen & Company, CPA, P.C., the Company's 
principal accountants for 2003 and for the current year are expected to be 
present at the Annual Meeting to respond to appropriate questions and to make 
a statement if they desire to do so.

     As described under "Incorporation by Reference," below, certain financial 
and other information about the Company is incorporated in this Proxy 
Statement by reference to certain documents, which are being delivered to the 
stockholders with this proxy statement.

     The Board of Directors recommends a vote for approval to amend the 
Company's Certificate of Incorporation to increase the number of shares of 
authorized common stock to thirty million (30,000,000) and eliminate the 
currently authorized class designated preferred stock.


              PROPOSAL 3.  ADOPTION OF 2004 STOCK OPTION PLAN

     This proposal is to approve the adoption of the new 2004 Stock Option 
Plan of Reunion Industries, Inc. (the "New Option Plan"), which the Board of 
Directors has adopted, subject to stockholder approval.  The Board believes 
that a new stock option plan is necessary because the number of shares of the 
Company's common stock available for future option grants under the existing 
plans is only 161,600.  The New Option Plan would provide for an additional 
1,000,000 shares for future option grants to key employees, non-employee 
directors and consultants of the Company.  The Board of Directors believes 
that the ability to offer key employees, directors and consultants of the 
Company the opportunity to become owners of common stock of the Company will 
help to align further their interests with those of Reunion Industries' 
stockholders.  On ________, the closing price per share of the Company's 
common stock on the American Stock Exchange was $______. 

DESCRIPTION OF NEW OPTION PLAN
 
     The following is a description of the material provisions of the New 
Option Plan. A copy of the proposed New Option Plan is set forth in ANNEX A to 
this Proxy Statement. The summary which follows is not intended to be complete 
and reference should be made to the New Option Plan for a complete statement 
of its terms and provisions.
 
     The principal purposes of the New Option Plan are to provide incentives 
for independent directors, key employees and consultants of the Company and 
its subsidiaries through granting of options, thereby stimulating their 
personal and active interest in the Company's development and financial 
success, and inducing them to remain in the Company's employ.
 
     Under the New Option Plan, up to 1,000,000 shares of Common Stock (or 
their equivalent in other equity securities) would be authorized for issuance 
upon exercise of options. The shares available under the New Option Plan upon 
exercise of stock options may be either previously unissued shares or treasury 
shares. The New Option Plan provides for appropriate adjustments in the number 
and kind of shares subject to the New Option Plan and to outstanding grants 
thereunder in the event of a distribution, stock dividend or certain other 
types of recapitalizations, including restructuring.
 
                                    - 9 -


     If any portion of a stock option terminates or lapses unexercised, or is 
canceled upon grant of a new option (which may be a higher or lower exercise 
price than the option so canceled), the shares which were subject to the 
unexercised portion of such option will continue to be available for issuance 
under the New Option Plan.
 
ADMINISTRATION
 
     The New Option Plan will be administered by the Compensation Committee or 
other committee of the Board (referred to herein as the "Committee"), 
consisting of at least two directors who are both "non-employee directors" (as 
defined by Rule 16b-3 of the Securities and Exchange Commission (the "SEC")) 
and "outside directors" (as defined in Section 162(m)(4) of the Internal 
Revenue Code of 1986, as amended (the "Code"). However, most decisions 
regarding non-employee directors under the New Option Plan will be made by the 
Board of Directors. The Committee (or the Board of Directors in the case of 
non-employee directors) is authorized to select from among the eligible 
employees, directors and consultants the individuals to whom options are to be 
granted and to determine the number of shares to be subject thereto and the 
terms and conditions thereof, consistent with the New Option Plan. The 
Committee is also authorized to adopt, amend and rescind rules relating to the 
administration of the New Option Plan.
 
PAYMENT FOR SHARES
 
     The exercise or purchase price for all options to acquire shares of the 
Company's Common Stock, together with any applicable tax required to be 
withheld, must be paid in full in cash at the time of exercise or purchase or 
may, with the approval of the Committee, be paid in whole or in part in Common 
Stock of the Company owned by the Optionee (or issuable upon exercise of the 
option) and having a fair market value on the date of exercise equal to the 
aggregate exercise price of the shares so to be purchased. The Committee may 
also authorize other lawful consideration to be applied to the exercise or 
purchase price of an award.
 
AMENDMENT AND TERMINATION
 
     Amendments of the New Option Plan to increase the number of shares as to 
which options may be granted in the aggregate or to any individual (except for 
adjustments) require the approval of the Company's stockholders. In all other 
respects the New Option Plan can be amended, modified, suspended or terminated 
by the Board or the Committee, unless such action would otherwise require 
stockholder approval as a matter of applicable law, regulation or rule. 
Amendments to the New Option Plan will not, without the consent of the 
participant, affect such person's rights under an award previously granted, 
unless the award itself otherwise expressly so provides. No termination date 
is specified for the New Option Plan.

ELIGIBILITY

     Options under the New Option Plan may be granted to individuals who are 
then officers or other key employees of the Company or any of its present or 
future subsidiaries, as determined by the Committee. Such awards also may be 
granted to consultants of the Company selected by the Committee and non-
employee directors selected by the Board of Directors for participation in the 
New Option Plan.  As of June 30, 2004, the Company had 545 employees and 
estimates that it had approximately 300 key employees, no consultants and four 
non-employee directors.  More than one option may be granted to a key 
employee, non-employee director or consultant.

                                    - 10 -


AWARDS UNDER THE NEW OPTION PLAN
 
     The New Option Plan provides that the Committee may grant stock options. 
Each grant will be set forth in a separate agreement with the person receiving 
the award and will indicate the type, terms and conditions of the award.  No 
determination has been made by the Committee or the Board of Directors as to 
which eligible participants will receive option grants under the New Option 
Plan.

     Non-qualified stock options ("NQSOs") will provide for the right to 
purchase Common Stock at a specified price which may not be less than the fair 
market value on the date of grant and usually will become exercisable (in the 
discretion of the Committee) in one or more installments after the grant date. 
NQSOs may be granted for any term specified by the Committee.

     Incentive stock options, if granted, will be designed to comply with the 
provisions of the Code and will be subject to restrictions contained in the 
Code, including exercise prices equal to at least 100% of fair market value of 
Common Stock on the grant date and a ten-year restriction on their term. 
Incentive stock options may be granted only to employees.

MISCELLANEOUS PROVISIONS OF THE NEW OPTION PLAN

     Options granted under the New Option Plan may provide for their 
termination upon dissolution or liquidation of the Company, the merger or 
consolidation of the Company into another corporation, or the acquisition by 
another corporation of all or substantially all of the Company's assets; but 
in such event the Committee may also give Optionees the right to exercise 
their outstanding options or rights in full during some period prior to such 
event, even though the options have not yet become fully exercisable. Options 
granted under the New Option Plan may provide that in the event of a corporate 
transaction (as defined in the option agreement) in the discretion of the 
Committee (or the Board in the case of option granted to non-employee 
directors), all previously unexercisable options may become immediately 
exercisable unless such options, or portions thereof, are determined by the 
Committee to constitute, when exercised, "excess parachute payments" (as 
defined in Section 280G of the Code). If any option does not contain such 
limitation, and its exercisability is accelerated upon a change in control, it 
is possible that an Optionee may be liable for an excise tax on the amount 
attributable to such acceleration (and any other payments made in connection 
with such change in control). If approved by the stockholders at the Annual 
Meeting, the New Option Plan will become effective immediately.

     The dates on which options under the New Option Plan first become 
exercisable and on which they expire will be set forth in individual stock 
option agreements setting forth the terms of the awards. Such agreements 
generally will provide that options expire upon termination of the Optionee's 
status as an employee, consultant or director, although the Committee may 
provide that such options continue to be exercisable following a termination 
without cause, or following a corporate transaction, or because of the 
Optionee's retirement, death, disability or otherwise. The period during which 
the right to exercise an Option vests in the Optionee shall be set by the 
Committee. However, unless the Committee states otherwise no option will be 
exercisable by an Optionee subject to Section 16 of the Exchange Act within 
the period ending six months and one day after the date the Option is granted. 

     No option to acquire Common Stock granted under the New Option Plan may 
be assigned or transferred by the Optionee, except by will or the laws of 
intestate succession, although the shares underlying such rights may be 
transferred if all applicable restrictions have lapsed or are otherwise 
inapplicable. During the lifetime of the holder of any option, the option may 
be exercised only by the holder.

                                    - 11 -


 
     The Company requires participants to discharge withholding tax 
obligations, if any, in connection with the exercise of any option granted 
under the New Option Plan as a condition to the issuance or delivery of stock 
or payment of other compensation pursuant thereto. Shares held by or to be 
issued to a participant may also be used to discharge tax withholding 
obligations related to exercise of options, subject to the discretion of the 
Committee to disapprove such use. In addition, the Committee may grant to 
employees a cash bonus in the amount of any tax related to awards.


FEDERAL INCOME TAX CONSEQUENCES

     The income tax consequences of the New Option Plan under current federal 
law are summarized below. The discussion is intended to provide only general 
information. State and local income tax consequences are not discussed.

Non-Qualified Stock Options.

     Non-qualified stock options granted under the Plan do not qualify for any 
special tax benefits to the optionee.  An optionee will not recognize any 
taxable income at the time he or she is granted non-qualified stock options.  
Upon the exercise of non-qualified stock options, however, the optionee will 
recognize ordinary income for federal tax purposes measured by the excess of 
the then fair market value of the shares acquired over the aggregate option 
exercise price.  The income realized by the optionee will be subject to income 
tax withholding by the Company out of the current earnings paid to the 
optionee.  If such earnings are insufficient to pay the tax, the optionee will 
be required to make a direct payment to the Company for tax liability.

     The optionee's basis for determination of gain or loss upon the 
subsequent disposition of shares acquired upon the exercise of non-qualified 
stock options will be the amount paid for such shares plus any ordinary income 
recognized as a result of the exercise of such stock options.  Upon a 
disposition of any shares acquired pursuant to the exercise of non-qualified 
stock options, the difference between the aggregate sale price and the 
optionee's basis in the shares will be treated as a capital gain or loss and 
will be characterized as long-term capital gain or loss if the shares have 
been held for more than one year at the date of their disposition.

     In general, there will be no federal tax consequences to the Company upon 
the grant or termination of non-qualified stock options or a sale or 
disposition of the shares acquired upon the exercise of non-qualified stock 
options.  Upon the exercise of non-qualified stock options, however, the 
Company will be entitled to a deduction for federal income tax purposes equal 
to the amount of ordinary income that an optioned is required to recognize as 
a result of the exercise, provided that the deduction is not otherwise 
disallowed under the Code.

Incentive Stock Options.

     Incentive stock options qualify for favorable tax treatment for the 
optionee under Section 422 of the Code.  Optionees will not recognize any 
income upon either the grant or the exercise of incentive stock options and 
the Company may not take a deduction for federal tax purposes with respect to 
such grant or exercise.  Upon the sale of the shares of Common Stock obtained 
through the exercise of incentive stock options by the optionee, the tax 
treatment to the optionee and the Company will depend primarily upon whether 
the optionee has met certain holding period requirements at the time the 
optionee sells the shares.  In addition, as discussed below, the exercise of 
incentive stock options may subject the optionee to alternative minimum tax 
liability.

                                    - 12 - 



     If an optionee exercises incentive stock options and holds the stock 
acquired for the later of (i) two years after the date of the grant of such 
stock options or (ii) one year after the date the stock was acquired per the 
exercise of the option, any gain realized upon disposition will be 
characterized as long-term capital gain.  In such case, the Company will not 
be entitled to a federal tax deduction.  If the optionee disposes of the 
shares either within two years after the date that the options are granted or 
within one year after the issuance of the shares to the optionee, such 
disposition will be treated as a disqualifying disposition and an amount equal 
to the lesser of (i) the fair market value of the shares on the date of 
exercise minus the exercise price, or (ii) the amount realized on the 
disposition minus the exercise price, will be taxed as ordinary income to the 
optionee in the taxable year in which the disposition occurs.  The excess, if 
any, of the amount realized upon disposition over the fair marker value at the 
time of the exercise of the stock options will be treated as long-term capital 
gain if the shares have been held for more than one year following the 
exercise of the stock options.  In the event of a disqualifying disposition, 
the Company may withhold income taxes from the optionee's compensation with 
respect to the ordinary income realized by the optionee as a result of the 
disqualifying disposition.

