SCOTSMAN INDUSTRIES INC, DEF 14A, 1995-03-29

SCOTSMAN INDUSTRIES INC
DEF 14A, 1995-03-29
AIR-COND & WARM AIR HEATG EQUIP & COMM & INDL REFRIG EQUIP

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the registrant /X/

Filed by a party other than the registrant / /

Check the appropriate box:

/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

/X/ Definitive proxy statement

/ / Definitive additional materials

/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SCOTSMAN INDUSTRIES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:
N/A
--------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:
N/A
--------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
N/A
--------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:
N/A
--------------------------------------------------------------------------------

(5) Total fee paid:
N/A
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/ / Fee paid previously with preliminary materials.
N/A
--------------------------------------------------------------------------------

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:
N/A
--------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:
N/A
--------------------------------------------------------------------------------

(3) Filing party:
N/A
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(4) Date filed:
N/A
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<PAGE> 2

[LOGO]

March 29, 1995

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of
Scotsman Industries, Inc. which will be held on Thursday, May 18, 1995, at 9:00
a.m., local time, at our headquarters in Vernon Hills, Illinois. Please refer to
the attached map for directions to the premises.

At the Annual Meeting, shareholders are being asked to elect three
directors to serve terms which expire in 1998 and to consider and vote upon a
proposal to approve the Scotsman Industries, Inc. Non-Employee Directors Stock
Option Plan pursuant to which Scotsman's non-employee directors will be entitled
to receive options to acquire Scotsman Common Stock. The Board of Directors
recommends a vote "FOR" each nominee and "FOR" approval of the proposed Scotsman
Industries, Inc. Non-Employee Directors Stock Option Plan.

Your vote is important. Whether or not you plan to attend the Annual
Meeting and regardless of the size of your holdings, you are encouraged to sign,
date, and mail the enclosed Proxy in the envelope provided. Your right to vote
in person at the meeting is not affected by returning the Proxy.

A copy of Scotsman Industries' Annual Report for the fiscal year ended
January 1, 1995 accompanies this Notice of Meeting and Proxy Statement. On
behalf of the Board of Directors, officers and employees of Scotsman, I would
like to thank you for your continued interest and support.

Sincerely,

[SIG]

RICHARD C. OSBORNE
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3

[Insert Map]

-- Place of Annual Meeting
Scotsman's headquarters is located at 775 Corporate Woods Parkway in Vernon
Hills, Illinois, approximately 40 miles northwest of downtown Chicago.
Shareholders attending the meeting who will be using the Tri-State Tollway
(Interstate Route 94-294) should exit at Half Day Road (Route 22) and travel
west to reach Milwaukee Avenue (Route 21). Turn right onto Milwaukee Avenue and
travel north approximately 1 mile to reach Corporate Woods Parkway (the second
or northern Corporate Woods entrance).
Parking facilities will be available and refreshments will be served beginning
at 8:30 a.m.
<PAGE> 4

775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
708-215-4500

[LOGO]

March 29, 1995

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 18, 1995

------------------------

To the Shareholders of SCOTSMAN INDUSTRIES, INC.

Notice is hereby given that the annual meeting of shareholders of Scotsman
Industries, Inc. (the "Company") will be held at the Company's headquarters at
775 Corporate Woods Parkway, Vernon Hills, Illinois 60061 on Thursday, May 18,
1995, at 9:00 a.m., local time, for the following purposes:

1. To elect three directors to serve for a term of three years;

2. To consider and vote upon a proposal to approve the Scotsman Industries,
Inc. Non-Employee Directors Stock Option Plan, as more fully described
herein; and

3. To transact such other business as may properly come before the meeting
or any adjournment thereof.

Only shareholders of record at the close of business on March 24, 1995, are
entitled to notice of and to vote at the meeting and any adjournment thereof.

PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY TO
THE COMPANY IN THE ENVELOPE PROVIDED. THE GIVING OF SUCH PROXY WILL NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.

By Order of the Board of Directors
[SIG]
DONALD D. HOLMES,
Vice President -- Finance and
Secretary
<PAGE> 5

775 Corporate Woods Parkway
Vernon Hills, Illinois 60061

[LOGO]

March 29, 1995

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 18, 1995

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Scotsman Industries, Inc., a Delaware
corporation (the "Company"), for use at the annual meeting of shareholders of
the Company to be held at the Company's principal executive offices at 775
Corporate Woods Parkway, Vernon Hills, Illinois 60061 on Thursday, May 18, 1995,
at 9:00 a.m., local time (the "1995 Annual Meeting"), and at any adjournments
thereof. The 1995 Annual Meeting is being held to consider and vote upon (i) the
election of three directors to serve until the 1998 annual meeting of
shareholders of the Company or until the successors of such directors have been
duly elected and qualified, and (ii) a proposal to approve the Scotsman
Industries, Inc. Non-Employee Directors Stock Option Plan (the "Stock Option
Plan"), as more fully described in this Proxy Statement. The Company's Board of
Directors knows of no other business that will be presented for consideration at
the 1995 Annual Meeting other than the matters described in this Proxy
Statement.

The close of business on March 24, 1995 has been fixed by the Board of
Directors as the record date (the "Record Date") for determination of
shareholders entitled to vote at the 1995 Annual Meeting. Accordingly, only
holders of record of shares of the Company's common stock, par value $.10 per
share (the "Common Stock"), and the Company's Series A $0.62 Cumulative
Convertible Preferred Stock, par value $1.00 per share (the "Series A
Convertible Preferred Stock"), at the close of business on such date will be
entitled to vote at the 1995 Annual Meeting. As of the close of business on that
date, there were outstanding (i) 8,940,020 shares of Common Stock (not including
194,259 shares of Common Stock held in treasury) and (ii) 1,999,992 shares of
Series A Convertible Preferred Stock. Each share of Common Stock outstanding as
of the Record Date, excluding the treasury shares, is entitled to one vote, and
each share of Series A Convertible Preferred Stock outstanding as of the Record
Date is entitled to one-tenth (1/10) of a vote. The Common Stock and the Series
A Convertible Preferred Stock will vote together and not as separate classes on
each of the matters to be voted on at the 1995 Annual Meeting. A combined total
of 9,140,019 votes may therefore be cast by the holders of the Common Stock and
the Series A Convertible Preferred Stock on each of the matters brought before
the 1995 Annual Meeting.

Any shareholder who has given a proxy may revoke it at any time prior to
its exercise at the 1995 Annual Meeting by (1) giving written notice of such
revocation to the Secretary of the Company, (2) properly submitting to the
Company a duly executed proxy bearing a later date or (3) appearing in person at
the 1995 Annual Meeting and voting in person. All written notices of revocation
or other communications with respect to the revocation of proxies should be
addressed as follows: Scotsman Industries, Inc., 775 Corporate Woods Parkway,
Vernon Hills, Illinois 60061, Attention: Donald D. Holmes, Secretary. Duly
executed proxies received prior to the meeting will be voted in accordance with
the instructions indicated in the proxy. IF NO INSTRUCTIONS ARE INDICATED, SUCH
PROXIES WILL BE VOTED "FOR" THE ELECTION

1
<PAGE> 6

OF THE NOMINEES FOR DIRECTOR NAMED IN THE PROXY AND "FOR" THE PROPOSAL TO
APPROVE THE STOCK OPTION PLAN.

This Proxy Statement is first being mailed to the Company's shareholders on
or about March 29, 1995. The Company's 1994 Annual Report to Shareholders,
including financial statements for the fiscal year ended January 1, 1995,
accompanies this Proxy Statement.

The presence, in person or by proxy, of the holders of record of shares of
Common Stock and Series A Convertible Preferred Stock entitling the holders
thereof to cast a majority of the votes eligible to be cast at the 1995 Annual
Meeting will constitute a quorum. Votes cast by proxy or in person at the 1995
Annual Meeting will be tabulated by the inspectors of election appointed for the
meeting to determine whether or not a quorum is present. The inspectors will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum.

The Company will bear the cost of soliciting proxies. In addition to
solicitations by mail, officers, directors, or employees of the Company or its
subsidiaries may make solicitations in person or by telephone without
compensation, other than the compensation such persons otherwise receive for
their services as officers, directors or employees. Arrangements will also be
made with brokerage firms and other custodians, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of shares of Common
Stock held of record by such persons, and the Company will reimburse such
brokerage firms, custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses in connection with forwarding such materials. In
addition, the Company has retained Morrow & Co., Inc. to aid in the solicitation
of proxies. The fees to be paid to such firm for such services are not expected
to exceed $4,000, plus reimbursement for out-of-pocket costs and expenses.

YOUR VOTE IS IMPORTANT TO THE COMPANY. IF YOU DO NOT EXPECT TO VOTE IN
PERSON AT THE 1995 ANNUAL MEETING, WE URGE YOU TO COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.

PROPOSAL 1

ELECTION OF DIRECTORS

The Company's by-laws provide for a Board of Directors, the number of which
shall be fixed from time to time by a resolution adopted by a majority of the
whole Board of Directors. The number of members of the Board of Directors has
been fixed at eight.

The Company's by-laws also provide that the directors are to be divided
into three classes with respect to the time for which they hold office. At each
annual meeting of shareholders of the Company, successors of the class whose
terms of office expire in that year are to be elected for three-year terms or
until their successors have been duly elected and qualified. The terms of three
directors, Richard C. Osborne, Donald C. Clark and Timothy C. Collins, will
expire at the 1995 Annual Meeting, and the Company's Board of Directors has
renominated all three for re-election to the Board of Directors. If re-elected,
all three will serve until the 1998 annual meeting of shareholders of the
Company or until their successors have been duly elected and qualified. The
Company's by-laws establish certain procedures for shareholder nominations of
candidates for directors. Those procedures are set forth below in the section
entitled "Notice Provisions for Shareholder Proposals and Shareholder
Nominations of Directors."

2
<PAGE> 7

Under the Company's by-laws, directors are elected by a plurality of the
votes cast. Since three positions are to be filled on the Board of Directors,
the three nominees receiving the highest number of votes cast will be elected as
directors. The inspectors of election will not count abstentions in determining
the number of votes received by any nominee.

It is the intention of the parties named in the enclosed proxy to vote the
shares represented thereby for the election of the nominees listed below unless
the proxy is marked otherwise. Each of the nominees has agreed to serve as a
director if elected, and the Company has no reason to believe that any nominee
will be unable to serve. In the event that one or more nominees should become
unwilling or unable to accept nomination for election, however, the persons
named in the enclosed proxy will vote such proxy for such other person or
persons as may be nominated for director by the Board of Directors of the
Company.