     The exercise of incentive stock options may subject an optionee to 
alternative minimum tax liability because the excess of the fair market value 
of the shares at the time incentive stock options are exercised over the 
exercise price of the stock options is included in income for purposes of the 
alternative minimum tax, even though it is not included in the taxable income 
for purposes of determining the regular tax liability of an optionee.  
Consequently, an optionee may be obligated to pay alternative minimum tax in 
the year the optionee exercises incentive stock options.

     In general, there will be no federal income tax deductions allowed to the 
Company upon the grant, exercise, or termination of incentive stock options.  
However, in the event an optionee sells or disposes of stock received upon the 
exercise of incentive stock options in a disqualifying disposition, the 
Company is entitled to a deduction for federal income tax purposes in an 
amount equal to the ordinary income, if any, recognized by the optionee upon 
disposition of the shares, provided that the deduction is not otherwise 
disallowed under the Internal Revenue Code.
	
     The Board of Directors recommends a vote for approval of a new 2004 Stock 
Option Plan and the reservation of 1,000,000 shares of Common Stock for future 
issuance under such Plan.  


                            MANAGEMENT INFORMATION

Executive Officers 

     The following individuals serve as our executive officers:

Name                     Age  Position
-----------------------  ---  ----------------------------------------------
Charles E. Bradley, Sr.   75  Director, Chairman and Chief Executive Officer
Joseph C. Lawyer          58  Director and Vice Chairman
Kimball J. Bradley        39  Director, President and Chief Operating Officer
John M. Froehlich         61  Executive Vice President, Chief Financial
                              Officer and Secretary
Jack T. Croushore         59  President, CP Industries Division

                                    - 13 -



     The business experience of  Charles  E. Bradley, Sr.,  Kimball J. Bradley 
and Joseph  C. Lawyer is described above in the section entitled "Election of 
Directors - Nominees."

     JOHN M. FROEHLICH became Executive Vice President of Finance and Chief 
Financial Officer of Reunion Industries on March 16, 2000.  He became 
Secretary on June 12, 2002.  He was a Vice President of Chatwins Group from 
1989 until the merger of Chatwins Group and Reunion Industries on March 16, 
2000 and its Chief Financial Officer and Treasurer from 1988 until the merger.

     JACK T. CROUSHORE became Division President of the CP Industries division 
during 1988.  From 1984 to 1988 he was Executive Vice President and Chief 
Operating Officer of CP Industries, Inc. and its predecessor division of USX 
Corporation.  He was also a Vice President of Chatwins Group from 1988 to 
2000.


Executive Compensation

     The following table reflects all forms of compensation for services to 
Reunion Industries by our executive officers for the last three completed 
fiscal years.  There was no other annual compensation for any executive of the 
Company in the last three completed fiscal years.

                                                      Long-Term
                                                    Compensation
                                                    ------------
                               Annual Compensation     Shares
                               -------------------   Underlying     All Other
Name and Position        Year  Salary     Bonus(1)  Stock Option  Compensation
-----------------------  ----  --------   --------  ------------  ------------
Charles E. Bradley, Sr.  2003  $400,024   $      0       100,000   $  1,020(2)
  Chairman and Chief     2002   400,024          0             0      6,516(2)
  Executive Officer      2001   400,024          0         5,000      6,266(2)

Joseph C. Lawyer         2003   200,000          0             0      1,020(3)
  Vice Chairman          2002   245,830          0             0      1,020(3)
                         2001   289,011          0        10,000      9,520(3)

Kimball J. Bradley       2003   366,819          0       400,000     15,480(4)
  President and Chief    2002   347,765          0             0      1,020(4)
  Operating Officer      2001   318,238          0        50,000      9,520(4)

John M. Froehlich        2003   210,001          0             0      8,801(5)
  Executive Vice         2002   206,246          0             0      1,020(5)
  President of Finance   2001   180,000          0        25,000      9,520(5)
  and Chief Financial
  Officer

Jack T. Croushore        2003   209,000          0        50,000      7,020(6)
  President CPI Division 2002   209,000          0             0      6,476(6)
                         2001   212,360    100,000        25,000     14,223(6)

(1)  Amounts shown for bonuses are amounts earned for the period shown, 
although such bonuses are generally paid in the subsequent year.

(2)  Includes 401(k) matching payments of $5,496 in 2002 and $5,246 in 2001. 
Includes a healthcare benefit credit of $1,020 in each year. 

(3)  Includes payments under the Chatwins Group, Inc. Money Purchase Pension 
Plan of  $8,500 in 2001.  Includes a healthcare benefit credit of $1,020 in 
each year.

                                    - 14 -



(4)  Includes payments of life insurance premiums of $14,460 in 2003 and 
payments under the Chatwins Group, Inc. Money Purchase Pension Plan of $8,500 
in 2001.  Includes a healthcare benefit credit of $1,020 in each year.

(5)  Includes payments of life insurance premiums of $7,781 in 2003 and 
payments under the Chatwins Group, Inc. Money Purchase Pension Plan of $8,500 
in 2001.  Includes a healthcare benefit credit of $1,020 in each year.

(6)  Includes a car allowance of $6,000 in 2003; 401(k) matching payments of 
$5,456 in 2002 and $4,703 in 2001; and payments under the Chatwins Group, Inc. 
Money Purchase Plan of $8,500 in 2001.  Includes a healthcare benefit credit 
of $1,020 in each year.

Option Grants

     There were 570,000 options granted in the year ended December 31, 2003, 
of which 550,000 were granted to employees of Reunion and 20,000 were granted 
to a non-employee director.  The following table shows all options to acquire 
Reunion Industries common stock granted to the named executive officers during 
the fiscal year ended December 31, 2003.

                             Individual Grants(1)             Projected
                     -------------------------------------    Realizable Value
                                % of                          at Rates of
                     Number of  Options                       Stock Price
                     Securities Granted to Exercise           Apreciation for
                     Underlying Employees  Price              Option Term(2)
                     Options    in Fiscal  Per                ----------------
Name                 Granted    Year       Share   Expires       5%      10%
-------------------- ---------- ---------- ------- --------   -------  -------
Charles Bradley, Sr. 100,000(3)   18.18%   $0.3520 12/01/08   $ 5,641  $16,336
Kimball J Bradley    100,000(4)   18.18%   $0.2750 06/26/08   $ 4,407  $12,763
Kimball J. Bradley   300,000(3)   54.55%   $0.3520 12/01/08   $16,923  $49,009
Jack T. Croushore     50,000(5)    9.09%   $0.2500 06/26/13   $ 7,861  $19,722

(1)  Options granted to Charles E. Bradley, Sr. and Kimball J. Bradley have an 
exercise price equal to 110% of the fair market value of Reunion Industries' 
common stock on the grant date.  The remaining options have an exercise price 
of 100% of the fair market value on the grant date.  Reunion Industries has 
not issued any stock appreciation rights.

(2)  As required by SEC rules, these columns show potential gains that may 
exist for the respective options, assuming that the market price for Reunion's 
common stock appreciated from the grant date to the end of the option terms at 
rates of 5% and 10%, respectively.  The amounts are not estimates of Reunion's 
future stock price performance and are not necessarily indicative of Reunion's 
future stock performance.  If the price of Reunion's common stock does not 
increase above the exercise price, no value will be realized from these 
options. 

(3)  These options were granted on December 1, 2003.  Assuming continued 
employment with Reunion, these options have a 5-year term and will become 
exercisable in one-third increments on the first, second and third 
anniversaries of their issuance.

(4)  These options were granted on June 26, 2003.  Assuming continued 
employment with Reunion, these options have a 5-year term and became or will 
become exercisable in one-third increments on the first, second and third 
anniversaries of their issuance.

(5)  These options were granted on June 26, 2003.  Assuming continued 
employment with Reunion, these options have a 10-year term and became or will 
become exercisable in one-third increments on the first, second and third 
anniversaries of their issuance.
     
                                    - 15 -


Option Exercises and Year-End Values

     There were no options exercised in the year ended December 31, 2003.


Equity Compensation Plan Information

     The following table summarizes information with respect to options under 
Reunion's equity compensation plans on December 31, 2003:

                                                  Equity Compensation Plans
                                                 ---------------------------
                                                 Approved by    Not Approved
                                                 Security        by Security
                                                 Holders             Holders
                                                 ------------   ------------
Number of Securities to be issued upon
  exercise of outstanding options,
  warrants and rights                                 614,000              -
                                                    =========      =========
Weighted-average exercise price of
  outstanding options, warrants 
  and rights                                            $0.51              -
                                                    =========      =========
Number of Securities remaining available
  for future issuance under equity
  compensation plans (excluding outstanding
  options, warrants and rights)                       161,100              -
                                                    =========      =========

                                    - 16 -



Compensation Committee Report

     The compensation committee of the board of directors has furnished the 
following report on executive compensation for 2003:

     The board of directors pursues a philosophy of seeking to improve Reunion 
Industries' 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 generally intended to be 
competitive with that paid at comparable companies.  However, no comparability 
studies were conducted for executive salaries paid in 2003, and the committee 
bases its base salary determinations primarily on its knowledge of 
compensation paid to senior executives at other companies.  The committee also 
takes into account the responsibilities and individual performance of the 
executives in setting base salaries and the committee may set the base 
compensation for certain executives at a premium level if they are viewed as 
essential to the organization.  The committee uses these same criteria to 
establish compensation for the chief executive officer and has not established 
any quantitative criteria for his compensation.

     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 Reunion Industries' net assets and cash flow, and in 
certain instances, rationalization of certain company businesses or assets.  

     The board of directors believes that properly designed and administered 
long-term, stock-based incentives for senior executives closely align the 
executives' economic interest 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 and stockholders, to continue to 
consider alternate forms of stock-based incentives designed to achieve the 
maximum possible performance based benefit to all senior executives at the 
least possible cost and the greatest attainable economic efficiency to Reunion 
Industries, with such benefits designed as nearly as practicable to directly 
align the economic interests of professional managers with those of Reunion 
Industries' stockholders. In 2002, the board, including certain current 
members of the compensation committee, directed Reunion's management to take 
action to possibly improve the value of outstanding stock options as an 
incentive to the Company's employees that held stock options, including 
executive management.  The board approved management's plan of repricing the 
outstanding stock options to an amount closer to then recent trade amounts, 
which ultimately gave executive management a larger ownership stake in Reunion 
and an increased incentive to remain with the Company.

     Pursuant to applicable rules of the Securities and Exchange Commission, 
as of May 14, 2004, members of the compensation committee are deemed to own 
beneficially an aggregate of 147,029 shares, or less than 1.0%, of Reunion's 
outstanding common stock.  See "Ownership Information - Security Ownership of 
Certain Beneficial Owners and Management".

The Compensation Committee
Thomas N. Amonett, Chairman; Thomas L. Cassidy; David E. Jackson

                                    - 17 -



                            OWNERSHIP INFORMATION

Security Ownership of Certain Beneficial Owners and Management 

     Reunion Industries has 16,278,519 shares of common stock outstanding as 
of ______, 2004. The following table sets forth information regarding the 
beneficial ownership of our common stock by (i) each stockholder known to us 
to own 5% or more of our common stock, (ii) each director of Reunion 
Industries, (iii) each of the chief executive officer and the other 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 our common 
stock shown as owned by him or her. 
                                                                % of
                                                             Outstanding
Beneficial Owner                        Shares Owned           Shares
--------------------------------  -------------------------  -----------
Kimball J. Bradley                6,150,335 (1)                 37.7%
  c/o Reunion Industries, Inc.
  11 Stanwix Street, suite 1400
  Pittsburgh, PA 15222
The Charles E. Bradley, Sr. 
Family Limited Partnership        4,310,813 (5)                 26.5%
  c/o Stanwich Consulting Corp.
  62 Southfield Ave.
  One Stamford Landing
  Stamford, CT 06902
Stanwich Financial Services Corp. 1,651,697 (5)                 10.1%
  c/o Melissa Neier, Esq.
  Ivey, Barnum & O'Mara
  170 Mason Street
  Greenwich, CT  06830
The John Grier Poole Family 
Limited Partnership               1,499,747 (6)(7)               9.2%
  One Rye Road
  Portchester, NY  10573
Amanda Poole, David Poole and
Jesse Poole                       1,499,747 (6)                  9.2%
  c/o John G. Poole
  One Rye Road
  Portchester, NY  10573
Charles E. Bradley, Sr.             258,810 (2)(3)(4)(13)        1.6%
  c/o Stanwich Consulting Corp.
  62 Southfield Ave.
  One Stamford Landing
  Stamford, CT 06902
Thomas N. Amonett                    78,000                      0.5%
Thomas L. Cassidy                    62,362                      0.4%
David E. Jackson                      6,667 (8)                  0.1%
Joseph C. Lawyer                    701,751 (9)                  4.3%
John G. Poole                       757,438 (10)                 4.7%
John M. Froehlich                    74,008                      0.5%
Jack T. Croushore                   211,854 (11)                 1.3%

All Officers and Directors as 
  a group (9 individuals)         8,301,225 (12)                51.0%

(1)  Includes (a) 4,310,813 shares owned by The Charles E. Bradley, Sr. Family 
Limited Partnership (the "Bradley Partnership") of which Kimball J. Bradley is 
general partner, (b) 33,333 shares subject to an option that became 
exercisable on June 26, 2004 and (c) 100,000 shares subject to an option that 
becomes exercisable within 60 days.

                                    - 18 -



(2)  Mr. Bradley, Sr. and his wife own, respectively, a 28% and a 1% limited 
partnership interest in the Bradley Partnership, which in turn beneficially 
owns 4,310,813 shares of common stock.  Because Mr. Bradley, Sr. and his wife 
have no dispositive power as to the shares owned by the Bradley Partnership, 
he disclaims any beneficial ownership thereof, and none of such shares are 
included as being beneficially owned by him in the table above.

(3)  Excludes 1,651,697 shares owned by Stanwich Financial Services Corp., 
with which Mr. Bradley, Sr. is the indirect sole shareholder.  He has no 
voting or dispositive powers as to these shares.  See note (5) below.  

(4)  Includes 100,000 shares owned by Hanna Investment Corporation, with which 
Mr. Bradley, Sr. shares voting and dispositive power.  Mr. Bradley, Sr. is the 
controlling stockholder of the parent company of Hanna Investment Corporation 
and may be deemed to be the beneficial owner of these shares.  

(5)  The voting and dispositive powers as to these shares is held by the 
Liquidating Agent and the Executive Committee (subject to court oversight) 
appointed in SFSC's bankruptcy proceeding.  

(6)  Pursuant to the Securities Pledge Agreement dated as of May 1, 1993 among 
the Charles E. Bradley, Sr. Family Limited Partnership, the John Grier Poole 
Family Limited Partnership, and U.S. Bank, National Association, as successor 
Collateral Agent to State Street Bank and Trust Company and the First National 
Bank of Boston, the Bradley Partnership pledged 4,145,247 shares and the Poole 
Partnership pledged 552,703 shares to secure the obligations of Reunion 
Industries under the Indenture, dated as of May 1, 1993, between Reunion and 
the Collateral Agent relating to certain Senior Notes issued by Reunion 
Industries in 1993 that were due in 2003.

(7)  These shares are owned by the John Grier Poole Family Limited 
Partnership.  Amanda Poole, David Poole and Jesse Poole are co-general 
partners (and limited partners) of such partnership.  As such, they share 
voting and dispositive powers as to such shares with each other and with such 
partnership.

(8)  Represents shares subject to an option that became exercisable on June 
26, 2004.

(9)  Includes 3,567 shares beneficially owned by Mr. Lawyer's wife, as to 
which he has no voting or dispositive power.  Mr. Lawyer may be deemed to be 
the beneficial owner of these shares.

(10) Includes 139,808 shares as to which Mr. Poole has voting rights, but not 
dispositive rights.

(11) Includes 16,666 shares subject to an option that became exercisable on 
June 24, 2006.

(12) Includes 56,666 shares subject to options that became exercisable on June 
26, 2004.

(13) Includes 33,333 shares subject to an option that becomes exercisable 
within 60 days.


Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934, as amended, 
requires Reunion's directors and officers and persons who own beneficially 
more than 10% of the common stock of Reunion Industries to file with the 
Securities and Exchange Commission and the American Stock Exchange initial 
reports of beneficial ownership and reports of changes in beneficial ownership 
of the common stock of Reunion Industries.  Directors, officers and persons 

                                    - 19 -



owning more than 10% of the common stock of Reunion Industries are required to 
furnish Reunion Industries with copies of all such reports.  Based solely on 
Reunion's review of the copies of such forms it has received and 
representations from certain persons that they were not required to file 
reports on Form 5 during 2003, Reunion Industries 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 
2003, except that (1) Mr. Bradley, Sr. filed five late reports (by a Form 5) 
relating to eight transactions, (2) Mr. Kimball J. Bradley filed four late 
reports (by a Form 5) relating to seven transactions, (3) The Charles E. 
Bradley, Sr. Family Limited Partnership filed three late reports (by a Form 5) 
relating to five transactions and (4) Mr. Lawyer filed one late report 
relating to two transactions.


                              OTHER INFORMATION

Common Stock Performance Graph

     The following graph illustrates the yearly percentage change in the 
cumulative total stockholder return on Reunion Industries' common stock, 
compared with the cumulative total return on the American Stock Exchange 
(AMEX) Composite Index and the Industrial Manufacturing Index published by The 
Center for research in Security Prices at the University of Chicago, published 
by the AMEX for use by AMEX listed companies:

                          Five Year Total Return (1)


                  [FIVE YEAR PERFORMANCE GRAPH APPEARS HERE]


                                         Fiscal Year Ending
                           ----------------------------------------------
                            1998    1999    2000    2001    2002    2003
                           ------  ------  ------  ------  ------  ------
Reunion Industries, Inc.   100.00   63.64   50.18   11.27    5.45   20.73
AMEX Composite Index       100.00  131.94  122.38  113.92   93.11  126.03
Industrial Manufacturing 
  Index                    100.00  129.49  159.70  127.58   96.19  169.92

(1)   Tabular data assumes that the value of the investment in Reunion 
Industries' common stock and each index was $100.00 at January 1, 1999 and 
that all dividends, if any, were reinvested.  The Company paid no dividends in 
any period presented.

                                    - 20 -



Certain Relationships and Related Transactions

Related Parties

     Reunion Industries, Inc. - Reunion is a publicly traded Delaware 
corporation headquartered in Pittsburgh, Pennsylvania.  Charles E. Bradley, 
Sr. (Mr. Bradley) is chairman of the board and Chief Executive Officer of 
Reunion.  Kimball J. Bradley is President, Chief Operating Officer, a director 
of Reunion and son of Mr. Bradley.

     Stanwich Consulting Corp. - Stanwich Consulting Corp. (SCC), formerly 
known as Stanwich Partners, Inc. (SPI), is engaged in consulting services in 
the field of financial planning and reporting.  Mr. Bradley is the President 
of SCC.

     Stanwich Financial Services Corp. - Stanwich Financial Services Corp. 
(SFSC) is a privately held corporation in the structured settlement business. 
SFSC is owned 100% by Mr. Bradley.  On June 25, 2001, SFSC filed a voluntary 
petition in the United States Bankruptcy Court for the District of Connecticut 
for reorganization under Chapter 11 of the United States Bankruptcy Code.  See 
"SFSC Litigation Settlement" below.

     NPS Acquisition Corp. - NPS Acquisition Corp. (NPSAC) was formed by Mr. 
Bradley to acquire and hold NAPTech Pressure Systems (NAPTech).  NAPTech was 
based in Clearfield, Utah and manufactured seamless steel pressure vessels, an 
existing Metals product line.  In January 2001, NPSAC was merged into the 
Company.

     CPS Leasing, Inc. - CPS Leasing, Inc. (CPSL) is a subsidiary of Consumer 
Portfolio Services, Inc. (CPS).  Mr. Bradley and Mr. Poole are stockholders of 
CPS.  Mr. Poole is a director of CPS and Mr. Bradley was a director until July 
2001.  Charles E. Bradley Jr., Mr. Bradley's son and Kimball J. Bradley's 
brother, is President of CPS.  CPSL is primarily engaged in machinery and 
equipment lease financing.

Transactions and Balances

     SPI Consulting Agreement - Reunion maintained a consulting agreement with 
SPI under which $300,000 was recorded as expense during the year ended 
December 31, 2001.  The agreement was terminated effective September 30, 2002. 
During 2002, $225,000 was expensed related to this agreement.  The Company 
made advances during 2002 totaling $127,795 to SPI related to this agreement, 
including $25,000 relating to stock options exercised by Mr. Bradley.  At 
December 31, 2003 and 2002, $117,205 was owed to SPI under this agreement and 
is classified as due to related parties in the Company's consolidated balance 
sheet for the year ended December 31, 2003.

     SFSC Notes Payable - The Company assumed three notes payable to SFSC 
related to acquisitions in 2000 and 2001.  At December 31, 2003 and 2002, 
their balances of $2,998,000, $500,000 and $100,000 are included in notes 
payable - related parties in the accompanying consolidated balance sheet.  
During 2003 and 2002, no interest was paid to SFSC related to these notes 
payable.  At December 31, 2003 and 2002, accrued and unpaid interest due to 
SFSC related to these notes payable of $1,844,283 and $1,219,572, 
respectively, is included in due to related parties in the Company's 
consolidated balance sheet at December 31, 2003.  However, see "SFSC 
Litigation Settlement" below.

                                    - 21 -



     SFSC Note Receivable - In August 1999, pre-merger Reunion loaned $310,000 
to SFSC.  The loan was scheduled to be repaid in December 1999 with interest 
at 15%.  In December 1999, the Company agreed to extend the maturity to March 
2000 and loaned an additional $40,000 to SFSC also with interest at 15%, which 
was repaid in March 2000.  The remaining balance including accrued and unpaid 
interest due from SFSC at December 31, 2003 and 2002 is $465,000 and is 
included in due from related parties in the Company's consolidated balance at 
December 31, 2003.  However, see "SFSC Litigation Settlement" below.

     CPS Leasing, Inc. - Reunion entered into various operating lease 
agreements with CPSL.  During 2003 and 2002, lease payments totaling $336,000 
and $580,000, respectively, were paid to or accrued for CPSL. At December 31, 
2003, the Company has future minimum rental commitments under noncancellable 
operating leases with CPSL totaling $1,460,000.

     SFSC Collateral Fees - To close on a refinancing with Bank of America 
(BOA) in March 2000, SFSC provided side collateral in the form of CPS debt and 
common stock to support the borrowings.  Under this arrangement, SFSC was to 
receive a 5% collateral fee for as long as the collateral was in place.  Such 
collateral remained in place until the Congress refinancing in December 2003. 
However, in January 2003, Mr. Bradley agreed to absorb this collateral fee 
expense to SFSC on a going forward basis with no further obligation to the 
Company.  In each of 2002 and 2001, the Company recorded interest expense of 
$283,000 related to this arrangement.  No payments have been made under this 
arrangement during 2003 or 2002.  During 2001, the Company made a $100,000 
payment related to this arrangement.  At December 31, 2003 and 2002, $690,041 
is included in due to related party in the Company's consolidated balance 
sheet at December 31, 2003.  However, see "SFSC Litigation Settlement" below.

     In March 2000, SFSC pledged a $5.0 million note from CPS to secure the 
obligations of NPSAC to the former owners of the business.  NPSAC agreed to 
pay SFSC a 2% credit support fee for this pledge.  The Company assumed this 
credit support obligation in the acquisition of NPSAC.  No payments have been 
made under this arrangement during 2003 or 2002.  At December 31, 2003 and 
2002, accrued and unpaid fees totaling $293,943 and $226,990, respectively, 
were due to SFSC under this credit support obligation and included in due to 
related parties in the Company's consolidated balance sheet at December 31, 
2003.  However, see "SFSC Litigation Settlement" below.

     Cash Surrender Value of Life Insurance Policies - The Company pays the 
premiums on life insurance policies covering Mr. Bradley, Mr. Joseph C. Lawyer 
(Mr. Lawyer), the Company's vice chairman and a director, and Mr. Poole.  
Pursuant to these arrangements, the Company will be reimbursed for the 
premiums it pays for such policies from either the death benefit of the policy 
or their cash surrender value.  The covered individuals have agreed with the 
Company that if the policy proceeds are insufficient to reimburse the Company 
for the full amount of the premiums paid, they will cover the shortfall.  As 
of December 31, 2003 and 2002, premiums paid by the Company in excess of the 
cash surrender values of the policies totaled $940,000 and $1,031,000, 
respectively, and are included in due from related parties in the Company's 
consolidated balance sheet at December 31, 2003.

     Mr. Bradley Notes Payable - At the time of the merger, the Company 
assumed a note payable to Mr. Bradley related to pre-merger Reunion's plastics 
business.  At December 31, 2002 and 2001, the balance of $1,017,000 is 
included in notes payable - related parties in the Company's consolidated 
balance sheet at December 31, 2003.  However, see "SFSC Litigation Settlement" 
below.  No interest was paid in 2003 or 2002.  The note payable and any 
accrued and unpaid interest have been assigned to SFSC.  During 2001, $55,000 
was paid to SFSC related to this note payable.  At December 31, 2003 and 2002, 

                                    - 22 -



accrued and unpaid interest due related to this note payable of $280,166 and 
$168,283, respectively, is included in due to related parties in the Company's 
consolidated balance sheet at December 31, 2003.  However, see "SFSC 
Litigation Settlement" below.