INFORMATION REGARDING NOMINEES AND DIRECTORS

3
<PAGE> 8

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY OR OTHER PRINCIPAL
NAME AND AGE OCCUPATION AND OTHER DIRECTORSHIPS
---------------------------------------------------------------------------------------------
<S> <C>
DIRECTORS CONTINUING TO SERVE UNTIL 1996
---------------------------------------------------------------
James J. O'Connor (58) Mr. O'Connor is Chairman, Chief Executive Officer and a
director of Commonwealth Edison Company, an electric utility
company, and has held those positions since 1980. Mr.
O'Connor has also been the Chairman, Chief Executive Officer
and a director of Unicom Corporation, a newly created holding
company for Commonwealth Edison Company, since 1994. Mr.
O'Connor is a director of Corning Incorporated, First Chicago
Corporation, The First National Bank of Chicago, Tribune
Company, UAL Inc., and American National Can Company and
serves on the Board of Governors of the Chicago Stock
Exchange. He has been a director of the Company since April,
1989.
Robert G. Rettig (65) Mr. Rettig is a consultant to Illinois Tool Works, Inc., a
manufacturer of industrial products and components, and a
consultant to, and a director of, The Tech Group, a custom
molding company. He was an Executive Vice President of
Illinois Tool Works, Inc. from 1983 to January, 1990. Mr.
Rettig is also a director of Lawson Products, Inc. and serves
as a trustee of the Illinois Institute of Technology. He has
been a director of the Company since April, 1989.
Matthew O. Diggs, Jr. (62) Mr. Diggs is the Chief Executive Officer of The Diggs Group, a
New York general partnership that provides investment banking
services, and has held that position since 1990. From 1987 to
1990, Mr. Diggs was Vice Chairman of Copeland Corporation, a
refrigerator compressor manufacturer, having served as
President and Chief Executive Officer of Copeland Corporation
from 1975 to 1987. He has been a director of the Company
since April, 1994.
DIRECTORS CONTINUING TO SERVE UNTIL 1997
---------------------------------------------------------------
Frank W. Considine (73) Mr. Considine is Honorary Chairman of the Board, Chairman of
the Executive Committee and a director of American National
Can Company, a packaging manufacturer. He was Chairman of the
Board of American National Can Company from 1983 to 1990,
President from 1969 to 1988, and Chief Executive Officer from
1973 to 1988. Mr. Considine is a director of Encyclopedia
Britannica, Inc., Helene Curtis Industries, Inc., IMC Global,
Inc. and Pechiney International, S.A. Mr. Considine is also
Chairman of the Board of Trustees of Loyola University,
Chicago, and serves on the Board of Trustees of the Field
Museum of Natural History, Chicago. Mr. Considine has been a
director of the Company since April, 1989.
</TABLE>

4
<PAGE> 9

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY OR OTHER PRINCIPAL
NAME AND AGE OCCUPATION AND OTHER DIRECTORSHIPS
---------------------------------------------------------------------------------------------
<S> <C>
George D. Kennedy (68) Mr. Kennedy was Chairman and a director of the Mallinckrodt
Group Inc., a producer of medical products and chemicals,
from 1991 until his retirement in October, 1994. He was
Chairman and Chief Executive Officer of Mallinckrodt Group
Inc. from 1986 to 1991. Mr. Kennedy is also a director of
Brunswick Corporation, Illinois Tool Works, Inc., American
National Can Company, Kemper National Insurance Company,
Stone Container Corporation, and Kemper Corporation. He has
been a director of the Company since April, 1989.
</TABLE>

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors of the Company held six meetings during 1994. The
standing committees of the Board of Directors also held a total of six meetings.
The average attendance at the aggregate of the total number of meetings of the
Board of Directors and the total number of committee meetings was 98%. Each of
the directors of the Company attended at least 90% of the aggregate total number
of meetings of the Board of Directors and meetings of any committee of the Board
of Directors on which that director served. The Board of Directors has standing
Audit, Compensation and Executive Committees. It does not have a standing
nominating committee.

The Audit Committee is composed of Frank W. Considine, Timothy C. Collins
and Robert G. Rettig. Mr. Considine is the Chairman of the Committee. The Audit
Committee's duties and functions include reviewing the internal accounting
controls and audit functions of the Company and its subsidiaries, the Company's
accounting principles, policies and practices, and financial reporting, the
scope of the audits conducted by the Company's independent public accountants
and internal auditors, and the annual financial statements of the Company and
its subsidiaries. The Audit Committee is responsible for informing the Chief
Executive Officer of the Company and the Board of Directors of any material
concerns that may arise in connection with its review. The Audit Committee also
recommends to the Board of Directors the selection of the Company's principal
independent public accountants and reviews their professional services to
determine if their independence may have been impaired by the performance of any
non-audit services. The Audit Committee met twice during 1994.

The Compensation Committee is composed of George D. Kennedy, Donald C.
Clark, Matthew O. Diggs, Jr., and James J. O'Connor. Mr. Kennedy is the Chairman
of the Committee. The Compensation Committee is responsible for determining the
salaries, salary ranges and bonuses of the five highest paid executive officers
of the Company and its subsidiaries. It also recommends to the Board of
Directors the adoption of, or any substantive amendments to, any pension,
profit-sharing, employee benefit or long-term executive compensation plan or
program in which senior management participates. The Compensation Committee is
also responsible for the granting of stock options, stock appreciation rights
and other awards under any long-term executive incentive compensation plan or
program of the Company. The Compensation Committee met four times during 1994.

5
<PAGE> 10

DIRECTORS' FEES AND COMPENSATION

Non-employee directors of the Company receive for their services (i) an
annual retainer fee paid in shares of Common Stock with a total market value of
approximately $16,000, determined as of the day immediately preceding the date
of the annual meeting of the shareholders of the Company, and (ii) a fee of $900
for each Board of Directors and committee meeting attended. In addition, any
non-employee director who serves as chairman of the Audit, Compensation or
Executive Committees of the Board of Directors receives, as compensation for
those services, additional shares of Common Stock with a total market value of
approximately $2,000, determined as of the same valuation date used in
determining the number of shares to be granted to the directors as annual
retainer fees. The Company transfers shares of treasury stock to the directors
in payment of such fees at the time of, or shortly after, the first meeting of
the Board of Directors following the annual meeting of the shareholders of the
Company. For information relating to compensation to be paid to directors under
the proposed Stock Option Plan, see "PROPOSAL 2, APPROVAL OF NON-EMPLOYEE
DIRECTORS STOCK OPTION PLAN."

AGREEMENTS GOVERNING THE APPOINTMENT AND FUTURE NOMINATION
OF CERTAIN DIRECTORS; VOTING AGREEMENTS

Timothy C. Collins and Matthew O. Diggs, Jr. were appointed directors of
the Company, effective April 29, 1994, pursuant to the terms and conditions of
an Agreement and Plan of Merger, dated January 11, 1994, as amended (the "DFC
Merger Agreement"), and a Share Acquisition Agreement, dated January 11, 1994,
as amended (the "WAL Acquisition Agreement") governing the acquisition by the
Company of DFC Holding Corporation ("DFC") and its wholly-owned subsidiary, The
Delfield Company ("Delfield"), and Whitlenge Acquisition Limited ("WAL") and its
wholly-owned subsidiary, Whitlenge Drink Equipment Limited ("Whitlenge").
Pursuant to the DFC Merger Agreement and WAL Acquisition Agreement, the Company
also agreed that, (i) so long as the former shareholders of DFC and WAL,
together in each case, with certain permitted transferees (collectively, the
"New Scotsman Shareholders") own, on a fully diluted basis, at least 1,688,578
shares of Common Stock (appropriately adjusted for any subsequent
recapitalization, stock dividend, split or other change in the capital stock),
they will be entitled to designate the persons nominated by the Board of
Directors to fill the directorships currently held by Mr. Collins and Mr. Diggs,
and (ii) so long as the New Scotsman Shareholders own, on a fully diluted basis,
at least 1,114,462 shares of Common Stock (appropriately adjusted for any
subsequent recapitalization, stock dividend, split or other change in the
capital stock), they will be entitled to designate one such nominee.

So long as the New Scotsman Shareholders are entitled to designate at least
one nominee to the Board of Directors, (i) the Company has agreed that, subject
to the right of the holders of its preferred stock to elect directors under
certain circumstances, it will not increase the number of directors to more than
eight directors, and (ii) the New Scotsman Shareholders have agreed to vote, to
cause any affiliates or associates controlled by them to vote, and to use
reasonable efforts to cause any other affiliates or associates to vote, all
shares of capital stock of the Company owned by them in favor of all of the
nominees to the Board of Directors recommended by the Board of Directors.

The right of the New Scotsman Shareholders to designate one or more
nominees to the Company's Board of Directors will terminate on January 11, 2004
unless such obligation is extended by written agreement among the Company and
the New Scotsman Shareholders after January 11, 2002 but before the termination
date. Upon termination of the right of the New Scotsman Shareholders to
designate one or more nominees to

6
<PAGE> 11

the Board of Directors at a time when any designee of the New Scotsman
Shareholders is currently on the Board and upon the request of the Company, (i)
any such designee who is a New Scotsman Shareholder shall promptly resign as a
director, and (ii) the New Scotsman Shareholders will use their best efforts to
cause any such designee or designees who are not New Scotsman Shareholders to
promptly resign.

Certain former shareholders of DFC and WAL have entered into a
Stockholders' Agreement, dated as of January 11, 1994 (the "Stockholders'
Agreement"), under which they have, among other things, allocated among
themselves the power to designate the person or persons to be nominated as
directors. The Stockholders' Agreement provides that, so long as Onex and its
affiliates, Onex DHC LLC and Onex U.S. Investments (the "Onex Affiliates"), hold
Common Stock or Series A Convertible Preferred Stock, Onex and the Onex
Affiliates will have the right to designate (and remove) one such director, and
EJJM, an Ohio general partnership of which Mr. Diggs is the sole managing
general partner ("EJJM"), will have the right to designate (and remove) the
other such director. If the New Scotsman Shareholders are entitled to designate
only one nominee to the Board of Directors, whichever of Onex and the Onex
Affiliates or EJJM owns the higher percentage of Common Stock (on a fully
diluted basis) at the time of such designation will be entitled to designate the
nominee. In all other cases, the holders of a majority of the Common Stock held
by the New Scotsman Shareholders at the time that they are entitled to designate
one or more nominees to the Board of Directors shall make such designation.
Scotsman is not a party to the Stockholders' Agreement.

Under the Stockholders' Agreement, Onex and the Onex Affiliates have also
been granted an irrevocable proxy (the "Onex Proxy") to vote all of the shares
of Common Stock and Series A Convertible Preferred Stock held by the New
Scotsman Shareholders. The Onex Proxy includes the right to vote for the
transaction of any and all business that may come before an annual, general or
special meeting of the Company's shareholders, including the right to vote for
the sale of all or any part of the assets, the liquidation, or the dissolution
of the Company. The Onex Proxy will automatically terminate on January 10, 1999
or at such time that Onex, together with the Onex Affiliates, holds less than
30% of the number of shares of Common Stock (on a fully diluted basis) initially
acquired by it pursuant to the merger provided for in the DFC Merger Agreement.
The Onex Proxy will also terminate with respect to specific shares of Common
Stock upon the transfer of such shares to any person other than certain
specified types of affiliates or associates of the former DFC shareholders and
WAL shareholders that have granted Onex and the Onex Affiliates the Onex Proxy.
For additional information regarding the parties to, and terms of, the
Stockholders' Agreement, see Note 5 under "Security Ownership of Certain
Beneficial Owners."

7
<PAGE> 12

SECURITY OWNERSHIP OF MANAGEMENT

The following table shows the beneficial ownership of Common Stock and
Series A Convertible Preferred Stock for each director and nominee for director,
each executive officer named in the Summary Compensation Table elsewhere in this
Proxy Statement and all directors and executive officers of the Company as a
group.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
NO. OF SHARES NO. OF SHARES OF
OF COMMON STOCK SERIES A CONVERTIBLE
BENEFICIALLY PERCENT OF PREFERRED STOCK PERCENT OF
OWNED(1) CLASS(2) BENEFICIALLY OWNED CLASS(3)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DIRECTORS AND
DIRECTOR NOMINEES
--------------------------------------
Donald C. Clark..................... 40,771 * 0 0%
--------------------------------------
Timothy C. Collins.................. 100,873(4) 1.12%(5) 65,787(6) 3.29%
--------------------------------------
Frank W. Considine.................. 10,090 * 0 0%
--------------------------------------
Matthew O. Diggs, Jr. .............. 708,534(7) 7.65%(8) 418,308(9) 20.92%
--------------------------------------
George D. Kennedy................... 10,380 * 0 0%
--------------------------------------
James J. O'Connor................... 8,955 * 0 0%
--------------------------------------
Richard C. Osborne.................. 198,022(10) 2.18%(11) 0 0%
--------------------------------------
Robert G. Rettig.................... 9,955 * 0 0%
--------------------------------------
CERTAIN EXECUTIVE OFFICERS
--------------------------------------
Emanuele Lanzani.................... 62,472(10) * 0 0%
--------------------------------------
Donald D. Holmes.................... 79,172(10) * 0 0%
--------------------------------------
Kevin E. McCrone.................... 97,738(12) 1.09%(13) 60,512(14) 3.03%
--------------------------------------
Paolo Faenza........................ 30,582(10) * 0 0%
--------------------------------------
Directors and Officers as a Group
(17 individuals, including all
those listed above)............... 1,425,214(10)(15) 14.51%(16) 544,607(17) 27.23%
--------------------------------------
</TABLE>

---------------
* Less than one percent of the outstanding Common Stock.

(1) Information relating to the number of shares of Common Stock beneficially
owned by directors, nominees for directors and executive officers is based
upon information (i) furnished by, or on behalf of, each person to the
Company, (ii) reflected in the records of the Tax Reduction Investment Plan
("TRIP") of the Company's wholly-owned subsidiary, Scotsman Group Inc.
("SGI"), or the Company's Long-Term Executive Incentive Compensation Plan
or (iii) reflected in a Schedule 13D, as amended by Amendment No. 1 dated
February 21, 1995, filed by the New Scotsman Shareholders (including Mr.
Collins, Mr. Diggs, Mr. McCrone and one other executive officer of the
Company), as more fully described in Note 5 under "Security Ownership of
Certain Beneficial Owners." Information relating to shares held in the TRIP
has been furnished as of December 31, 1994, the latest date for which such
information is available. Information relating to the number of shares of
Common Stock and Series A Convertible Preferred Stock beneficially owned by
Mr. Collins, Mr. Diggs, Mr. McCrone and one other executive officer, all of
whom were former shareholders of DFC or WAL, is as of March 17, 1995, the
date on which additional shares of Common Stock were issued to the
shareholders of DFC and WAL pursuant to the terms of the DFC Merger
Agreement and WAL Acquisition Agreement. Information relating to the number
of shares of Common Stock and Series A Convertible Preferred Stock
beneficially owned by all other directors, nominees for director and
executive officers (other than

8
<PAGE> 13

pursuant to TRIP) has been furnished as of February 15, 1995. Except as
indicated otherwise in the notes to this table, each person named in the
table has sole voting and investment power over the number of shares of
Common Stock and Series A Convertible Preferred Stock listed opposite his
name.

(2) Based upon a total of 8,940,020 issued and outstanding shares of Common
Stock as of March 24, 1995.

(3) Based upon a total of 1,999,992 shares of Series A Convertible Preferred
Stock outstanding as of March 24, 1995.

(4) Includes 50,698 shares of Common Stock held of record by Mr. Collins and
50,175 shares of Common Stock issuable upon the conversion of 65,787 shares
of Series A Convertible Preferred Stock held of record by Mr. Collins, with
respect to which Mr. Collins has shared investment power and shared voting
power, pursuant to the Stockholders' Agreement and the Onex Proxy. Does not
include an additional 3,173,523 shares of Common Stock held of record, or
issuable upon the conversion of shares of Series A Convertible Preferred
Stock held of record, by other New Scotsman Shareholders who, according to
a Schedule 13D, as amended, filed on behalf of such persons, may be deemed
to constitute a "group" for purposes of Section 13(d)(3) and with respect
to which Mr. Collins shares investment power and voting power as part of
such group. See Note 5 under "Security Ownership of Certain Beneficial
Owners."

(5) On a partially diluted basis, assuming only the conversion of those shares
of Series A Convertible Preferred Stock held by Mr. Collins.

(6) Consists solely of shares of Series A Convertible Preferred Stock held of
record by Mr. Collins with respect to which Mr. Collins has shared
investment power and shared voting power, pursuant to the Stockholders'
Agreement and the Onex Proxy. Does not include 1,934,205 additional shares
of Series A Convertible Preferred Stock held of record by other New
Scotsman Shareholders who, according to a Schedule 13D, as amended, filed
on behalf of such persons, may be deemed to constitute a "group" for
purposes of Section 13(d)(3) and with respect to which Mr. Collins shares
investment power and voting power as part of such group. See Note 5 under
"Security Ownership of Certain Beneficial Owners."

(7) Includes 326,331 shares of Common Stock held of record by EJJM and 319,043
shares of Common Stock issuable upon the conversion of 418,308 shares of
Series A Convertible Preferred Stock held of record by EJJM, 1,160 shares
of Common Stock held of record by Mr. Diggs, and 62,000 shares of Common
Stock held of record by The Diggs Family Foundation, a charitable
foundation for which Mr. Diggs serves as one of six trustees. Mr. Diggs has
shared investment power and shared voting power with respect to all of
these shares pursuant to the Stockholders' Agreement and the Onex Proxy.
With respect to the shares held by The Diggs Family Foundation, Mr. Diggs
also shares investment power and voting power with his co-trustees. The
shares reported for Mr. Diggs do not include (i) 30 shares held by Mr.
Diggs' son as to which Mr. Diggs disclaims beneficial ownership, or (ii) an
additional 2,565,862 shares of Common Stock held of record, or issuable
upon the conversion of shares of Series A Convertible Preferred Stock held
of record, by other New Scotsman Shareholders who, according to a Schedule
13D, as amended, filed on behalf of such persons, may be deemed to
constitute a "group" for purposes of Section 13(d)(3) and with respect to
which Mr. Diggs, EJJM and The Diggs Family Foundation and its trustees
share investment power and voting power as part of such group. See Note 5
under "Security Ownership of Certain Beneficial Owners."

(8) On a partially diluted basis, assuming only the conversion of those shares
of Series A Convertible Preferred Stock held by Mr. Diggs.

(9) Consists solely of shares of Series A Convertible Preferred Stock held of
record by EJJM with respect to which Mr. Diggs has shared investment power
and shared voting power, pursuant to the Stockholders' Agreement and the
Onex Proxy. Does not include 1,581,684 additional shares of Series A
Convertible Preferred Stock held of record by other New Scotsman
Shareholders who, according to a Schedule 13D, as amended, filed on behalf
of such persons, may be deemed to constitute a "group" for purposes of
Section 13(d)(3) and with respect to which Mr. Diggs, EJJM and The Diggs
Family Foundation and its trustees share investment power and voting power
as part of such group. See Note 5 under "Security Ownership of Certain
Beneficial Owners."

(10) Includes shares issuable pursuant to stock options exercisable within 60
days after February 15, 1995 as follows: Mr. Osborne, 142,868; Mr. Holmes,
58,813; Mr. Faenza, 30,582; Mr. Lanzani, 62,472; all

9
<PAGE> 14

directors and officers as a group, 336,397. Also includes shares held for
the account of executive officers under the TRIP with respect to which each
such officer has sole voting but no investment power as follows: Mr.
Osborne, 6,949; Mr. Holmes, 8,210; all executive officers as a group,
22,494.

(11) On a partially diluted basis, assuming only the exercise of stock options
held by Mr. Osborne which are exercisable within 60 days.

(12) Includes 51,586 shares of Common Stock held of record by Mr. McCrone and
46,152 shares of Common Stock issuable upon the conversion of 60,512 shares
of Series A Convertible Preferred Stock held of record by Mr. McCrone, with
respect to which Mr. McCrone has shared investment power and shared voting
power, pursuant to the Stockholder's Agreement and the Onex Proxy. Does not
include an additional 3,176,658 shares of Common Stock held of record, or
issuable upon the conversion of shares of Series A Convertible Preferred
Stock held of record, by other New Scotsman Shareholders who, according to
a Schedule 13D, as amended, filed on behalf of such persons, may be deemed
to constitute a "group" for purposes of Section 13(d)(3) and with respect
to which Mr. McCrone shares investment power and voting power as part of
such group. See Note 5 under "Security Ownership of Certain Beneficial
Owners."

(13) On a partially diluted basis, assuming only the conversion of those shares
of Series A Convertible Preferred Stock held by Mr. McCrone.

(14) Consists solely of shares of Series A Convertible Preferred Stock held of
record by Mr. McCrone with respect to which Mr. McCrone has shared
investment power and shared voting power, pursuant to the Stockholders'
Agreement and the Onex Proxy. Does not include 1,939,480 additional shares
of Series A Convertible Preferred Stock held of record by other New
Scotsman Shareholders who, according to a Schedule 13D, as amended, filed
on behalf of such persons, may be deemed to constitute a "group" for
purposes of Section 13(d)(3) and with respect to which Mr. McCrone shares
investment power and voting power as part of such group. See Note 5 under
"Security Ownership of Certain Beneficial Owners."

(15) Includes 415,370 shares of Common Stock issuable upon the conversion of
544,607 shares of Series A Convertible Preferred Stock held of record by
Mr. Collins, EJJM and Mr. McCrone. Does not include 2,364,684 shares of
Common Stock held of record or shares of Common Stock issuable upon the
conversion of Series A Convertible Preferred Stock held of record by New
Scotsman Shareholders (other than Mr. Collins, Mr. Diggs, EJJM, The Diggs
Family Foundation, Mr. McCrone and one other executive officer of the
Company) who, according to a Schedule 13D, as amended, filed on behalf of
such persons, may be deemed to constitute a "group" for purposes of Section
13(d)(3) and with respect to which Mr. Collins, Mr. Diggs, EJJM, The Diggs
Family Foundation, Mr. McCrone and one other executive officer of the
Company share investment power and voting power as part of such group. See
Note 5 under "Security Ownership of Certain Beneficial Owners."

(16) On a partially diluted basis, assuming only the exercise of the 336,397
stock options referred to in Note 10 above and the conversion of the
544,607 shares of Series A Convertible Preferred Stock referred to in Note
15.

(17) Consists solely of shares of Series A Convertible Preferred Stock held of
record by Mr. Collins, EJJM and Mr. McCrone, with respect to which Mr.
Collins, EJJM and Mr. McCrone have shared investment power and shared
voting power, pursuant to the Stockholders' Agreement and the Onex Proxy.
Does not include 1,455,385 additional shares of Series A Convertible
Preferred Stock held of record by other New Scotsman Shareholders who,
according to a Schedule 13D, as amended, filed on behalf of such persons,
may be deemed to constitute a "group" for purposes of Section 13(d)(3) and
with respect to which Mr. Collins, EJJM and Mr. McCrone share investment
power and voting power as part of such group. See Note 5 under "Security
Ownership of Certain Beneficial Owners."

10
<PAGE> 15

EXECUTIVE COMPENSATION

The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company.