     In January 2003, Mr. Bradley made a $500,000 payment on behalf of the 
Company to the Shaw Group, former owner of Naptech Pressure Systems and holder 
of a $3,644,000 15% note payable assumed by Reunion in the NPSAC acquisition 
in January 2001.  In exchange for the payment, the Company issued a $500,000 
10% note payable to Mr. Bradley.  The note payable and any accrued but unpaid 
interest is due on October 31, 2004.  At December 31, 2003, accrued and unpaid 
interest related to this note totaled $50,000 and is included in due to 
related parties in the Company's consolidated balance sheet at December 31, 
2003.  Mr. Bradley's rights under this note are subordinate to the Company's 
indebtedness to Congress. 

     Mr. Bradley Guarantees - To facilitate the closing of the refinancing of 
the Company's bank debt with Congress Financial Corporation (Congress) in 
December 2003, Mr. Bradley provided a personal guarantee of $1.5 million of 
the revolving credit portion of the new facilities.  In exchange for his 
guarantee, the Board of Directors approved a 2% guarantee fee to be paid to 
Mr. Bradley during the time period such guarantee is in place.  Amounts 
payable under this arrangement are being offset against an employee advance 
previously received by Mr. Bradley and owed to the Company.  Such advance 
totaled $58,000 at the time of the refinancing and, through December 31, 2003, 
$2,384 of guarantee fees had been offset against such advance.  See "Employee 
Advances" below.

     At the time of the NPSAC acquisition by the Company, NPSAC was indebted 
to Mr. Bradley in connection with an agreement whereby Mr. Bradley guaranteed 
certain obligations of NPSAC to its former owners.  At December 31, 2001, the 
Company owed Mr. Bradley a total of $90,000 related to this agreement.  During 
2002, Mr. Bradley assigned his right to this guarantee fee plus interest at 
approximately 11%, totaling $100,000, to two employees of the Company in 
repayment of loans totaling $100,000 made to Mr. Bradley by these employees.  
These employees also had received a total of $100,000 in advances from the 
Company during 2001.  See "Employee Advances" below.

     Kimball Bradley Guarantees - To facilitate obtaining new financing with 
two private investment funds and the closing of the refinancing of the 
Company's bank debt with Congress in December 2003, Kimball Bradley provided 
personal guarantees totaling $9.2 million, including guarantees of two notes 
payable totaling $7.7 million and $1.5 of the revolving credit portion of the 
new Congress facilities.  In exchange for his guarantees, the Board of 
Directors approved 2% guarantee fees to be paid to Kimball Bradley during the 
time period such guarantees are in place.  Amounts payable under these 
arrangements are being offset against an employee advance previously received 
by Kimball Bradley and owed to the Company.  Such advance totaled $55,000 at 
the time of the refinancing.  In addition, Kimball Bradley owed the Company 
$19,000 for the December 2002 exercise of 95,000 options which had been 
repriced to $0.20.  Through December 31, 2003, guarantee fees totaling $74,963 
had been incurred by the Company, of which $74,000 was offset against amounts 
due from Kimball Bradley.  The remaining $963 is included in due to related 
parties in the Company's consolidated balance sheet at December 31, 2003.  See 
"Employee Advances" below.

     Employee Advances - At December 31, 2002, the Company had non-interest 
bearing advances due from two employees totaling $113,000.  The highest 
balance during 2003 was $113,000.  The highest balance during 2002 was 
$213,000.  During 2002, two employees with advances totaling $100,000 repaid 
their advances by waiving their rights to the guarantee fee plus interest they 
received from Mr. Bradley.  See "Mr. Bradley Guarantees" and "Kimball Bradley 
Guarantees" above.

                                    - 23 -



SFSC Litigation Settlement

     The Company had been named as one of several defendants in fifteen 
consolidated lawsuits filed in December 2000 or early 2001 in the Superior 
Court for Los Angeles County, California.  The plaintiffs in these suits, 
except one, are structured settlement payees to whom Stanwich Financial 
Services Corp. (SFSC) is indebted.  The Company and SFSC were related parties. 
The plaintiffs alleged that the Company received loans from SFSC that have not 
been repaid.  On May 25, 2001, SFSC filed a Chapter 11 Bankruptcy Petition in 
the U.S. Bankruptcy Court for the District of Connecticut.
 
     A settlement was reached in the Superior Court action among the 
plaintiffs, Bankers Trust Co. and certain other financial institution 
defendants.  In the settlement, Bankers Trust Co. and the other settling 
financial institution defendants paid the plaintiffs an amount specified in 
the settlement agreement, and Bankers Trust Co. received an assignment of the 
claims of the plaintiffs and such other settling defendants against the 
Company and other defendants.  In the SFSC bankruptcy proceeding, the Company 
and certain other defendants entered into a settlement with SFSC and Bankers 
Trust Co.  Under this settlement (1) the Company is obligated to pay SFSC a 
settlement amount by December 31, 2006 in the sum of $4.29 million, plus 
interest at the rate of 10% per annum, in full satisfaction of the Company's 
indebtedness to SFSC under notes payable totaling $4.6 million, plus interest, 
and for certain credit support fees payable, which settlement amount is net of 
an offset against SFSC's note payable to the Company in the amount of $310,000 
plus interest, and (2) provided it makes such settlement payment, the Company 
is released from all claims that have been or could have been asserted against 
the Company by the plaintiffs or the settling financial institution defendants 
in the California Superior Court suits or by SFSC in the bankruptcy 
proceeding.  The settlement amount does not constitute a new liability of the 
Company, as it relates to indebtedness and a note receivable that had 
previously been recorded on the Company's balance sheet.

Previous Independent Accountants 

     On July 21, 2003, with the approval of the audit committee of the board 
of directors, the Company replaced Ernst & Young LLP as its independent 
accountants. The reports of Ernst & Young LLP on the financial statements for 
the two fiscal years ended prior to July 21, 2003 contained no adverse opinion 
or disclaimer of opinion and were not qualified or modified as to audit scope 
or accounting principle.  The reports of Ernst & Young LLP on the financial 
statements for the two fiscal years ended prior to July 21, 2003 were modified 
as to uncertainty concerning Reunion's ability to continue as a going concern. 
In connection with its audits for the two most recent fiscal years and through 
July 21, 2003, there were no disagreements with Ernst & Young LLP on any 
matter of accounting principles or practices, financial statement disclosure, 
or auditing scope or procedure, which disagreements, if not resolved to the 
satisfaction of Ernst & Young LLP, would have caused them to make reference 
thereto in their reports on the financial statements for such years.  During 
the two most recent years and through July 21, 2003, there were no reportable 
events (as defined in SEC Regulation S-K, Item 304 (a)(1)(v)).


Independent Accountants for 2003

     On July 21, 2003, Wiss & Company LLP was selected by the audit committee 
of the board of directors to audit Reunion Industries' financial statements 
for the fiscal year ending December 31, 2003. In its letter to Reunion 
September 30, 2003, Wiss & Company, LLP, the Registrant's then independent 
accountants, informed the Registrant of its decision to discontinue providing 
audit services to registrants with the SEC.  A copy of Wiss & Company's 

                                    - 24 -




September 30, 2003 letter was filed as Exhibit 99 to the Company's Current 
Report on Form 8-K filed with the SEC on October 29, 2003.  Having only 
provided financial statement review services to the Registrant relating to the 
filing of its Quarterly Report on Form 10-Q for the period ended June 30, 2003 
as filed with the SEC on August 14, 2003, Wiss & Company, LLP did not issue 
any reports on the financial statements of the Registrant for the past two 
fiscal years.  In connection with its review of the Registrant's financial 
statements for the period ended June 30, 2003 and through October 28, 2003, 
there have been no disagreements with Wiss & Company, LLP on any matter of 
accounting principles or practices, financial statement disclosure, or review 
scope or procedure.  During the period ended June 30, 2003 and through October 
28, 2003, there have been no reportable events (as defined in SEC Regulation 
S-K, Item 304 (a)(1)(v)).

     Effective on October 28, 2003, Reunion engaged Mahoney Cohen & Company, 
CPA, P.C. (Mahoney) as its new independent accountants.  The selection of 
Mahoney by Reunion was based on several factors, including the departure to 
Mahoney from the Wiss & Company of the audit engagement management formerly 
responsible for providing auditing services to the Company and our desire to 
maintain continuity of engagement staffing.  Prior to their appointment as 
independent accountants, Mahoney Cohen & Company, CPA, P.C., had not been 
consulted by the Company on any matters.

     Representatives of Mahoney Cohen & Company, CPA, P.C. are expected to be 
present at the Annual Meeting   to respond to appropriate questions and to 
make a statement if they desire to do so.


Fees Paid to Mahoney Cohen & Company, CPA, P.C., Wiss & Company, LLP and Ernst 
& Young LLP

     The following table presents fees paid by Reunion Industries for 
professional services rendered by Mahoney Cohen & Company, CPA, P.C., Wiss & 
Company, LLP and Ernst & Young, LLP for the years ended December 31, 2003 and 
2002. 

Fee Category and Service Provider                  2003                2002
-----------------------------------------------  --------            --------
Audit fees - Mahoney Cohen & Company, CPA, P.C.  $156,500            $      -
Audit fees - Wiss & Company, LLP                    6,500                   -
Audit fees - Ernst & Young, LLP                    18,300             178,000
Audit-related fees - Ernst & Young, LLP            47,675              36,500
                                                 --------            --------
Total fees                                       $228,975            $214,500
                                                 ========            ========

     Audit fees were for professional services rendered for the audit of 
Reunion Industries' consolidated financial statements and review of the 
interim consolidated financial statements included in quarterly reports and 
services that are normally provided in connection with statutory and 
regulatory filings or engagements. 
 
     Audit-related fees were for assurance and related services that are 
reasonably related to the performance of the audit or review of Reunion 
Industries' consolidated financial statements and are not reported under audit 
fees.  These services primarily include employee benefit plan audits not 
necessarily required by statute or regulation. 
 
     Except as indicated in the above table, the Company paid no fees to any 
of its principal accountants in either 2003 or 2002, including any fees for 
tax compliance, tax advice or tax planning. 

                                    - 25 -



Audit Committee Report

     The audit committee of the board of directors has furnished the following 
report on its activities during 2003:

     The audit committee consists of three of Reunion Industries' outside 
directors.  The board of directors and the audit committee believe that the 
audit committee's membership satisfies the American Stock Exchange rules 
concerning audit committee membership, including the requirements that members 
be independent and have financial sophistication. The Board of Directors has 
adopted a formal written audit committee charter and the audit committee 
performs a review and reassessment of the adequacy of the charter on an annual 
basis.

     In accordance with its written charter, the audit committee assists the 
board of directors in fulfilling its oversight responsibilities by reviewing 
the financial information that will be provided to the stockholders and 
others, the systems of internal controls, and all audit processes.

     In discharging its oversight responsibilities regarding the audit 
process, the audit committee:

     - reviewed and discussed the audited financial statements with 
management;

     - discussed with the independent accountants the material required to be 
discussed by Statement on Auditing Standards No. 61, as currently in effect; 
and

     - reviewed the written disclosures and the letter from the independent 
accountants required by the Independence Standards Board's Standard No. 1, as 
currently in effect, and discussed with the independent accountants any 
relationships that may impact their objectivity and independence.

     Based upon the review and discussions referred to above, the audit 
committee recommended to the board of directors that the audited financial 
statements be included in the company's Annual Report on Form 10-K for the 
fiscal year ended December 31, 2003, as filed with the Securities and Exchange 
Commission.

Members of the Audit Committee
David E. Jackson, Chairman
Thomas N. Amonett
Thomas L. Cassidy

                                    - 26 -



Incorporation by Reference

     The Company's Annual Report on Form 10-K for the year ended December 31, 
2003, as amended by Form 10-K/A Amendment No. 1 and by Form 10-K/A Amendment 
No.2 (the "Form 10-K") and its Quarterly Report on Form 10-Q for the period 
ended June 30, 2004 (the "Form 10-Q") are incorporated into, and are being 
delivered with, this proxy statement.  The Form 10-K also serves as the 
Company's Annual Report to Stockholders for 2003.


Limitation on Incorporation by Reference

     Notwithstanding any reference in prior or future filings of Reunion 
Industries 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", "Other 
Information - Common Stock Performance Graph" or "Other Information - Audit 
Committee Report".


Other Matters

     The Form 10-K and Form 10-Q have been mailed with this proxy statement to 
each stockholder entitled to vote at the Annual Meeting.  Copies of the Form 
10-K and Form 10-Q will be furnished upon written request to stockholders who 
have not previously received a copy from Reunion Industries. In addition, 
Reunion Industries will furnish any excluded exhibit to its Form 10-K upon 
written request and upon payment of a fee limited to Reunion Industries' 
reasonable expenses in furnishing such exhibit.  Written requests may be 
directed to Reunion Industries, Inc., attn:  Investor Relations, 11 Stanwix 
Street, Suite 1400, Pittsburgh, Pennsylvania 15222.


Deadline for Stockholder Proposals

     Although a specific date has not been set, Reunion Industries intends to 
hold its year 2005 annual meeting in June 2005.  In order to be considered for 
inclusion in the Company?s proxy statement and form of proxy for such meeting, 
any proposals by stockholders intending to be presented at such meeting must 
be received by the Secretary of the Company at 11 Stanwich Street, Pittsburgh, 
Pennsylvania 15222 by no later than January 31, 2005.  Any proposal received 
after January 31, 2005 will not be included in the Company's 2005 proxy 
statement.  If such proposals are in compliance with all of the requirements 
of SEC Rule 14a-8, they will be included in the proxy statement and set forth 
on the form of proxy issued for the annual meeting of stockholders to be held 
in 2005.

     If a stockholder intends to present a proposal at the 2005 annual meeting 
of stockholders without seeking to include the proposal in Reunion Industries' 
proxy statement, management proxies will be entitled to use the discretionary 
voting authority that will be contained in the proxies for the 2005 annual 
meeting of stockholders to vote on the stockholder's proposal at such meeting.

                                    - 27 -



Proxies

     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
                                 /s/ John M. Froehlich
                                 ----------------------------------
                                     John M. Froehlich
                                     Secretary
_______, 2004

                                    - 28 -



                                 ANNEX A

                       THE 2004 STOCK OPTION PLAN
                                   OF
                        REUNION INDUSTRIES, INC.
 
     Reunion Industries, Inc., a Delaware corporation (the "COMPANY"), has 
adopted The 2004 Stock Option Plan of Reunion Industries, Inc. (the "PLAN"), 
effective     , 2004, for the benefit of its eligible employees, consultants 
and directors.

The purposes of this Plan are as follows:

     (1) To provide an additional incentive for directors, key Employees and 
Consultants to further the growth, development and financial success of the 
Company by personally benefiting through the ownership of Company stock which 
recognizes such growth, development and financial success.

     (2) To enable the Company to obtain and retain the services of directors, 
key Employees and consultants considered essential to the long range success 
of the Company by offering them an opportunity to own stock in the Company 
which will reflect the growth, development and financial success of the 
Company.


                                  ARTICLE 1

Definitions
 
     1.1 General. Wherever the following terms are used in this Plan they 
shall have the meanings specified below, unless the context clearly indicates 
otherwise.
 
     1.2 "AFFILIATE" shall mean, with respect to any Person, any Person or 
Persons that, directly or indirectly, controls, or is controlled by or is 
under common control with such Person. For the purpose of this 
definition,"CONTROL" (including the terms "CONTROLLING", "CONTROLLED BY" and 
"UNDER COMMON CONTROL WITH"), as used with respect to any Person, means the 
possession, directly or indirectly, of the power to direct or cause the 
direction of the management or policies of such Person, whether through the 
ownership of voting securities or by contract or agency or otherwise.
 
     1.3 "AWARD LIMIT" shall mean 100,000 shares of Common Stock, as adjusted 
pursuant to Section 8.3.
 
     1.4 "BOARD" shall mean the Board of Directors of the Company.
 
     1.5 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
 
     1.6 "COMMITTEE" shall mean the Compensation Committee of the Board, or 
another committee of the Board, appointed as provided in Section 7.1.
 
     1.7 "COMMON STOCK" shall mean the common stock of the Company, $.01 par 
value per share.
 
     1.8 "COMPANY" shall mean Reunion Industries, Inc., a Delaware 
corporation.
 
     1.9 "CORPORATE TRANSACTION" shall mean any of the following shareholder-
approved transactions to which the Company is a party:
 
                                    - 29 -



          (a) a merger or consolidation in which the Company is not the 
surviving entity, except for a transaction the principal purpose of which is 
to change the State in which the Company is incorporated, to form a holding 
company or to effect a similar reorganization as to form whereupon this Plan 
and all Options are assumed by the successor entity;
 
          (b) the sale, transfer, exchange or other disposition of all or 
substantially all of the assets of the Company, in complete liquidation or 
dissolution of the Company in a transaction not covered by the exceptions to 
clause (a), above; or

          (c) any reverse merger in which the Company is the surviving entity 
but in which securities possessing more than fifty percent (50%) of the total 
combined voting power of the Company's outstanding securities are transferred 
or issued to a person or persons different from those who held such securities 
immediately prior to such merger.
 
     1.10 "DIRECTOR" shall mean a member of the Board.
 
     1.11 "DISABILITY" shall mean any complete and permanent disability as 
defined in Section 22(e)(3) of the Code and determined by the Committee (or 
the Board in the case of Options granted to Non-Employee Directors) in 
accordance with the procedures set forth in the regulations, thereunder.
 
     1.12 "EMPLOYEE" shall mean any officer or other employee (as defined in 
accordance with Section 3401(c) of the Code) of the Company, or of any 
corporation which is a Subsidiary.
 
     1.13 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as 
amended.
 
     1.14 "FAIR MARKET VALUE" of a share of Common Stock as of a given date 
shall be (i) the closing price of a share of Common Stock on the principal 
exchange on which shares of Common Stock are then trading, if any (or as 
reported on any composite index which includes such principal exchange), on 
the trading day previous to such date, or if shares were not traded on the 
trading day previous to such date, then on the next preceding date on which a 
trade occurred; or (ii) if Common Stock is not traded on an exchange but is 
quoted on NASDAQ or a successor quotation system, the closing price for the 
Common Stock on the trading day previous to such date as reported by NASDAQ or 
such successor quotation system, or if shares were not traded on the trading 
day previous to such date, then on the next preceding date on which a trade 
occurred; or (iii) if Common Stock is not publicly traded on an exchange and 
not quoted on NASDAQ or a successor quotation system, the Fair Market Value of 
a share of Common Stock shall be established by the Committee (or the Board in 
the case of Options granted to Non-Employee Directors) acting in good faith, 
giving predominate weight to the earnings history, book value and prospects of 
the Company in light of market conditions generally.
 
     1.15 "INCENTIVE STOCK OPTION" shall mean an option which conforms to the 
applicable provisions of Section 422 of the Code and which is designated as an 
Incentive Stock Option by the Committee.
 
     1.16 "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board who 
qualifies as a "Non-Employee Director" as defined in Rule 16b-3 under the 
Exchange Act, or any successor definition.
 
     1.17 "NON-QUALIFIED STOCK OPTION" shall mean an Option which is not 
designated as an Incentive Stock Option by the Committee.
 
                                    - 30 -



     1.18 "OPTION" shall mean a stock option granted under Article 3 of this 
Plan. An Option granted under this Plan shall, as determined by the Committee, 
be either a Non-Qualified Stock Option or an Incentive Stock Option; provided, 
however, that Options granted to Non-Employee Directors and consultants shall 
be Non-Qualified Stock options.

     1.19 "OPTION SHARES" shall mean shares of Common Stock acquired by 
Optionees through the exercise of options under this Plan.
 
     1.20 "OPTIONEE" shall mean an Employee, consultant or Non-Employee 
Director granted an Option under this Plan.
 
     1.21 "PERSON" shall mean a corporation, an association, a partnership, a 
trust, a limited liability company, an organization, a business or an 
individual.
 
     1.22 "PLAN" shall mean The 2004 Stock Option Plan of Reunion Industries, 
Inc.

     1.23 "PUBLIC OFFERING" shall mean the registration of an offering of 
shares of Common Stock under the Securities Act which becomes effective (other 
than by a registration on Form S-8 or any successor or similar forms).
 
     1.24 "QDRO" shall mean a qualified domestic relations order as defined by 
the Code or Title I of the Employee Retirement Income Security Act of 1974, as 
amended, or the rules thereunder.
 
     1.25 "RELATED PERSON" shall mean (a) in the event of a Person's death, 
such Person's executors, administrators, testamentary trustees, legatees or 
beneficiaries or the executors, administrators, testamentary trustees, 
legatees or beneficiaries of a Person who has become a holder of Options or 
Option Shares in accordance with the terms of this Plan; or (b) a revocable 
trust or custodianship the beneficiaries of which may include only such 
Person, spouse or lineal descendants by blood or adoption.
 
     1.26 "RULE 16B-3" shall mean that certain Rule 16b-3 under the Exchange 
Act, as such Rule may be amended from time to time.
 
     1.27 "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
 
     1.28 "SUBSIDIARY" shall mean any corporation, whether now or hereafter 
existing, which constitutes a "subsidiary" of the Company, as defined in 
Section 424(f) of the Code.
 
     1.29 "TERMINATION OF CONSULTANCY" shall mean the time when the engagement 
of an Optionee as a consultant to the Company or a Subsidiary is terminated 
for any reason, with or without cause, including, but not by way of 
limitation, by resignation, discharge, death, Disability or retirement; but 
excluding terminations where there is a simultaneous commencement of 
employment with the Company or any Subsidiary. The Committee, in its absolute 
discretion, shall determine the effect of all matters and questions relating 
to Termination of Consultancy, including, but not by way of limitation, the 
question of whether a Termination of Consultancy resulted from a discharge for 
good cause, and all questions of whether particular leaves of absence 
constitute Terminations of Consultancy. Notwithstanding any other provision of 
this Plan, the Company or any Subsidiary has an absolute and unrestricted 
right to terminate a consultant's service at any time for any reason 
whatsoever, with or without cause, except to the extent expressly provided 
otherwise in writing.
 
                                    - 31 -



     1.30 "TERMINATION OF DIRECTORSHIP" shall mean the time when an Optionee 
who is an Non-Employee Director ceases to be a Director for any reason, 
including, but not by way of limitation, a termination by resignation, failure 
to be elected, death, Disability or retirement. The Board, in its sole and 
absolute discretion, shall determine the effect of all matters and questions 
relating to Termination of Directorship with respect to Non-Employee 
Directors.
 
     1.31 "TERMINATION OF EMPLOYMENT" shall mean the time when the employee-
employer relationship between an Optionee and the Company or any Subsidiary is 
terminated for any reason, with or without cause, including, but not by way of 
limitation, a termination by resignation, discharge, death, Disability or 
retirement; but excluding (i) terminations where there is a simultaneous 
reemployment or continuing employment of an Optionee by the Company or any 
Subsidiary, (ii) at the discretion of the Committee, terminations which result 
in a temporary severance of the employee-employer relationship, and (iii) at 
the discretion of the Committee, terminations which are followed by the 
simultaneous establishment of a consulting relationship by the Company or a 
Subsidiary with the former employee. The Committee, in its absolute 
discretion, shall determine the effect of all matters and questions relating 
to Termination of Employment, including, but not by way of limitation, the 
question of whether a Termination of Employment resulted from a discharge for 
good cause, and all questions of whether particular leaves of absence 
constitute Terminations of Employment; provided, however, that, unless 
otherwise determined by the Committee in its discretion, a leave of absence, 
change in status from an employee to an independent contractor or other change 
in the employee-employer relationship shall constitute a Termination of 
Employment if, and to the extent that, such leave of absence, change in status 
or other change interrupts employment for the purposes of Section 422(a)(2) of 
the Code and the then applicable regulations and revenue rulings under said 
Section. Notwithstanding any other provision of this Plan, the Company or any 
Subsidiary has an absolute and unrestricted right to terminate an Employee's 
employment at any time for any reason whatsoever, with or without cause, 
except to the extent expressly provided otherwise in writing.
 
     1.32 "TERMINATION FOR CAUSE" shall mean the time when the Non-Employee 
Director-employer, employee-employer or consultant-employer relationship 
between an Optionee and the Company or any Subsidiary is terminated for cause, 
as termination for cause is defined in the Optionee's directorial, employment 
or consultancy agreement; provided, however, that if termination for cause is 
not therein defined, it shall have such meaning, in conformance with 
applicable law, as the Committee (or the Board in the case of termination for 
cause of an Non-Employee Director) shall determine is appropriate.
 

                                  ARTICLE 2

Shares Subject to Plan
 
     2.1 Shares Subject to Plan.
 
          (a) The shares of stock subject to Options shall be Common Stock. 
The aggregate number of such shares which may be issued upon exercise of such 
options under the Plan shall be 1,000,000. The shares of Common Stock of the 
Company issuable upon exercise of such options may be either previously 
authorized but unissued shares or treasury shares.
 