SUMMARY COMPENSATION TABLE
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------
ANNUAL COMPENSATION(2) LONG-TERM COMPENSATION
----------------

<CAPTION>
OTHER ALL
PRINCIPAL ANNUAL OTHER
NAME POSITION(1) YEAR SALARY BONUS COMP. AWARDS PAYOUTS COMP.(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------
<CAPTION>
SECURITIES
RESTRICTED UNDERLYING
STOCK STOCK LTIP
AWARDS OPTIONS(#) PAYOUTS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------
R. Osborne Chairman of the 1994 $320,000 $200,000 -- $0 18,100 $0 $15,075
Board, CEO & 1993 $301,250 $182,500 -- $0 25,800 $0 $13,387
President 1992 $286,250 $145,000 -- $0 27,700 $0 $12,638
----------------
E. Lanzani Exec.VP; Mgng. 1994 $158,763 $63,431 -- $0 8,900 $0 $ 0
Dir., Frimont S.p.A. 1993 $150,236 $47,688 -- $0 12,700 $0 $ 0
& Castel MAC 1992 $174,314 $19,976 -- $0 13,500 $0 $ 0
S.p.A.
----------------
D. Holmes VP Finance & 1994 $154,708 $66,060 -- $0 6,200 $0 $ 6,459
Secretary 1993 $145,667 $60,597 -- $0 8,900 $0 $ 5,626
1992 $137,667 $41,851 -- $0 9,500 $0 $ 5,313
----------------
K. McCrone(4) VP; President, 1994 $127,058 $78,914 -- $0 0 $0 $ 9,280
Delfield
----------------
P. Faenza General Manager, 1994 $113,936 $54,900 -- $0 3,400 $0 $ 0
Castel MAC 1993 $109,496 $24,581 -- $0 4,900 $0 $ 0
S.p.A. 1992 $124,481 $11,767 -- $0 5,100 $0 $ 0
----------------
</TABLE>

(1) Each executive officer held the same position with the Company in each of
the years indicated.

(2) Includes amounts earned in the fiscal year, whether or not deferred.

(3) Amounts in this column consist of Company-matching contributions to the
TRIP, the Supplemental Tax Reduction Plan and, in the case of Mr. McCrone,
to The Delfield Company 401(k) Savings and Profit Sharing Retirement Plan.
Also included for Mr. McCrone is a payment in the amount of $2,605 under an
agreement between Mr. McCrone and DFC pursuant to which DFC agreed to
reimburse Mr. McCrone for the after-tax amount of the annual interest paid
on a bank loan taken by Mr. McCrone to purchase 120,000 shares of common
stock of DFC in 1991.

(4) The compensation reported is for a partial year, beginning on April 29,
1994, the date on which the Company acquired Delfield and Mr. McCrone became
an executive officer of the Company.

11
<PAGE> 16

OPTIONS AND STOCK APPRECIATION RIGHTS

The following tables summarize option grants to and exercises by the
executive officers named in the Summary Compensation Table above during the 1994
fiscal year and the value of the options held by such persons at the end of the
1994 fiscal year. No stock appreciation rights have been granted to date by the
Company.

OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS IN 1994 POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR 10-YEAR OPTION TERM(1)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE EXPIRATION
NAME GRANTED EMPLOYEES(2) PRICE(3) DATE 0% 5% 10%
------------------------------------------------------------------------------------------------------------------
R. Osborne 18,100 32.01% $16.50 02/18/04 $0 $ 187,819 $ 475,971
--------------------------
E. Lanzani 8,900 15.74% $16.50 02/18/04 $0 $ 92,353 $ 234,041
--------------------------
D. Holmes 6,200 10.96% $16.50 02/18/04 $0 $ 64,336 $ 163,040
--------------------------
K. McCrone 0 --% -- -- $0 $ 0 $ 0
--------------------------
P. Faenza 3,400 6.01% $16.50 02/18/04 $0 $ 35,281 $ 89,409
--------------------------
All Shareholders(4) $0 $85,794,408 $217,419,899
--------------------------
Named Executive Officers' Gains as a % of all Shareholder Gains 0.443% 0.443%
--------------------------
</TABLE>

(1) The Company is unaware of any formula which provides an accurate depiction
of the value of a stock option as of the date of grant.

(2) Based on 56,550 options granted to all employees.

(3) Fair market value (the average of the high and low prices for the Common
Stock as reported on the New York Stock Exchange) on February 17, 1994, the
date of grant.

(4) Total dollar gains based on the assumed annual rates of appreciation shown
here and calculated on 8,267,938 outstanding shares -- the number of shares
outstanding on December 30, 1994.

12
<PAGE> 17

AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF SECURITIES TOTAL VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS HELD
OPTIONS HELD AT FISCAL YEAR END AT FISCAL YEAR END(1)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------------------------------------------------------------------------------------------
R. Osborne 0 $ 0 115,150 61,118 $ 933,191 $ 331,002
---------------
E. Lanzani 13,495 $98,561 48,857 30,015 $ 366,288 $ 162,458
---------------
D. Holmes 0 $ 0 49,280 21,008 $ 385,329 $ 113,899
---------------
K. McCrone 0 $ 0 0 0 $ 0 $ 0
---------------
P. Faenza 0 $ 0 25,389 11,468 $ 195,857 $ 61,988
---------------
</TABLE>

(1) Based on the fair market value of the Common Stock on December 30, 1994 of
$17.0625 (the average of the high and low prices for the Common Stock as
reported on the New York Stock Exchange).

PENSION PLAN

The Salaried Pension Plan of Scotsman Group Inc. ("SGI") is a
non-contributory, defined benefit plan for certain salaried employees of SGI and
its subsidiaries. The amount of a participant's pension benefits depends
primarily on years of employment, age at retirement, and average annual
compensation (salary plus bonus, whether paid in cash or stock) for the five
successive highest-paid years out of the employee's last ten years of
employment, adjusted for wages subject to Social Security taxes. Participants
become fully vested in their accrued pension benefits after five years of
service. Payment of vested pension benefits normally begins at age 65, but an
early retirement benefit at reduced levels may be paid if a participant is at
least 55 years of age with 10 years of service. Effective January 1, 1994, SGI
adopted the Supplemental Executive Retirement Plan (the "Supplemental Plan")
which provides each participant in the Supplemental Plan with the benefits such
participant would have received under the Salaried Pension Plan except for
certain limitations on compensation and benefits imposed under the Internal
Revenue Code of 1986, as amended (the "Code").

13
<PAGE> 18

The following table illustrates the amount of annual pension benefits
payable under the Salaried Pension Plan (including amounts payable under the
Supplemental Plan, where applicable) for eligible employees retiring at age 65
with the following remuneration and numbers of credited years of service.

PENSION PLAN

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
YEARS OF SERVICE
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REMUNERATION 15 20 25 30 35
-----------------------------------------------------------------------------
$100,000 $ 18,452 $ 24,603 $ 30,754 $ 36,905 $ 43,056
----------
$175,000 $ 33,910 $ 45,213 $ 56,517 $ 67,820 $ 79,123
----------
$250,000 $ 49,368 $ 65,824 $ 82,279 $ 98,735 $115,191
----------
$325,000 $ 64,825 $ 86,434 $108,042 $129,651 $151,259
----------
$400,000 $ 80,283 $107,044 $133,805 $160,566 $187,327
----------
$475,000 $ 95,741 $127,654 $159,568 $191,481 $223,395
----------
$550,000 $111,198 $148,264 $185,331 $222,397 $259,463
----------
$625,000 $126,656 $168,875 $211,093 $253,312 $295,531
----------
</TABLE>

The benefits set forth in the above table are computed on a straight-line
annuity basis. Offsets for Social Security payments and other offsets provided
for in the plan are not reflected in the table. For purposes of determining the
benefit under the Salaried Pension Plan for Mr. Osborne and Mr. Holmes, credited
years of service and the amount of covered compensation (salary plus bonuses
paid in cash or stock) for 1994 are as follows: Mr. Osborne, 16 years and
$502,500; Mr. Holmes, 20 years and $215,305. Covered compensation, in each case,
is equal to the salary reported for such officer in the Summary Compensation
Table for 1994 plus the bonus reported for 1993 since bonuses earned in a given
fiscal year are paid the following fiscal year. In calculating credited years of
service under the Salaried Pension Plan, years of service with Household or its
former subsidiaries prior to the spin-off of the Company by Household in 1989
have been taken into account.

Mr. Lanzani, Mr. McCrone and Mr. Faenza are not covered by SGI's Salaried
Pension Plan. Mr. Lanzani does, however, have an agreement with the Company's
Italian subsidiary, Frimont S.p.A. ("Frimont"), which provides that he will
receive monthly payments beginning at the later of July 1, 1999 or termination
of his employment and ending at his death. These monthly payments will be equal
to .0133 times his average monthly compensation times his credited service. For
purposes of the agreement, "average monthly compensation" means his regular
salary plus short-term bonuses received during the five-year period prior to
termination of employment divided by 60 and "credited service" means the number
of years of continuous service from November 7, 1967 to the date of termination
of employment. For purposes of this plan, Mr. Lanzani is currently credited with
27 years of service, and he received a total of $206,451 in salary and bonuses
in 1994. If Mr. Lanzani's employment is terminated before he reaches age 65,
then at age 65 he will begin receiving such monthly payments.

Mr. Faenza is covered by a pension plan of the Company's Italian
subsidiary, Castel MAC S.p.A., ("Castel MAC"). Under the terms of that plan and
as required by Italian law, Castel MAC accrues each year, on Mr. Faenza's
behalf, an amount equal to (i) his compensation for such year (salary plus cash
bonuses), divided by 13.5, plus (ii) an amount equal to 75% of an Italian
consumer price index for that year times the amount of such compensation, less
(iii) the amount of certain contributions made by Castel MAC, on Mr. Faenza's
behalf, to an Italian government-sponsored social security plan. Upon his
retirement,

14
<PAGE> 19

Mr. Faenza is entitled to receive a lump sum payment equal to the sum of the
amounts accrued, on his behalf, in accordance with the formula set forth above,
for each year of employment with Castel MAC in which he was covered by the plan.
An accrual in the amount of 16,603,583 Lire (approximately $10,337 as of
December 31, 1994), determined in accordance with the formula set forth above,
was established for Mr. Faenza under the plan for 1994. As of December 31, 1994,
Mr. Faenza had been covered by the plan for a total of nine years.

EXECUTIVE COMPENSATION AND SEVERANCE AGREEMENTS, INCLUDING CHANGE OF CONTROL
PROVISIONS

Mr. Osborne has entered into an employment agreement with SGI under which
he is currently entitled to an annual base salary of $325,000, subject to annual
review, and to benefits under SGI's benefit plans. The agreement also
establishes an annual target bonus under the Company's Executive Incentive
Compensation Program (the "Program") equal to 50% of his annual salary. The
agreement provides for certain continued compensation in the event of (i)
termination of employment by SGI or its subsidiaries prior to age 65 for any
reason other than willful and deliberate misconduct or disability for a
specified period that prevents him from reasonably performing his duties, or
(ii) Mr. Osborne's resignation from his position prior to age 65 because of a
reassignment to a position of lesser rank or status, reduction of salary,
benefits or target bonus, or reassignment to a geographic area more than 50
miles from his residence as of the date the agreement was executed.

In the event Mr. Osborne's employment is terminated or he resigns for any
of the reasons described in the preceding paragraph, he will be entitled for the
next 18 months to (i) continued salary at the rate at which last received, (ii)
continued target bonuses (prorated for such 18-month period) and (iii)
continuation of pension accrual, savings plan contributions, deferred
compensation (if any) and medical and life insurance benefits or, with respect
to the benefits described in clause (iii), the economic equivalent thereof.
Benefit plan accruals described in clause (iii) that would be payable to Mr.
Osborne on a deferred basis, were he to continue his employment, may be deferred
or paid in an actuarially equivalent lump sum at the end of the 18-month period.
Mr. Osborne's employment agreement further provides that SGI will reimburse Mr.
Osborne for any excise tax due upon any of the benefits described in this
paragraph and for any additional federal income and excise taxes due as the
result of such reimbursement.

Mr. Osborne and SGI have also entered into a separate, executive severance
agreement (the "Severance Agreement") under which Mr. Osborne will be entitled
to receive a single cash payment equal to the sum of (i) three times the amount
of his highest annual base salary in effect during the immediately preceding
12-month period and (ii) three times the amount of the greater of his then
current target bonus under the Program or the average target bonus paid or
payable to him under the Program in the last five fiscal years, if at any time
before he reaches age 65, Mr. Osborne's employment with SGI is terminated or he
resigns for "good reason" following a "change of control" of the Company. Under
such circumstances, Mr. Osborne will also become fully vested in any accrued
benefits in which he is not then fully vested under SGI's Salaried Pension
Plan and in any employer matching contributions in which he is not then fully
vested under SGI's Tax Reduction Investment Plan ("TRIP") or Supplemental Tax
Reduction Plan. SGI will be obligated to pay Mr. Osborne, within 30 days of his
termination or resignation, a lump sum equal to the actuarial equivalent of such
accrued benefits under the Salaried Pension Plan and the amount of such employer
matching contributions. SGI will also be obligated to keep in full force and
effect, for a period of three years, all medical and insurance policies provided
to Mr. Osborne by SGI at the same level of coverage and upon the same terms

15
<PAGE> 20

and conditions in effect as of the date of termination of his employment. Any
payments made and benefits provided to Mr. Osborne under the Severance Agreement
will be in lieu of those payments and benefits to which Mr. Osborne would
otherwise be entitled under his employment agreement. The Severance Agreement
further provides that SGI will reimburse Mr. Osborne for any excise tax due upon
any payment made as a result of a change of control and for any additional
federal income and excise taxes due as the result of such reimbursement.

For purposes of the Severance Agreement, a "change of control" will be
deemed to have occurred if any of the events described as constituting a "change
of control" for purposes of the Stock Option Plan shall have occurred. See
"Proposal 2, Approval of Non-Employee Directors Stock Option Plan." Mr. Osborne
will be deemed to have had "good reason" to terminate his employment with SGI
following a change of control if, among other things, without his written
consent, he is assigned to duties inconsistent with his duties or
responsibilities with SGI immediately prior to the change of control, his salary
or benefits are reduced, he is reassigned to any location other than the
facility where he is located at the time of the change of control or, following
a merger or consolidation in which the Company is not the surviving corporation
or the transfer of all or substantially all of the assets of the Company to
another corporation, SGI fails to obtain from such corporation an agreement to
assume all of SGI's obligations under the Severance Agreement.

In addition to Mr. Osborne, Mr. Holmes and Mr. Lanzani each have employment
agreements with SGI. Under their employment agreements with SGI, Mr. Holmes and
Mr. Lanzani are currently entitled to annual base salaries of $165,000, and
273,000,000 Lire (approximately $170,000 as of December 31, 1994) subject to
annual review. The employment agreements of Mr. Holmes and Mr. Lanzani also
establish for each an annual target bonus equal to 30% of his annual salary. The
remaining provisions of Mr. Holmes' and Mr. Lanzani's employment agreements are
identical to those of Mr. Osborne's employment agreement except that (i) the
provisions relating to continuation of compensation apply for a period of 12,
rather than 18 months, (ii) there is no provision in the agreements for
reimbursement of excise taxes, and (iii) each agreement will remain in effect,
not until the executive officer who is a party to the agreement reaches age 65,
but only until June 20, 1995. Thereafter, the term of each agreement will be
automatically extended each year for one additional year, unless the
Compensation Committee delivers written notice of termination three months prior
to the end of such term or extended term.

Mr. Holmes and Mr. Lanzani have also entered into executive severance
agreements with SGI. The provisions of those agreements are identical to the
provisions of Mr. Osborne's Severance Agreement with SGI except that each of
these officers will be entitled to receive a single cash payment equal to the
sum of (i) two (rather than three) times the amount of his highest annual base
salary in effect during the immediately preceding 12-month period and (ii) two
(rather than three) times the amount of the greater of his then current target
bonus or the average target bonus paid or payable to him under the Program in
the preceding five fiscal years, if at any time before he reaches age 65, such
officer's employment is terminated or he resigns for "good reason" following a
"change of control" of the Company. Unlike Mr. Osborne's Severance Agreement,
such agreements may be terminated prior to the occurrence of a change of control
by SGI upon six months' prior notice to the executive who is a party to the
agreement, provided that, to the knowledge of the board of directors of SGI, no
person has taken, at the time of such notice, steps reasonably calculated to
effect a change of control.

16
<PAGE> 21

OTHER AGREEMENTS

Mr. Lanzani has an agreement with Frimont which provides that, so long as
he is employed in his present position at Frimont, he will receive 2.4% of the
annual net operating income of Frimont. This agreement replaced his prior
ownership of 10% of the shares of Frimont. The agreement provides that if Mr.
Lanzani resigns from his position or is terminated without cause before May 31,
1996, he thereafter may elect to receive a lump sum payment, in lieu of payments
under the agreement, equal to the present value of the projected annual payments
under the agreement which he would have received had he remained employed by
Frimont until June 30, 1996. The projection will be based on the average net
operating income growth of Frimont for the prior five years. Since the payments
made to Mr. Lanzani pursuant to this agreement replaced his prior ownership of
shares of Frimont stock, the Company does not consider these payments to be cash
compensation for services rendered and, accordingly, such payments have not been
included in the summary compensation table set forth above.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors is responsible for
developing executive compensation philosophies, determining the executive
compensation program components and assuring that the program is administered in
a manner consistent with the program's philosophies and objectives. All
Committee members are outside directors of the Company.

The Committee believes that since executive officers are in positions to
make substantial contributions to the long-term success of the Company, the
executive compensation program should be structured to provide meaningful
incentives to increase shareholder value. On an annual basis, the Committee
reviews the actual results of each executive officer's performance against the
objectives established by, and for, such executive for the preceding year. The
Committee also reviews the compensation program components and plan for each
executive officer for the upcoming year and relies upon the advice of
independent compensation consultants regarding the competitiveness of the
compensation programs. The Committee approves each compensation plan with such
modifications as it deems appropriate. During the year, the Committee reviews
individual salaries in conjunction with the criteria for base salaries set forth
below, taking into account any significant event that could affect program
objectives and design.

The Company's executive officer compensation program is comprised of a base
salary, an annual cash incentive compensation program and a long-term incentive
compensation plan in the form of stock options, stock appreciation rights,
restricted stock and restricted stock rights. In addition, executives are
eligible for other benefits that are generally available to employees of the
Company, including insurance protection, retirement plans and vacations and
holidays.

Base Salary

Base salary ranges for executives are set at the 50th percentile of the
national marketplace for manufacturing companies of comparable size. Due to the
increased size of the Company in 1994, manufacturing companies with sales in the
range of $300-$500 million are now being used as the benchmark for comparison
purposes, and target salary ranges have been adjusted accordingly. In
determining salaries, the Committee takes into account salary rates compared
with the marketplace, the performance of individuals and other factors deemed
relevant by the Committee.

17
<PAGE> 22

Mr. Osborne's 1994 base salary increase of 6.6% was slightly higher than
increases reported in marketplace surveys which indicated that the average
expected increase in chief executive officers' base salaries was in the range of
5% in 1994. Due to the change in comparison data, the resultant base salary for
Mr. Osborne, however, is still somewhat below the median of chief executive
officers of comparably sized manufacturing companies.

Executive Incentive Compensation Program

The Executive Incentive Compensation Program is designed to provide
increased incentives to key executives to meet or exceed aggressive financial
targets and to accomplish significant projects contributing to the Company's
success.

The targets for awards under this plan are set at the 50th percentile of
the national marketplace. Incentives earned are based primarily on performance
compared with financial targets established for the Company and/or a subsidiary
or division of the Company at levels approved by the Committee. The financial
targets include targets for earnings and return on investment or return on
equity. A portion of earned awards are based on discretionary factors to reflect
individual contributions to the Company's success each year.

In a given fiscal year, Mr. Osborne may earn incentive compensation which
ranges from 0% to 75% of his annual base salary, with a target payout of 50% of
his annual base salary. For 1994, Mr. Osborne received a bonus of 62.5% of his
annual base salary. In reviewing Mr. Osborne's incentive amount, the Committee
considered the performance of the continuing operations of the Company and the
acquisitions and restructuring of operations completed in 1994. During 1994,
Delfield and Whitlenge were acquired and successfully integrated into the
Company. These companies made a positive contribution to the Company's earnings
and net income per share in their first year. The integration of the operations
of Booth and Crystal Tips was also completed. Finally, earnings per share
exceeded original expectations. The Committee believes that Mr. Osborne's
performance during 1994 was worthy of an incentive award above target.

Long-Term Executive Incentive Compensation Plan

The Committee believes that long-term incentives should provide significant
portions of total compensation for executives while encouraging long-term stock
ownership. The objectives of the Scotsman Long-Term Executive Incentive
Compensation Plan (the "Long-Term Plan") are to align executive and shareholder
long-term interests by creating a strong and direct link between executive pay
and shareholder return. The Committee endorses the value of stock ownership as
an incentive for Company executives to increase shareholder value through
improved executive performance.

The Committee has established programs for each executive officer under the
Long-Term Plan which provide for stock option grants as a portion of each
participant's salary grade midpoint. The option exercise price is equal to the
fair market value of the Common Stock on the date of the grant. Value to the
executive is dependent upon an increase in the share price above the option
exercise price. The program established for Mr. Osborne under the Long-Term Plan
has a target equal to 100% of his salary grade midpoint. In 1994, the Committee
approved a stock option grant equal to 100% of his salary grade midpoint. The
Committee believes that an appropriate portion of Mr. Osborne's total
compensation is tied directly to shareholder value.

18
<PAGE> 23

Benefit Programs

The Company provides its executive officers with insurance protection
plans, including medical, dental, life, accidental death and dismemberment,
travel and accident, and disability insurance plans, retirement programs and
vacation and holiday plans. These plans are generally available to the Company's
employees.

George D. Kennedy, Committee
Chairman
Donald C. Clark, Committee Member
Matthew O. Diggs, Jr., Committee
Member
James J. O'Connor, Committee Member

19
<PAGE> 24

COMMON STOCK PERFORMANCE

The graph below compares the cumulative total shareholder return on the
Common Stock for the last five fiscal years with the cumulative total return of
the Russell 2000 Index and the S&P Diversified Manufacturing Index over the same
period. Most of the Company's direct competitors are private companies or small
segments of larger companies and do not permit construction of a realistic peer
group. Therefore, the S&P Diversified Manufacturing Index has been used in lieu
of a peer group for this comparison.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
SCOTSMAN INDUSTRIES, RUSSELL 2000,
AND S&P DIVERSIFIED MANUFACTURING

<TABLE>
<CAPTION>
S&P DIVERSI-
MEASUREMENT PERIOD SCOTSMAN IN- FIED MANU-
(FISCAL YEAR COVERED) DUSTRIES RUSSELL 2000 FACTURING
<S> <C> <C> <C>
12/31/89 100.00 100.00 100.00
12/31/90 67.98 80.50 99.13
12/31/91 81.41 117.57 121.49
12/31/92 95.00 139.25 131.67
12/31/93 144.27 165.55 159.82
12/31/94 176.08 162.55 165.47
</TABLE>

Assumes $100 invested on December 31, 1989 in the Common Stock, Russell 2000,
and S&P Diversified Manufacturing Group.