          (b) The maximum number of shares which may be subject to Options 
granted under the Plan to any individual in any fiscal year of the Company 
shall not exceed the Award Limit. To the extent required by Section 162(m) of 
the Code, shares subject to Options which are canceled continue to be counted 

                                    - 32 -



against the Award Limit and if, after grant of an Option, the price of shares 
subject to such Option is reduced, the transaction is treated as a 
cancellation of the Option and a grant of a new Option and both the Option 
deemed to be canceled and the Option deemed to be granted are counted against 
the Award Limit.
 
     2.2 Add-Back of Options. If any option to acquire shares of Common Stock 
under this Plan expires or is canceled without having been fully exercised, 
the number of shares subject to such Option but as to which such Option was 
not exercised prior to its expiration, cancellation or exercise may again be 
available for the granting of Options hereunder, subject to the limitations of 
Section 2.1. Furthermore, any shares subject to Options which are adjusted 
pursuant to Section 8.3 and become exercisable with respect to shares of stock 
of another corporation shall be considered cancelled and may again be 
available for the granting of Options hereunder, subject to the limitations of 
Section 2.1. Shares of Common Stock which are delivered by the Optionee or 
withheld by the Company upon the exercise of any Option under this Plan, in 
payment of the exercise price thereof, may again be available for the granting 
of Options hereunder, subject to the limitations of Section 2.1. 
Notwithstanding the provisions of this Section 2.2, no shares of Common Stock 
may again be available for the granting of Options if such action would cause 
an Incentive Stock Option to fail to qualify as an incentive stock option 
under Section 422 of the Code.  
 

                                  ARTICLE 3

Granting of Options
 
     3.1 Eligibility. Any Non-Employee Director, Employee or consultant 
selected by the Committee (or the Board in the case of Options granted to Non-
Employee Directors) pursuant to Section 3.4(a)(i) shall be eligible to be 
granted an Option.
 
     3.2 Disqualification for Stock Ownership. No person may be granted an 
Incentive Stock Option under this Plan if such person, at the time the 
Incentive Stock Option is granted, owns stock possessing more than ten percent 
(10%) of the total combined voting power of all classes of stock of the 
Company or any then existing Subsidiary unless such Incentive Stock Option 
conforms to the applicable provisions of Section 422 of the Code.
 
     3.3 Qualification of Incentive Stock Options. No Incentive Stock Option 
shall be granted to any person who is not an Employee.
 
     3.4 Granting of Options.
 
          (a) The Committee (or the Board in the case of Options granted to 
Non-Employee Directors) shall from time to time, in its absolute discretion, 
and subject to applicable limitations of this Plan:
 
               (i) Determine which Employees are key Employees and select from 
among the Non-Employee Directors, key Employees and consultants (including 
Non- Employee Directors, Employees and consultants who have previously 
received Options or other awards under this Plan) such of them as in its 
opinion  should be granted Options;
 
               (ii) Determine the number of shares to be subject to such 
Options granted to the selected Non-Employee Directors, key Employees and 
consultants;
 
                                    - 33 -



               (iii) Subject to Section 3.2(a), determine whether such Options 
are to be  Incentive Stock Options or Non-Qualified Stock Options and whether 
such  Options are to qualify as performance-based compensation as described in 
Section 162(m)(4)(C) of the Code; and 

               (iv) Determine the terms and conditions of such Options, 
consistent with  this Plan; provided, however, that the terms and conditions 
of Options intended to qualify as performance-based compensation as described 
in Section 162(m)(4)(C) of the Code shall include, but not be limited to, such 
terms and conditions as may be necessary to meet the applicable provisions of 
Section 162(m) of the Code.
 
          (b) Upon the selection of a Non-Employee Director, key Employee or 
consultant to be granted an Option, the Committee (or the Board in the case of 
Options granted to Non-Employee Directors) shall instruct the Secretary of the 
Company to issue the Option and may impose such conditions on the grant of the 
Option as it deems appropriate. Without limiting the generality of the 
preceding sentence, the Committee (or the Board in the case of Options granted 
to Non-Employee Directors) may, in its discretion and on such terms as it 
deems appropriate, require as a condition on the grant of an Option to an Non-
Employee Director, Employee or consultant that such Non-Employee Director, 
Employee or consultant surrender for cancellation some or all of the 
unexercised Options or other rights which have been previously granted to such 
Non-Employee Director, Employee or consultant under this Plan or otherwise. An 
Option, the grant of which is conditioned upon such surrender, may have an 
option price lower (or higher) than the exercise price of such surrendered 
Option or other award, may cover the same (or a lesser or greater) number of 
shares as such surrendered Option or other award, may contain such other terms 
as the Committee (or the Board in the case of Options granted to Non-Employee
Directors) deems appropriate, and shall be exercisable in accordance with its 
terms, without regard to the number of shares, price, exercise period or any 
other term or condition of such surrendered Option or other award.
 

                                  ARTICLE 4

Terms of Options
 
     4.1 Option Agreement. Each Option shall be evidenced by a written Stock 
Option Agreement, which shall be executed by the Optionee and an authorized 
officer of the Company and which shall contain such terms and conditions as 
the Committee (or the Board in the case of Options granted to Non-Employee 
Directors) shall determine, consistent with this Plan. Stock Option Agreements 
evidencing Options intended to qualify as performance-based compensation as 
described in Section 162(m)(4)(C) of the Code shall contain such terms and 
conditions as may be necessary to meet the applicable provisions of Section 
162(m) of the Code. Stock Option Agreements evidencing Incentive Stock Options 
shall contain such terms and conditions as may be necessary to meet the 
applicable provisions of Section 422 of the Code.
 
     4.2 Option Price. The price per share of the shares subject to each 
Option shall be set by the Committee (or the Board in the case of Options 
granted to Non-Employee Directors); provided, however, that:
 
          (a) Unless otherwise permitted by applicable securities laws, such 
price shall be not less than the Fair Market Value  of the stock at the time 
the option is granted;
 
          (b) In the case of Incentive Stock Options and Options intended to 
qualify as performance-based compensation as described in Section 162(m)(4)(C) 
of the Code, such price shall not be less than one hundred percent (100%) of 
the Fair Market Value of a share of Common Stock on the date the Option is 
granted; and

                                    - 34 -


 
          (c) In the case of Incentive Stock Options granted to an individual 
then owning (within the meaning of Section 424(d) of the Code) more than ten 
percent (10%) of the total combined voting power of all classes of stock of 
the Company or any Subsidiary, such price shall not be less than one hundred 
and ten percent (110%) of the Fair Market Value of a share of Common Stock on 
the date the Option is granted.
 
     4.3 Option Term. The term of an Option shall be set by the Committee (or 
the Board in the case of Options granted to Non-Employee Directors) in its 
discretion; provided, however, that:
 
          (a) No Option may have a term that extends beyond the expiration of 
ten (10) years from the date the Option was granted;

          (b) In the case of Incentive Stock Options, the term shall not be 
more than ten (10) years from the date the Incentive Stock Option is granted, 
or five (5) years from such date if the Incentive Stock Option is granted to 
an individual then owning (within the meaning of Section 424(d) of the Code) 
more than ten percent (10%) of the total combined voting power of all classes 
of stock of the Company or any Subsidiary;
 
          (c) Except as limited by requirements of Section 422 of the Code and 
regulations and rulings thereunder applicable to Incentive Stock Options, the 
Committee (or the Board in the case of Options granted to Non-Employee 
Directors) may extend the term of any outstanding option in connection with 
any Termination of Directorship, Termination of Employment or Termination of 
Consultancy of the Optionee, or amend any other term or condition of such 
Option relating to such a termination; and
 
          (d) Unless otherwise permitted by applicable securities laws, in the 
event of an Optionee's Termination of Directorship, Termination of Employment 
or Termination of Consultancy for any reason except death, Disability or 
Termination for Cause, the Optionee shall have a period of time, as is 
determined by the Committee (or the Board in the case of Options granted to 
Non-Employee Directors), not to exceed three (3) months  in the case of 
Incentive Stock Options, from the date of such Termination of Directorship, 
Termination of Employment or Termination of Consultancy to exercise the 
Option, and in the event of an Optionee's Termination of Directorship, 
Termination of Employment or Termination of Consultancy due to the Optionee's 
death or Disability, the Optionee, the Optionee's estate or a person who 
acquired the right to exercise the Option by bequest or inheritance shall have 
a period of time, as is determined by the Committee (or the Board in the case 
of Options granted to Non-Employee Directors), not to exceed twelve (12) 
months in the case of Incentive Stock Options, from the date of such 
Termination of Directorship, Termination of Employment or Termination of 
Consultancy to exercise the Option.  Notwithstanding the foregoing, if an 
Optionee's Termination of Directorship, Termination of Employment or 
Termination of Consultancy also qualifies as a Termination for Cause, the 
Company, in its discretion, may terminate the Optionee's right to exercise his 
or her Options on the date of such termination or such other time as the 
Committee (or the Board in the case of Options granted to Non-Employee 
Directors), in its sole discretion, shall deem appropriate.
 
     4.4 Option Vesting.
 
          (a) The period during which the right to exercise an Option in whole 
or in part vests in the Optionee shall be set by the Committee (or the Board 
in the case of Options granted to Non-Employee Directors) and the Committee 
(or the Board in the case of Options granted to Non-Employee Directors) may 
determine that an Option may not be exercised in whole or in part for a 
specified period after it is granted; provided, however, that, subject to 

                                    - 35 -



section 4.4(b), (i) each option shall become exercisable as determined by the 
Committee (or the Board in the case of Options granted to Non-Employee 
Directors) in its sole discretion; (ii) unless the Committee (or the Board in 
the case of Options granted to Non-Employee Directors) otherwise provides in 
the terms of the Stock Option Agreement or this Plan otherwise so dictates, no 
Option shall be exercisable by any Optionee who is then subject to Section 16 
of the Exchange Act within the period ending six months and one day after the 
date the Option is granted; and (iii) upon the transfer of more than fifty 
percent (50%) of Common Stock to a Person who is not an Affiliate of the 
Company during the term of the option the Committee (or the Board in the case 
of Options granted to Non-Employee Directors) may determine in its sole 
discretion, that each outstanding option shall become fully exercisable for 
all of the shares of Common Stock at the time subject to such option; 
provided, that options may become fully exercisable, subject to reasonable 
conditions such as continued directorship, employment or consultancy, at any 
time or during any period established by the Committee (or the Board in the 
case of options granted to Non-Employee Directors).
 
          (b) No portion of an Option which is unexercisable at Termination of 
Directorship, Termination of Employment or Termination of Consultancy shall 
thereafter become exercisable, except as may be otherwise provided by the 
Committee (or the Board in the case of Options granted to Non-Employee 
Directors), in its sole discretion, either in the Stock Option Agreement or by 
action of the Committee (or the Board in the case of Options granted to Non-
Employee Directors) following the grant of the Option.
 
          (c) To the extent that the aggregate Fair Market Value of stock with 
respect to which "incentive stock options" (within the meaning of Section 422 
of the Code, but without regard to Section 422(d) of the Code) are exercisable 
for the first time by an Optionee during any calendar year (under the Plan and 
all other incentive stock option plans of the Company and any Subsidiary) 
exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options 
to the extent required by Section 422 of the Code. The rule set forth in the 
preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 4.4(c), the 
Fair Market Value of stock shall be determined as of the time the Option with 
respect to such stock is granted. 
 
     4.5 No Right of Employment. Nothing in this Plan or in any Stock Option 
Agreement hereunder shall confer upon any Optionee any right to continue in 
the employ (or to consult for or serve as a Non-Employee Director, as 
applicable) of the Company or any Subsidiary or shall interfere with or 
restrict in any way the rights of the Company or any Subsidiary, which are 
hereby expressly reserved, to discharge any Optionee at any time for any 
reason whatsoever, with or without good cause.
 
     4.6 Financial Statements. To the extent required by applicable securities 
laws, each Optionee shall receive financial statements of the Company at least 
annually.

                                  ARTICLE 5

Exercise of Options
 
     5.1 Partial Exercise. An exercisable Option may be exercised in whole or 
in part. However, an Option shall not be exercisable with respect to 
fractional shares and the Committee (or the Board in the case of Options 
granted to Non-Employee Directors) may require that, by the terms of the 
Option, a partial exercise be with respect to a minimum number of shares.