* Total return assumes reinvestment of dividends on a quarterly basis.

20
<PAGE> 25

PROPOSAL 2

APPROVAL OF NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

On August 11, 1994, the Board of Directors adopted, subject to approval by
the Company's shareholders, the Scotsman Industries, Inc. Non-Employee Directors
Stock Option Plan. The Stock Option Plan provides for an automatic annual award
of options to purchase shares of Common Stock to directors who are not employees
of the Company. If approved by the shareholders, the Stock Option Plan will be
deemed to have been effective as of August 11, 1994 (the "Effective Date").

The purpose of the Stock Option Plan is to enhance the Company's ability to
attract and retain non-employee directors of exceptional competence and to
promote the achievement of the long-term objectives of the Company by more
closely aligning the personal financial interests of non-employee directors with
the interests of the Company's shareholders. The Board of Directors believes
that it is in the best interests of the Company and its shareholders to provide
non-employee directors with a personal financial stake in the Company in order
to provide them with an additional incentive for seeking to enhance the
Company's performance and growth.

The affirmative vote of a majority of the votes cast by the holders of
Common Stock and Series A Convertible Preferred Stock present, in person or by
proxy, and entitled to vote at the 1995 Annual Meeting is required in order to
approve the Stock Option Plan. Abstentions will be counted in determining the
total number of votes cast on the proposal at the 1995 Annual Meeting. As a
result, an abstention will have the same effect as a vote "Against" the approval
of the Stock Option Plan.

A copy of the Stock Option Plan is attached as Exhibit A to this Proxy
Statement. The following discussion of the material features and provisions of
the Stock Option Plan is qualified in its entirety by reference to Exhibit A.

ADMINISTRATION

The Stock Option Plan will be administered by the Board of Directors,
subject to the provisions of the Stock Option Plan. The Stock Option Plan
provides that the Board shall have full authority to interpret and administer
the Stock Option Plan; provided, however, that the Board shall not have the
authority to determine the criteria for eligibility to participate in the Stock
Option Plan, the number of options or shares of Common Stock subject to options
granted under the Stock Option Plan, the option exercise price, the vesting
period, or the timing of the grant of options under the Stock Option Plan. All
such determinations shall be automatically made pursuant to the provisions of
the Stock Option Plan.

SHARES SUBJECT TO THE STOCK OPTION PLAN

If the Stock Option Plan is adopted by the shareholders, up to 100,000
shares of Common Stock shall be available for grant under the Stock Option Plan.
Common Stock issued pursuant to options granted under the Stock Option Plan may
consist of authorized and previously unissued shares of Common Stock or of
Common Stock held in the Company's treasury. The grant of an option shall reduce
the number of shares of Common Stock available for grant under the Stock Option
Plan by the number of shares of Common Stock subject to such option. If an
option granted under the Stock Option Plan terminates or lapses for any reason,
any shares of Common Stock subject to such option will again be available for
grant under the Stock Option Plan. In the

21
<PAGE> 26

event of a stock dividend, stock split, recapitalization, reorganization,
merger, consolidation or other change in the Company's capitalization, the Board
of Directors has the authority to make appropriate adjustments in the price,
number of shares of Common Stock or kind of securities subject to options or in
the terms of such options in order to prevent dilution or enlargement of rights
under the options. In addition, the Board of Directors may also change the
number of shares or kinds of securities available for grant under the Stock
Option Plan to reflect any such corporate changes. No such adjustment shall be
made, however, if the adjustment would cause the Stock Option Plan to fail to
comply with the "formula award" exception under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or any successor
regulation.

ELIGIBILITY

Only directors of the Company who are not otherwise employees of the
Company or any of its subsidiaries and who are serving on the Board of Directors
on the date of each scheduled grant under the Stock Option Plan will be eligible
to participate in the Stock Option Plan. As of the date hereof, the Company has
seven non-employee directors -- Messrs. Clark, Collins, Considine, Diggs,
Kennedy, O'Connor and Rettig. As President and Chief Executive Officer of the
Company, Mr. Osborne is not eligible to participate in the Stock Option Plan.

OPTIONS

Grant of Options

Under the terms of the Stock Option Plan, each non-employee director will
receive, as of the Effective Date, an automatic grant of an option to purchase
2,000 shares of Common Stock. If the Stock Option Plan is approved by the
shareholders, Messrs. Clark, Collins, Considine, Diggs, Kennedy, O'Connor and
Rettig will therefore be deemed to have been granted such an option as of August
11, 1994, the Effective Date. Each non-employee director who is newly elected or
appointed to the Board of Directors after the Effective Date will receive an
automatic grant of an option to purchase 2,000 shares of Common Stock on the
next business day following the date of such director's election or appointment.

Each non-employee director (other than a non-employee director who has not
yet served at least six months on the Board of Directors) will automatically be
granted an additional option to purchase 1,000 shares of Common Stock of the
Company on the next business day following the date of each annual meeting,
beginning with the next business day following the 1995 Annual Meeting. If the
Stock Option Plan is approved by the shareholders, on May 19, 1995, the next
business day following the date of the 1995 Annual Meeting, Messrs. Clark,
Collins, Considine, Diggs, Kennedy, O'Connor and Rettig will accordingly be
granted an option to acquire an additional 1,000 shares of Common Stock. No
additional options shall be granted under the Stock Option Plan other than the
options described in this paragraph and the preceding paragraph.

Option Price

The purchase price per share of Common Stock to be paid by a non-employee
director upon the exercise of an option granted under the Stock Option Plan
shall be equal to the fair market value of a share of Common Stock on the date
on which the option was granted. For purposes of the Stock Option Plan, fair
market value is defined as the average of the high and low sales prices for the
Common Stock, as reported on the New York

22
<PAGE> 27

Stock Exchange, on such date or, if no sales are reported, the weighted average
of the mean of the high and low sales prices reported on the New York Stock
Exchange on the nearest days before and after such date.

Vesting of Options

Each option granted under the Stock Option Plan shall vest 100% on the date
immediately preceding the first annual meeting following the date of the grant
of such option. If the Stock Option Plan is approved by the shareholders,
options granted to non-employee directors as of the Effective Date will
therefore be deemed to have vested on May 17, 1995.

Notwithstanding the provisions of the preceding paragraph, all options held
by a non-employee director will become immediately vested upon the death or
disability of such non-employee director during his service as a director or
upon a "change in control" of the Company, as defined in the Stock Option Plan.
See "-- Provisions Relating to a 'Change in Control' of the Company." In the
event that a non-employee director ceases to be a director for any reason other
than death, disability or a change in control of the Company, all options held
by such non-employee director which have not vested as of the date such
non-employee director ceases to be a director shall be forfeited, and any shares
of Common Stock subject to such options shall again be available for grants
under the Stock Option Plan.

Exercise of Options

Each option shall expire on the date which is 10 years and one day from the
date on which the option was granted, subject to the provisions of the Stock
Option Plan relating to the termination of a non-employee director's service as
a director. If a non-employee director terminates service on the Board of
Directors as a result of death or disability, any option held by such director
or such director's permitted transferees under the Stock Option Plan may be
exercised within one year following the date of such termination or until the
expiration date of such option, whichever period is shorter. In the event that a
non-employee director ceases to be a director for any reason other than death,
disability or a change in control of the Company, all options held by such
non-employee director or such director's permitted transferees which are vested
as of the date of such termination may be exercised within six months following
such date or until the expiration date of such option, whichever period is
shorter. Any option which vests pursuant to a change in control of the Company
may be exercised at any time prior to the expiration date of such option.

Payment for shares purchased upon exercise of an option shall be made in
cash or in shares of Common Stock at the then fair market value of such shares
or by a combination of cash and shares. No option granted under the Stock Option
Plan may be sold, assigned or otherwise transferred other than (i) by will or by
laws of descent and distribution or, (ii) to the extent permitted by Rule 16b-3
under the Exchange Act and solely for the purposes of estate planning, by
transfer to members of the non-employee director's family or to family
partnerships or trusts of which the sole beneficiaries are the non-employee
director and members of such director's family.

23
<PAGE> 28

PROVISIONS RELATING TO A "CHANGE IN CONTROL" OF THE COMPANY

For purposes of the Stock Option Plan, a "change of control" will be deemed
to have occurred if any of the following events occurs:

(i) subject to certain specified exceptions, any individual, entity,
or group, including any "person" (as defined in Section 13(d)(3) or
14(d)(2) of the Exchange Act) acquires beneficial ownership of 20%
or more of the Common Stock or of the combined voting power of the then
outstanding securities of the Company entitled to vote generally in the
election of directors (the "Voting Securities");

(ii) persons who were directors of the Company as of the Effective
Date or persons nominated by those directors to succeed to their positions
or their successors (the "Incumbent Board") shall cease to constitute a
majority of the Board of Directors of the Company;

(iii) the shareholders shall approve a reorganization, merger or
consolidation of the Company, unless, following such reorganization, merger
or consolidation, (A) at least 60% of the Common Stock and 60% of the
Voting Securities are owned by all or substantially all of the same persons
who were beneficial owners of such securities immediately prior to such
reorganization, consolidation or merger, in substantially the same
proportions relative to one another, (B) no person beneficially owns 20% or
more of the common stock or voting securities of the surviving corporation,
other than specified entities controlled by the Company or a person who had
beneficial ownership of 20% or more of the Common Stock or the Voting
Securities immediately prior to the reorganization, consolidation or
merger, and (C) at least a majority of the members of the board of
directors of the surviving corporation were members of the Incumbent Board;
or

(iv) the shareholders approve a plan of liquidation or dissolution of
the Company or the sale or disposition of all or substantially all of the
assets of the Company to another corporation other than a corporation which
meets the following requirements: (A) at least 60% of the common stock and
60% of the voting securities of the corporation are owned by all or
substantially all of the same persons who were beneficial owners of the
Common Stock and the Voting Securities immediately prior to such sale or
disposition, in substantially the same proportions relative to one another,
(B) no person beneficially owns 20% or more of the common stock or voting
securities of the corporation, other than specified entities controlled by
the Company or a person who had beneficial ownership of 20% or more of the
Common Stock or the Voting Securities immediately prior to such sale or
disposition, and (C) at least a majority of the members of the board of
directors of the corporation were members of the Incumbent Board.

AMENDMENT AND DURATION

The Board of Directors may amend, modify or terminate the Stock Option Plan
at any time, subject to the following limitations: (i) without the approval of
the Company's shareholders, the Board of Directors may not materially increase
the number of shares which may be available for grants of options under the
Stock Option Plan, change the class of persons eligible to participate in the
Stock Option Plan, materially increase the benefits accruing to non-employee
directors under the Stock Option Plan, or make any other amendment to the Stock
Option Plan which is required by law to be approved by the shareholders, and
(ii) without the consent of the option holder, the Board of Directors may not
amend, modify or terminate a previously granted option in a manner which
materially and adversely affects the rights of the option holder. Additionally,
the provisions of the Stock Option Plan relating to eligibility, number of
options and shares of Common Stock to

24
<PAGE> 29

be awarded to non-employee directors, the option exercise price, the vesting
period and the timing of grants of options under the Stock Option Plan may not
be amended more than once every six months.