                                    - 36 -  



     5.2 Manner of Exercise. All or a portion of an exercisable Option shall 
be deemed exercised upon delivery of all of the following to the Secretary of 
the Company or such Secretary's office:
 
          (a) A written notice complying with the applicable rules established 
by the Committee (or the Board in the case of Options granted to Non-Employee 
Directors) stating that the Option, or a portion thereof, is exercised. The 
notice shall be signed by the Optionee or other person then entitled to 
exercise the Option or such portion;
 
          (b) Such representations and documents as the Committee (or the 
Board in the case of Options granted to Non-Employee Directors), in its 
absolute discretion, deems necessary or advisable to effect compliance with 
all applicable provisions of the Securities Act and any other federal or state 
securities laws or regulations. The Committee (or the Board in the case of 
Options granted to Non-Employee Directors) may, in its absolute discretion, 
also take whatever additional actions it deems appropriate to effect such 
compliance including, without limitation, placing legends on share 
certificates and issuing stop-transfer notices to agents and registrars;
 
          (c) In the event that the Option shall be exercised pursuant to 
Section 8.1 by any person or persons other than the Optionee, appropriate 
proof of the right of such person or persons to exercise the Option; and

          (d) Full cash payment to the Secretary of the Company for the shares 
and for payment of any applicable withholding or other applicable employment 
taxes with respect to which the Option, or portion thereof, is exercised.  
However, the Committee (or the Board in the case of Options granted to Non-
Employee Directors), may in its discretion (i) allow payment, in whole or in 
part, through the delivery of shares of Common Stock owned by the Optionee, 
duly endorsed for transfer to the Company with a Fair Market Value on the date 
of delivery equal to the aggregate exercise price of the Option or exercised 
portion thereof; (ii) allow payment, in whole or in part, through a cashless 
exercise program implemented by the Committee (or the Board in the case of 
Options granted to Non-Employee Directors); (iii) allow payment, in whole or 
in part, through the delivery of property of any kind which constitutes good 
and valuable consideration; (iv) allow payment, in whole or in part, through 
the delivery of a notice that the Optionee has placed a market sell order with 
a broker with respect to shares of Common Stock then issuable upon exercise of 
the Option, and that the broker has been directed to pay a sufficient portion 
of the net proceeds of the sale to the Company in satisfaction of the Option 
exercise price and any applicable withholding or other employment taxes; or 
(vi)allow payment through any combination of the consideration provided in the 
foregoing subparagraphs. 
 
     5.3 Conditions to Issuance of Stock Certificates. The Company shall not 
be required to issue or deliver any certificate or certificates for shares of 
stock purchased upon the exercise of any Option or portion thereof prior to 
fulfillment of all of the following conditions:
 
          (a) The admission of such shares to listing on all stock exchanges, 
if any, on which such class of stock is then listed;
 
          (b) The completion of any registration or other qualification of 
such shares under any state or federal law, or under the rulings or 
regulations of the Securities and Exchange Commission or any other government 
regulatory body which the Committee or the Board shall, in its absolute 
discretion, deem necessary or advisable;
 
          (c) The obtaining of any approval or other clearance from any state 
or federal governmental agency which the Committee or the Board shall, in its 
absolute discretion, determine to be necessary or advisable;
 
                                    - 37 -



          (d) The lapse of such reasonable period of time following the 
exercise of the Option as the Committee or the Board may establish from time 
to time for reasons of administrative convenience; and
 
          (e) The receipt by the Company of full payment for such shares, 
including payment of any applicable withholding tax.
 
     5.4 Rights as Shareholders. The holders of Options shall not be, nor have 
any of the rights or privileges of, shareholders of the Company in respect of 
any shares purchasable upon the exercise of any part of an Option unless and 
until certificates representing such shares have been issued by the Company to 
such holders.


                                  ARTICLE 6

Notices with Respect to Option Shares
 
     6.1 Disposition of Shares. Notwithstanding any provision in the Plan or 
any Option, each Optionee shall be required to give the Company advance notice 
of any intention to dispose of shares of Common Stock acquired by exercise of 
an Option and prompt notice of any disposition of shares of Common Stock, 
acquired by exercise of an Incentive Stock Option, within (i) two (2) years 
from the date of granting such Option to such Optionee or (ii) one (1) year 
after the transfer of such shares to such Optionee. Each Optionee shall be 
required to give the Company such notice regardless of whether the 
certificates evidencing shares acquired by exercise of an Option refer to such 
requirement to give notice.
 
     6.2 Ownership and Transfer Restrictions. The Committee (or the Board in 
the case of Options granted to Non-Employee Directors), in its absolute 
discretion, may impose additional restrictions on the ownership and 
transferability of the shares purchasable upon the exercise of an Option as it 
deems appropriate. Any such restriction shall be set forth in the respective 
Stock Option Agreement and may be referred to on the certificates evidencing 
such shares.
 
     6.3 Legend. Each certificate representing Option Shares may be endorsed 
with the following legend, which legend shall be removed upon termination of 
the stock restrictions set forth in this Article 6.
 
THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS  
SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN 2004 STOCK OPTION PLAN OF 
REUNION INDUSTRIES, INC. COPIES OF SUCH STOCK OPTION PLAN MAY BE OBTAINED UPON 
WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.
 

                                  ARTICLE 7

Administration
 
     7.1 Compensation Committee. The Compensation Committee (or another 
committee of the Board assigning the functions of the Committee under this 
Plan) shall consist solely of two or more Non-Employee Directors appointed by 
and holding office at the pleasure of the Board, each of whom is both a "NON-
EMPLOYEE DIRECTOR" as defined by Rule 16(b)-3 and an "OUTSIDE DIRECTOR" for 
purposes of Section 162(m) of the Code. Appointment of Committee members shall 
be effective upon acceptance of appointment. Committee members may resign at 
any time by delivering written notice to the Board. Vacancies in the Committee 
may be filled by the Board.
 
                                    - 38 -



     7.2 Duties and Powers of Committee. It shall be the duty of the Committee 
to conduct the general administration of this Plan in accordance with its 
provisions. The Committee shall have the power to interpret this Plan and the 
agreements pursuant to which Options are granted or awarded, and to adopt such 
rules for the administration, interpretation, and application of this Plan as 
are consistent therewith and to interpret, amend or revoke any such rules. 
Notwithstanding the foregoing, the full Board, acting by a majority of its 
members in office, shall conduct the general administration of the Plan with 
respect to Options granted to Non-Employee Directors. Any such grant or award 
under this Plan need not be the same with respect to each Optionee. Any such 
interpretations and rules with respect to Incentive Stock Options shall be 
consistent with the provisions of Section 422 of the Code. In its absolute 
discretion, the Board may at any time and from time to time exercise any and 
all rights and duties of the Committee under this Plan except with respect to 
matters which under Rule 16b-3 or Section 162(m) of the Code, or any 
regulations or rules issued thereunder, are required to be determined in the 
sole discretion of the Committee. All designations, determinations, 
interpretations and other decisions with respect to the Plan or any Option 
shall be within the sole discretion of the Committee (or the Board in the case 
of Options granted to Non-Employee Directors) and shall be final, conclusive 
and binding upon all persons, including, but not limited to, the Company, any 
Subsidiary, any Optionee, any holder or beneficiary of any Option, any owner 
of an equity interest in the Company and any Employee or consultant.
 
     7.3 Majority Rule; Unanimous Written Consent. The Committee shall act by 
an affirmative vote, taken with or without a meeting, of a majority of its 
members.
 
     7.4 Compensation; Professional Assistance; Good Faith Actions. Members of 
the Committee shall receive such compensation for their services as members as 
may be determined by the Board. All expenses and liabilities which members of 
the Committee incur in connection with the administration of this Plan shall 
be borne by the Company. The Committee may, with the approval of the Board, 
employ attorneys, consultants, accountants, appraisers, brokers, or other 
persons. The Committee, the Company and the Company's officers and Directors 
shall be entitled to rely upon the advice, opinions or valuations of any such 
persons. All actions taken and all interpretations and determinations made by 
the Committee or the Board in good faith shall be final and binding upon all 
Optionees, the Company and all other interested persons. No members of the 
Committee or Board shall be personally liable for any action, determination or 
interpretation made in good faith with respect to this Plan or Options, and 
the Company shall indemnify the members of the Committee against all costs and 
expenses reasonably incurred by them in connection with any action, suit or 
proceeding to which they or any of them may be party by reason of any action 
taken or failure to act under or in connection with the Plan or any award made 
under the Plan, and against all amounts paid by them in satisfaction of a 
judgment in any such action, suit or proceeding, except a judgment based upon 
a finding of bad faith. Upon the institution of any such action, suit or 
proceedings, a Committee member shall notify the Company in writing, giving 
the Company an opportunity, at its own expense, to handle and defend the same 
before such Committee member undertakes to handle it on his own behalf.


                                  ARTICLE 8

Miscellaneous Provisions
 
     8.1 Not Transferable. Options under this Plan may not be sold, pledged, 
assigned, or transferred in any manner other than by will or the laws of 
descent and distribution or pursuant to a QDRO. No Option or interest or right 
therein shall be liable for the debts, contracts or engagements of the 

                                    - 39 -



Optionee or the Optionee's successors in interest or shall be subject to 
disposition by transfer, alienation, anticipation, pledge, encumbrance, 
assignment or any other means whether such disposition be voluntary or 
involuntary or by operation of law by judgment, levy, attachment, garnishment 
or any other legal or equitable proceedings (including bankruptcy), and any 
attempted disposition thereof shall be null and void and of no effect, except 
to the extent that such disposition is permitted by the preceding sentence.  
During the lifetime of the Optionee, only such Optionee or a transferee of an 
Option pursuant to a QDRO may exercise an Option (or any portion thereof) 
granted to such Optionee under the Plan.
 
     8.2 Amendment, Suspension or Termination of this Plan. Except as 
otherwise provided in this Section 8.2, this Plan may be wholly or partially 
amended or otherwise modified, suspended or terminated at any time or from 
time to time by the Board or the Committee. However, without approval of the 
Company's shareholders given within twelve months before or after the action 
by the Board or the Committee, no action of the Board or the Committee may, 
except as provided in Section 8.3, increase the limits imposed in Section 2.1 
on the maximum number of shares which may be issued under this Plan, and no 
action of the Board or the Committee may be taken that would otherwise require 
shareholder approval as a matter of applicable law, regulation or rule. No 
amendment, suspension or termination of this Plan shall, without the consent 
of the holder of Options, alter or impair any rights or obligations under any 
Options theretofore granted or awarded, unless the award itself otherwise 
expressly so provides. No Options may be granted or awarded during any period 
of suspension or after termination of this Plan, and in no event may any 
Incentive Stock Option be granted under this Plan after the first to occur of 
the following events:
 
          (a) The expiration of ten (10) years from the date the Plan is 
adopted by the Board; or
 
          (b) The expiration of ten (10) years from the date the Plan is 
approved by the Company's shareholders under Section 8.4.
 
     8.3 Changes in Common Stock or Assets of the Company, Acquisition or 
Liquidation of the Company and Other Corporate Events.
 
          (a) Subject to Section 8.3(d), (A) in the event that the Committee 
(or the Board in the case of Options granted to Non-Employee Directors) 
determines that any dividend or other distribution (whether in the form of 
cash, Common Stock, other securities, or other property), recapitalization, 
reclassification, reorganization, merger, consolidation, split-up, spin-off, 
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange 
or other disposition of all or substantially all of the assets of the Company 
(including, but not limited to, a Corporate Transaction), or exchange of 
Common Stock or other securities of the Company, issuance of warrants or other 
rights to purchase Common Stock or other securities of the Company, or other 
similar corporate transaction or event, in the Committee's sole discretion 
(or, in the case of Options granted to Non-Employee Directors, the Board's 
sole discretion), affects the Common Stock such that an adjustment is 
determined by the Committee (or the Board in the case of Options granted to 
Non-Employee Directors) to be appropriate in order to prevent dilution or 
enlargement of the benefits or potential benefits intended to be made 
available under the Plan or with respect to an Option, or (B) in the event of 
any stock split or reverse stock split, then the Committee (or the Board in 
the case of Options granted to Non-Employee Directors) shall, in such manner 
as it may deem equitable, adjust any or all of
 
               (i) the number and kind of shares of Common Stock (or other 
securities or  property) with respect to which Options may be granted under 
the Plan,  (including, but not limited to, adjustments of the limitations in 
Section 2.1 on the maximum number and kind of shares which may be issued),

                                    - 40 -


 
               (ii) the number and kind of shares of Common Stock (or other 
securities or property) subject to outstanding Options, and
 
               (iii) the grant or exercise price with respect to any Option.
 
          (b) Subject to Sections 8.3(b)(vi) and 8.3(d), in the event of any 
Corporate Transaction or other transaction or event described in Section 
8.3(a) or any unusual or nonrecurring transactions or events affecting the 
Company, any Affiliate of the Company, or the financial statements of the 
Company or any Affiliate, or of changes in applicable laws, regulations, or 
accounting principles, the Committee (or the Board in the case of Options 
granted to Non-Employee Directors) in its discretion is hereby authorized to 
take any one (1)or more of the following actions whenever the Committee (or 
the Board in the case of Options granted to Non-Employee Directors) determines 
that such action is appropriate in order to prevent dilution or enlargement of 
the benefits or potential benefits intended to be made available under the 
Plan or with respect to any option under this Plan, to facilitate such 
transactions or events or to give effect to such changes in laws, regulations 
or principles:
 
               (i) In its sole and absolute discretion, and on such terms and 
conditions as it deems appropriate, the Committee (or the Board in the case of 
Options granted to Non-Employee Directors) may provide, either by the terms of 
the agreement or by action taken prior to the occurrence of  such transaction 
or event and either automatically or upon the Optionee's request, for either 
the purchase of any such Option for an amount of cash equal to the amount that 
could have been attained upon the exercise of such Option, or realization of 
the Optionee's rights had such Option been currently exercisable or payable or 
fully vested or the replacement of such Option with other rights or property 
selected by the Committee (or the Board in the case of Options granted to Non-
Employee Directors) in its sole discretion;
 
               (ii) In its sole and absolute discretion, the Committee (or the 
Board in the case of Options granted to Non-Employee Directors) may provide, 
either by the terms of such Option or by action taken prior to the occurrence 
of such transaction or event that such Option cannot be exercised after such 
event;
 
               (iii) In its sole and absolute discretion, and on such terms 
and conditions as it deems appropriate, the Committee (or the Board in the 
case of Options granted to Non-Employee Directors) may provide, either by the 
terms of such Option or by action taken prior to the occurrence of such 
transaction or event, that for a specified period of time prior to such 
transaction or event, such Option shall be exercisable as to all shares 
covered thereby, notwithstanding anything to the contrary in (i) Section 4.4 
or (ii) the provisions of such Option;
 
               (iv) In its sole and absolute discretion, and on such terms and 
conditions as it deems appropriate, the Committee (or the Board in the case of 
Options granted to Non-Employee Directors) may provide, either by the terms of 
such option or by action taken prior to the occurrence of such transaction or 
event, that upon such event, such Option be assumed by the successor or 
survivor corporation, or a parent or subsidiary thereof, or shall be 
substituted for by similar Options covering the stock of the successor or 
survivor corporation, or a parent or subsidiary thereof, with appropriate 
adjustments as to the number and kind of shares and prices;
 
               (v) In its sole and absolute discretion, and on such terms and 
conditions as it deems appropriate, the Committee (or the Board in the case of 
Options granted to Non-Employee Directors) may make adjustments in the number 

                                    - 41 -



and type of shares of Common Stock (or other securities or property) subject 
to outstanding Options and/or in the terms and conditions of (including the 
grant or exercise price), and the criteria included in, outstanding Options 
and Options which may be granted in the future; and
 
               (vi) None of the foregoing discretionary actions taken under 
this Section 8.3(b) shall be permitted with respect to Options granted to Non-
Employee Directors to the extent that such discretion would be inconsistent 
with the applicable exemptive conditions of Rule 16b-3. In the event of a 
Corporate Transaction, to the extent that the Board does not have the ability 
under Rule 16b-3 to take or to refrain from taking the discretionary actions 
set forth in Section 8.3(b)(iii) above, each Option granted to an Non-Employee 
Director shall be exercisable as to all shares covered thereby during the five 
days immediately preceding the consummation of such Corporate Transaction and 
subject to such consummation, notwithstanding anything to the contrary in 
Section 4.4 or the vesting schedule of such Options. In the event of a 
Corporate Transaction, to the extent that the Board does not have the ability 
under Rule 16b-3 to take or to refrain from taking the discretionary actions 
set forth in Section 8.3(b)(ii) above, no Option granted to an Non-Employee 
Director may be exercised following such Corporate Transaction unless such 
Option is, in connection with such Corporate Transaction, either assumed by 
the successor or survivor corporation (or parent or subsidiary thereof) or 
replaced with a comparable right with respect to shares of the capital stock 
of the successor or survivor corporation (or parent or subsidiary thereof).
 
          (c) Subject to Section 8.3(d) and 8.8, the Committee (or the Board 
in the case of Options granted to Non-Employee Directors) may, in its 
discretion, include such further provisions and limitations in any Option as 
it may deem equitable and in the best interests of the Company.
 
          (d) With respect to Incentive Stock Options and Options intended to 
qualify as performance-based compensation under Section 162(m), no adjustment 
or action described in this Section 8.3 or in any other provision of the Plan 
shall be authorized to the extent that such adjustment or action would cause 
the Plan to violate Section 422(b)(1) of the Code or would cause such option 
to fail to so qualify under Section 162(m), as the case may be, or any 
successor provisions thereto. Furthermore, no such adjustment or action shall 
be authorized to the extent such adjustment or action would result in short-
swing profits liability under Section 16 or violate the exemptive conditions 
of Rule 16b-3 unless the Committee (or the Board in the case of Options 
granted to Non-Employee Directors) determines that the Option is not to comply 
with such exemptive conditions. The number of shares of Common Stock subject 
to any Option shall always be rounded to the next whole number.
 
     8.4 Approval of Plan by Shareholders. This Plan will be submitted for the 
approval of the Company's shareholders within twelve months after the date of 
the Board's initial adoption of this Plan. Options may be granted prior to 
such shareholder approval, provided that such Options shall not be exercisable 
prior to the time when this Plan is approved by the shareholders, and provided 
further that if such approval has not been obtained at the end of said twelve-
month period, all Options previously granted under this Plan shall thereupon 
be canceled and become null and void.
 
     8.5 Tax Withholding. The Company shall be entitled to require payment in 
cash or deduction from other compensation payable to each Optionee of any sums 
required by federal, state or local tax law to be withheld with respect to the 
issuance, vesting or exercise of any Option. The Committee (or the Board in 
the case of Options granted to Non-Employee Directors) may in its discretion 
and in satisfaction of the foregoing requirement allow such Optionee to elect 
to have the Company withhold shares of Common Stock otherwise issuable under 
such Option (or allow the return of shares of Common Stock) having a Fair 
Market Value equal to the sums required to be withheld.
 
                                    - 42 -



     8.6 Forfeiture Provisions. Pursuant to its general authority to determine 
the terms and conditions applicable to awards under the Plan, the Committee 
(or the Board in the case of Options granted to Non-Employee Directors) shall 
have the right (to the extent consistent with the applicable exemptive 
conditions of Rule 16b-3 and to the extent permitted under applicable state 
law) to provide, in the terms of Options made under the Plan, or to require 
the recipient to agree by separate written instrument, that (i) any proceeds, 
gains or other economic benefit actually or constructively received by the 
recipient upon any receipt or exercise of an Option, or upon the receipt or 
resale of any Common Stock underlying such Option, must be paid to the 
Company, and (ii) the Option shall terminate and any unexercised portion of 
such Option (whether or not vested) shall be forfeited, if (a) a Termination 
of Directorship, Termination of Employment or Termination of Consultancy 
occurs prior to a specified date, or within a specified time period following 
receipt or exercise of the Option, or (b) the recipient at any time, or during 
a specified time period, engages in any activity in competition with the 
Company, or which is inimical, contrary or harmful to the interests of the 
Company, as further defined by the Committee (or the Board, as applicable).
 
     8.7 Limitations Applicable to Section 16 Persons and Performance-Based 
Compensation. Notwithstanding any other provision of this Plan, this Plan, and 
any Option granted to any individual who is then subject to Section 16 of the 
Exchange Act, shall be subject to any additional limitations set forth in any 
applicable exemptive rule under Section 16 of the Exchange Act (including any 
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the 
application of such exemptive rule. To the extent permitted by applicable law, 
the Plan and Options granted or awarded hereunder shall be deemed amended to 
the extent necessary to conform to such applicable exemptive rule. 
Furthermore, notwithstanding any other provision of this Plan, any Option 
intended to qualify as performance-based compensation as described in Section 
162(m)(4)(C) of the Code shall be subject to any additional limitations set 
forth in Section 162(m) of the Code (including any amendment to Section 162(m) 
of the Code) or any regulations or rulings issued thereunder that are 
requirements for qualification as performance-based compensation as described 
in Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to 
the extent necessary to conform to such requirements.
  
     8.8 Effect of Plan Upon Options and Compensation Plans. The adoption of 
this Plan shall not affect any other compensation or incentive plans in effect 
for the Company or any Subsidiary. Nothing in this Plan shall be construed to 
limit the right of the Company (i) to establish any other forms of incentives 
or compensation for Employees, Directors or consultants of the Company or any 
Subsidiary or (ii) to grant or assume options or other rights otherwise than 
under this Plan in connection with any proper corporate purpose including but 
not by way of limitation, the grant or assumption of options in connection 
with the acquisition by purchase, lease, merger, consolidation or otherwise, 
of the business, stock or assets of any corporation, partnership, limited 
liability company, firm or association.
 
     8.9 Compliance with Laws. This Plan, the granting and vesting of Options 
under this Plan and the issuance and delivery of shares of Common Stock and 
the payment of money under this Plan or under Options granted hereunder are 
subject to compliance with all applicable federal and state laws, rules and 
regulations (including but not limited to state and federal securities law and 
federal margin requirements) and to such approvals by any listing, regulatory 
or governmental authority as may, in the opinion of counsel for the Company, 
be necessary or advisable in connection therewith. Any securities delivered 
under this Plan shall be subject to such restrictions, and the person 
acquiring such securities shall, if requested by the Company, provide such 
assurances and representations to the Company as the Company may deem 
necessary or desirable to assure compliance with all applicable legal 

                                    - 43 -



requirements. To the extent permitted by applicable law, the Plan and Options 
granted or awarded hereunder shall be deemed amended to the extent necessary 
to conform to such Laws, rules and regulations.
 
     8.10 Titles. Titles are provided herein for convenience only and are not 
to serve as a basis for interpretation or construction of this Plan.
 
     8.11 Governing Law. This Plan and any agreements hereunder shall be 
administered, interpreted and enforced under the internal laws of the State of 
Delaware without regard to conflicts of laws thereof.
 
                                    * * *
 
     I hereby certify that the foregoing Plan was duly adopted by the Board of 
Directors of Reunion Industries, Inc. on                , 2004.

Executed on this      day of     , 2004.
 


-------------------------------------
John M. Froehlich, Secretary

                                    - 44 -



                               REVOCABLE PROXY
                           REUNION INDUSTRIES, INC.

[X]  PLEASE MARK VOTES AS IN THIS EXAMPLE

           THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
        ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 15, 2004

     The undersigned stockholder of Reunion Industries, Inc. (the "Company") 
hereby appoints Charles E. Bradley, Sr., Kimball J. Bradley, or Joseph C. 
Lawyer, 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 Company's offices, 11 
Stanwix Street, Pittsburgh, Pennsylvania 15222, on Wednesday, December 15, 
2004 and any postponements or adjournments of such meeting, as set forth 
below, and in their discretion to consider and act upon such other business as 
may properly be presented at such meeting (and any postponements or 
adjournments thereof).

Please be sure to sign below and date this Proxy.
                                              -------------------------
                                              | Date                  |
-----------------------------------------------------------------------
|                                                                     |
|                                                                     |
----Stockholder sign above-----------Co-holder (if any) sign above-----

                                                            With-     For All
1.   The election as directors (except as           For     hold      Except
     indicated below) of all nominees.              [_]     [_]         [_]

     THOMAS N. AMONETT        THOMAS L. CASSIDY        JOSEPH C. LAWYER
     CHARLES E. BRADLEY, SR.  DAVID E. JACKSON         JOHN G. POOLE
     KIMBALL J. BRADLEY

INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK 
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.

------------------------------------------------------------------------------
                                                    For     Against   Abstain
2.  To amend the Certificate of Incorporation       [_]       [_]       [_]
    to increase by 10 million the number of 
    authorized common shares and to eliminate 
    preferred shares.

3.  To adopt the 2004 Stock Option Plan.            [_]       [_]       [_]


PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING:------------->[_]

     The Board of Directors recommends a vote "FOR" the election as directors 
of all nominees and "FOR" proposals 2 and 3.  This proxy will be voted as 
specified or, if no choice is specified, said proxies will vote "FOR" all 
proposals and will consider and act upon such other business as may be 
properly presented to the meeting.

     The above signed 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.



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  ^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                  |
-----------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.

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