Unless terminated sooner by the Board of Directors, the Stock Option Plan
will remain in effect until all shares of Common Stock subject to the Stock
Option Plan shall have been purchased or acquired in accordance with the Stock
Option Plan.

NEW STOCK OPTION PLAN BENEFITS

The following table sets forth information concerning the options which
will have been granted under the Stock Option Plan, as of the Effective Date, if
the Stock Option Plan is approved by the shareholders and is therefore deemed to
have been in effect for the fiscal year ended January 1, 1995. Information
relating to employee directors, executive officers and other employees of the
Company is not included because such individuals are not eligible to participate
in the Stock Option Plan.

NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
OPTIONS GRANTED IN 1994 SUBJECT TO SHAREHOLDER APPROVAL

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
GROUP NUMBER OF OPTIONS EXERCISE PRICE(1)
<S> <C> <C>
---------------------------------------------------------------------------------------------
All Non-Employee Directors as a Group (7 Persons).... 14,000 $15.125
---------------------------------------------------------------------------------------------
</TABLE>

(1) Fair market value (the average of the high and low prices for the Common
Stock as reported on the New York Stock Exchange) on August 11, 1994, the
Effective Date.

On March 23, 1995, the last sales price of the Common Stock, as reported on
the New York Stock Exchange, was $18.00. If the options granted to the
non-employee directors under the Stock Option Plan on the Effective Date had
been exercisable as of March 23, 1995, the dollar value of each such option
(i.e., the difference between the last sales price of the Common Stock as of
such date and the exercise price) would have been $2.875.

FEDERAL INCOME TAX CONSEQUENCES

The options granted under the Stock Option Plan will be non-statutory
options not intended to qualify under Section 422(a) of the Code. The grant of
any option under the Stock Option Plan will not give rise to taxable income to
the non-employee director or to a tax deduction for the Company. The option
holder will recognize as ordinary income upon exercise of the option an amount
equal to the excess of the fair market value of the Common Stock on the date of
exercise over the option exercise price. If the option holder is subject to
Section 16(b) of the Exchange Act, special rules governing the time at which
such income is recognized may apply. The Company will be entitled to a deduction
in an amount equal to, and at the same time that, income is recognized by the
option holder.

If the option holder pays the exercise price of an option in cash, his or
her original tax basis in the Common Stock acquired upon exercise of the option
will be equal to the sum of the exercise price paid plus the amount that the
option holder is required to recognize as income as a result of the exercise of
the option. If the option holder pays the exercise price of an option by
tendering other Common Stock then owned by the option holder, the option holder
will not recognize any gain or loss on the tendered stock, and the option
holder's original tax basis for an equal number of shares of Common Stock
acquired upon exercise of the option will be the same as the option holder's
adjusted tax basis in the tendered stock. The remaining acquired

25
<PAGE> 30

Common Stock will have an original tax basis equal to the sum of the amount of
the exercise price paid in cash, if any, plus any amount which the option holder
is required to recognize as income as a result of the exercise of the option.

THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT APPROVAL OF THE STOCK
OPTION PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE STOCK OPTION PLAN. UNLESS OTHERWISE
DIRECTED IN THE PROXY, THE PERSONS NAMED IN THE ACCOMPANYING PROXY INTEND TO
VOTE SUCH PROXY "FOR" PROPOSAL 2.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following persons are known to the Company to be the beneficial owners
of more than 5% of (i) the outstanding Common Stock and (ii) the outstanding
Series A Convertible Preferred Stock as of the most recent date prior to the
preparation of this Proxy Statement for which information is available to the
Company.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
NUMBER OF
SHARES OF PERCENT OF
SERIES A SERIES A
NUMBER OF CONVERTIBLE CONVERTIBLE
SHARES OF PERCENT OF PREFERRED PREFERRED
COMMON STOCK CLASS STOCK STOCK
NAME AND ADDRESS OF BENEFICIAL BENEFICIALLY OF COMMON BENEFICIALLY BENEFICIALLY
OWNER OWNED STOCK OWNED OWNED(1)
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
Mario J. Gabelli
Gabelli Funds, Inc.
GAMCO Investors, Inc............... 730,200(2) 8.17%(3) 0 0%
One Corporate Center
Rye, New York 10580-1434
-------------------------------------------------------------------------------------------------
Neuberger & Berman................. 496,990(4) 5.56%(3) 0 0%
605 Third Avenue
New York, New York 10058-3698
-------------------------------------------------------------------------------------------------
Onex Corporation
EJJM
Pacific Mutual Life Insurance
Company et al................... 3,274,396(5) 31.29%(6) 1,999,992 100%
c/o Robert F. Quaintance, Jr., Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
-------------------------------------------------------------------------------------------------
</TABLE>

(1) Based upon a total of 1,999,992 shares of Series A Convertible Preferred
Stock issued and outstanding on March 24, 1995.

(2) Based on information provided in a Schedule 13D, as amended through
Amendment No. 21 thereto, dated February 7, 1995, filed with the Securities
and Exchange Commission (the "SEC") by various entities which, according to
the filing, Mario J. Gabelli directly or indirectly controls and for which
he acts as chief investment officer. According to the filing, GAMCO
Investors, Inc. ("GAMCO") is the beneficial owner of 710,200 shares of
Common Stock and Gabelli Funds, Inc. ("GFI") is the beneficial

26
<PAGE> 31

owner of 20,000 shares. According to the filing, Mr. Gabelli is deemed to
have beneficial ownership of the shares beneficially owned by GAMCO and GFI,
and GFI is deemed to have beneficial ownership of the shares beneficially
owned by GAMCO. The filing also states that GAMCO, GFI and Mr. Gabelli each
have sole voting and investment power over the shares which they are
reported as beneficially owning or as being deemed beneficially to own
except that (a) GAMCO lacks voting power over 65,700 shares, (b) under
certain circumstances, GFI will share with certain individual funds voting
power with respect to 20,000 shares held by one or more of those funds, and
(c) the voting and investment power of Mr. Gabelli and GFI (with respect to
the shares beneficially owned by GAMCO) is indirect.

(3) Based upon a total of 8,940,020 issued and outstanding shares of Common
Stock, as of March 24, 1995.

(4) Based on information provided in a Schedule 13G, as amended by Amendment No.
1, dated February 10, 1995, filed with the SEC by Neuberger & Berman.
According to the filing, Neuberger & Berman has shared investment power with
respect to all 496,990 shares, sole voting power with respect to 59,700
shares and no voting power with respect to the remaining shares. According
to the filing, the shares do not include 98,900 shares of Common Stock owned
by partners of Neuberger & Berman in their personal securities accounts as
to which Neuberger & Berman disclaims beneficial ownership and 70,400 shares
held in the name of the Neuberger & Berman Profit Sharing Retirement Plan as
to which Neuberger & Berman disclaims beneficial ownership.

(5) Based on information provided in a Schedule 13D, as amended by Amendment No.
1, dated February 21, 1995, filed with the SEC by Onex Corporation, Onex DHC
LLC, OMI Quebec Inc., Onex Capital Corporation, Oncap Holding Corporation,
Gerald W. Schwartz, EJJM, Matthew O. Diggs, Jr., Nancy B. Diggs, The Diggs
Family Foundation, Pacific Mutual Life Insurance Company, PM Group Life
Insurance Company, Pacific Mutual Charitable Foundation, Timothy C. Collins,
W. Joseph Manifold, Charles R. McCollom, Anita J. Moffatt Trust dated July
23, 1993, Anita J. Moffatt, Remo Panella, Teddy F. Reed, Robert L. Schafer,
Graham E. Tillotson, John A. Tilmann Trust dated July 23, 1993, John A.
Tilmann, Ronald A. Anderson, Kevin E. McCrone, Michael P. McCrone, Michael
J. de St. Paer, Paul L. de St. Paer, Wendy M. de St. Paer, M. Anne de St.
Paer, Graham F. Cook, Jane E. Cook, Catherine J. Cook, G.F. Cook and J.E.
Cook (A/c AJC) Trust, G.F. and J.E. Cook (A/c SEC) Trust, Christopher R.L.
Wheeler, Maureen J. Wheeler, Jonathan R. Wheeler, Josephine V. Wheeler, John
Rushton, Margaret L. Rushton, and J. Rushton & M.L. Rushton (A/c JGR) Trust
(the "Reporting Persons"). The shares include 1,525,393 shares of Common
Stock issuable upon the conversion of shares of Series A Convertible
Preferred Stock held by the Reporting Persons. According to the filing, the
Reporting Persons may be deemed to constitute a "group" for purposes of
Section 13(d)(3), and each of the Reporting Persons has shared voting power
and shared investment power with respect to all 3,274,396 shares reported as
beneficially owned by the group. According to the filing, pursuant to the
Stockholders' Agreement (i) the Reporting Persons may not transfer any
shares of Common Stock, except for transfers pursuant to an underwritten
public offering or sale in the public market through a broker, unless the
transferee agrees to become a party to, and to be bound by, the
Stockholders' Agreement, and (ii) the Reporting Persons have granted Onex
the Onex Proxy to vote all shares of Common Stock held by such Reporting
Persons. For additional information relating to the Stockholders' Agreement
and the Onex Proxy, see "Agreements Governing the Appointment and Future
Nomination of Certain Directors."

27
<PAGE> 32

(6) On a partially diluted basis, based upon a total of 10,465,413 shares of
Common Stock deemed to be outstanding, assuming the conversion of all
1,999,992 shares of Series A Convertible Preferred Stock beneficially owned
by the Reporting Persons.

AUDITORS

The independent public accounting firm of Arthur Andersen LLP has audited
the Company's consolidated 1994 financial statements. Arthur Andersen LLP will
serve as the Company's independent auditors in 1995. A representative from
Arthur Andersen LLP will be present at the 1995 Annual Meeting and will have the
opportunity to make a statement and to respond to appropriate questions.

NOTICE PROVISIONS FOR SHAREHOLDER PROPOSALS AND SHAREHOLDER NOMINATIONS OF
DIRECTORS

The Company's by-laws establish an advance notice procedure with regard to
the nomination, other than by or at the direction of the Board of Directors of
the Company, of candidates for election as directors (the "Nomination
Procedure") and with regard to certain matters to be brought before an annual
meeting of shareholders of the Company (the "Business Procedure").

The Nomination Procedure provides that only persons who are nominated by,
or at the direction of, the Board of Directors or by a shareholder who has given
timely written notice to the Secretary of the Company prior to the meeting at
which directors are to be elected will be eligible for election as directors of
the Company. The Business Procedure provides that at an annual meeting, and
subject to any other applicable requirements, only such business may be
conducted as has been brought before the meeting by, or at the direction of, the
Board of Directors or by a shareholder who has given timely prior written notice
to the Secretary of the Company of such shareholder's intention to bring such
business before the meeting. In order for business to be properly brought before
an annual meeting, such business must also be a proper matter for shareholder
action. To be timely, notice of a nomination or proposed business must be
received by the Company not later than the close of business on the 60th day nor
earlier than the close of business on the 90th day before the first anniversary
of the preceding year's annual meeting.

Special provisions apply if the date of an annual meeting is more than 30
days before or 60 days after such anniversary date. Under those circumstances,
in order to be timely, notice must be received by the Company not earlier than
the close of business on the 90th day before the date of the annual meeting nor
later than the later of (i) the close of business on the 60th day before the
annual meeting or (ii) the close of business on the 10th day after the date on
which the Company first publicly announces the meeting (either by a press
release reported by the Dow Jones News Service, Associated Press or a comparable
national news service or by a filing with the Securities and Exchange
Commission). Special provisions also apply in the event that the number of
directors to be elected at an annual meeting is increased and there is no such
public announcement naming all of the nominees for directors or specifying the
size of the increased board at least 70 days before the first anniversary of the
preceding year's annual meeting. Under those circumstances, a notice shall be
timely, but only with respect to nominees for any new positions created by the
increase, if the notice is received by the Company not later than the close of
business on the 10th day after the date that the Company first makes such a
public announcement. Any shareholder who gives notice of the nomination of any
person for election as a director or notice of business to be brought before an
annual meeting must be a shareholder of record at the time of the giving of
notice and entitled to vote on the matter with respect to which such notice is
given.

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<PAGE> 33

Under the Nomination Procedure, notice to the Company from a shareholder
who proposes to nominate a person at an annual meeting for election as a
director must contain certain information about that person, including age,
business and residence addresses, principal occupation, the class and number of
shares of Common Stock beneficially owned and such other information as would be
required to be included in a proxy statement soliciting proxies for the election
of the proposed nominee (including such person's written consent to being named
as a nominee and to serving as a director if elected). Under the Business
Procedure, notice relating to the conduct of business other than the nomination
of directors at an annual meeting must contain certain information about the
business to be brought, including a brief description of the business, the
reasons for conducting such business at the annual meeting, and any material
interest of such shareholder in the business so proposed. Any notice given under
either the Nomination Procedure or the Business Procedure must also contain
certain information about the shareholder giving such notice and the beneficial
owner, if any, on whose behalf the nomination or proposal has been made,
including the name and address of the shareholder as they appear on the
Company's books, the name and address of such beneficial owner, if any, and the
number of shares of Common Stock owned beneficially and of record by such
shareholder and beneficial owner, if any.

If the Chairman or other officer presiding at a meeting determines that a
person was not nominated in accordance with the Nomination Procedure, such
person will not be eligible for election as a director, or if such Chairman or
other officer determines that other business was not properly brought before
such meeting in accordance with the Business Procedure, such business will not
be conducted at such meeting. Nothing in the Nomination Procedure or the
Business Procedure will preclude discussion by any shareholder of any nomination
or business properly made or brought before the annual meeting in accordance
with the above-mentioned procedures.

1996 ANNUAL MEETING OF THE COMPANY'S SHAREHOLDERS

Proposals from shareholders to be presented at the 1996 annual meeting of
the shareholders of the Company must be received by the Company on or before
December 1, 1995 in order to be eligible for inclusion in the Company's proxy
statement and form of proxy for that meeting.

OTHER BUSINESS

The management of the Company knows of no business other than that stated
in this Proxy Statement which will be presented for action at the 1995 Annual
Meeting. If however, other business should properly come before the meeting, the
persons designated in the enclosed proxy will vote or refrain from voting in
respect thereof in accordance with their best judgment.

THE COMPANY WILL PROVIDE WITHOUT COST TO ANY SHAREHOLDER A COPY OF THE
COMPANY'S REPORT ON FORM 10-K FOR ITS MOST RECENT FISCAL YEAR, INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES, WHICH THE COMPANY IS REQUIRED TO FILE WITH
THE SECURITIES AND EXCHANGE COMMISSION. WRITTEN REQUESTS FOR THE REPORT SHOULD
BE DIRECTED TO SCOTSMAN INDUSTRIES, INC., 775 CORPORATE WOODS PARKWAY, VERNON
HILLS, ILLINOIS 60061, ATTENTION: DONALD D. HOLMES, SECRETARY.

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<PAGE> 34

EXHIBIT A

SCOTSMAN INDUSTRIES, INC.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

ARTICLE 1

DEFINITIONS

Whenever used in the Plan, the following terms shall have the meanings set
forth below:

1.1 AWARD AGREEMENT. "Award Agreement" means an agreement entered into by
and between the Company and a Non-employee Director, setting forth the terms and
provisions applicable to an Option granted under the Plan.

1.2 BENEFICIAL OWNER. "Beneficial Owner" shall have the meaning given such
term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

1.3 BOARD OR BOARD OF DIRECTORS. "Board" or "Board of Directors" means the
board of directors of the Company.

1.4 CHANGE IN CONTROL. A "Change in Control" of the Company shall be deemed
to have occurred upon the occurrence of any of the following:

(1) the acquisition by any Person of beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act of 20% or more of
either (i) the then outstanding shares of Common Stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a
Change in Control: (A) any acquisition directly from the Company (excluding
any acquisition resulting from the exercise of a conversion or exchange
privilege in respect of outstanding convertible or exchangeable
securities), (B) any acquisition by the Company, (C) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (D) any acquisition
by any corporation pursuant to a reorganization, merger or consolidation
involving the Company, if immediately after such reorganization, merger or
consolidation, each of the conditions described in clauses (i), (ii) and
(iii) of subsection (3) of this Section 1.4 shall be satisfied; and
provided further that, for purposes of clause (B), if any Person (other
than the Company or any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company,
shall become the beneficial owner of 20% or more of the Outstanding Company
Common Stock or 20% or more of the Outstanding Company Voting Securities by
reason of an acquisition by the Company and such Person shall, after such
acquisition by the Company, become the beneficial owner of any additional
shares of the Outstanding Company Common Stock or any additional
Outstanding Company Voting Securities and such beneficial ownership is
publicly announced, such additional beneficial ownership shall constitute a
Change in Control;

(2) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of such Board; provided, however, that any individual who

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becomes a director of the Company subsequent to the date hereof whose
election, or nomination for election by the Company's stockholders, was
approved by the vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed to have been a member of the
Incumbent Board; and provided further, that no individual who was initially
elected as a director of the Company as a result of an actual or threatened
election contest, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other
than the Board shall be deemed to have been a member of the Incumbent
Board;

(3) approval by the stockholders of the Company of a reorganization,
merger or consolidation unless, in any such case, immediately after such
reorganization, merger or consolidation, (i) more than 60% of the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and more than 60% of the combined
voting power of the then outstanding securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals or entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such reorganization, merger or
consolidation and in substantially the same proportions relative to each
other as their ownership, immediately prior to such reorganization, merger
or consolidation, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(other than the Company, any employee benefit plan (or related trust)
sponsored or maintained by the Company or the corporation resulting from
such reorganization, merger or consolidation (or any corporation controlled
by the Company) and any Person which beneficially owned, immediately prior
to such reorganization, merger or consolidation, directly or indirectly,
20% or more of the Outstanding Company Common Stock or the Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly
or indirectly, 20% or more of the then outstanding shares of common stock
of such corporation or 20% or more of the combined voting power of the then
outstanding securities of such corporation entitled to vote generally in
the election of directors and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent Board
at the time of the execution of the initial agreement or action of the
Board providing for such reorganization, merger or consolidation; or

(4) approval by the stockholders of the Company of (i) a plan of
complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the Company
other than to a corporation with respect to which, immediately after such
sale or other disposition, (A) more than 60% of the then outstanding shares
of common stock thereof and more than 60% of the combined voting power of
the then outstanding securities thereof entitled to vote generally in the
election of directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities immediately prior to such
sale or other disposition and in substantially the same proportions
relative to each other as their ownership, immediately prior to such sale
or other disposition, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (B) no Person
(other than the Company, any employee benefit plan (or related trust)
sponsored or maintained by the Company or such corporation (or any
corporation controlled by the Company) and any Person which beneficially
owned immediately prior to such sale or

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other disposition, directly or indirectly, 20% or more of the Outstanding
Company Common Stock or the Outstanding Company Voting Securities, as the
case may be) beneficially owns, directly or indirectly, 20% or more of the
then outstanding shares of common stock thereof or 20% or more of the
combined voting power of the then outstanding securities thereof entitled
to vote generally in the election of directors and (C) at least a majority
of the members of the board of directors thereof were members of the
Incumbent Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition.

1.5 CODE. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

1.6 COMMISSION. "Commission" means the United States Securities and
Exchange Commission or any successor agency thereto.

1.7 COMPANY. "Company" means Scotsman Industries, Inc., a Delaware
corporation, or any successor thereto as provided in Section 8.5 herein.

1.8 DIRECTOR. "Director" means any individual who is a member of the Board
of Directors of the Company.

1.9 DISABILITY. "Disability" means a permanent and total disability, within
the meaning of Section 22(e)(3) of the Code.

1.10 EFFECTIVE DATE. "Effective Date" shall have the meaning set forth in
Section 2.3 hereof.

1.11 EMPLOYEE. "Employee" means any employee of the Company or of any of
the Company's Subsidiaries. For purposes of the Plan, an individual whose only
employment relationship with the Company is as a Director shall not be deemed to
be an Employee.

1.12 EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor act thereto.

1.13 FAIR MARKET VALUE. "Fair Market Value" shall mean the average of the
highest and lowest sale prices for Shares on the relevant date, as reported on
the New York Stock Exchange, or if there were no sales on such date, the
weighted average of the mean between the highest and lowest sale prices reported
on the New York Stock Exchange the nearest day before and the highest and lowest
sale prices reported on the New York Stock Exchange on the nearest day after the
relevant date.

1.14 NON-EMPLOYEE DIRECTOR. "Non-employee Director" means any individual
who is a member of the Board of Directors of the Company, but who is not
otherwise an Employee.

1.15 OPTION. "Option" means a nonqualified stock option to purchase Shares,
granted under Article 6 herein.

1.16 OPTION PRICE. "Option Price" means the price at which a Share may be
purchased under an Option.

1.17 PARTICIPANT. "Participant" means a Non-employee Director who has
outstanding an Option granted under the Plan.

1.18 PERMITTED TRANSFEREE. "Permitted Transferee" shall have the meaning
set forth in Section 6.11 hereof.

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1.19 PERSON. "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).

1.20 PLAN. "Plan" shall have the meaning set forth in Section 2.1 hereof.

1.21 SHARES. "Shares" means shares of common stock of the Company, par
value $.10 per share, together with the related common stock purchase rights.

1.22 SUBSIDIARY. "Subsidiary" means any corporation in which the Company
owns directly, or indirectly through subsidiaries, at least fifty percent (50%)
of the total combined voting power of all classes of stock, or any other entity
(including, but not limited to, partnerships and joint ventures) in which the
Company owns at least fifty percent (50%) of the combined equity thereof.

ARTICLE 2

ESTABLISHMENT, PURPOSE AND DURATION

2.1 ESTABLISHMENT OF THE PLAN. Subject to the subsequent approval by an
affirmative vote of the stockholders of the Company in accordance with the
requirements of Rule 16b-3 under the Exchange Act, the Company hereby
establishes an incentive compensation plan to be known as the "Scotsman
Industries, Inc. Non-Employee Directors Stock Option Plan" (the "Plan"), as set
forth in this document. The Plan permits the grant of Options, subject to the
terms and provisions set forth herein.

2.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
achievement of long-term objectives of the Company by linking the personal
financial interests of Non-employee Directors to those of the Company's
stockholders and to attract and retain Non-employee Directors of outstanding
competence.

2.3 DURATION OF THE PLAN. Subject to the subsequent approval of the
stockholders in accordance with Section 2.1, the Plan shall commence on August
11, 1994 (the "Effective Date") and shall remain in effect, subject to the right
of the Board of Directors to terminate the Plan at any time pursuant to Article
7 hereof, until all Shares subject to the Plan shall have been purchased or
acquired according to the Plan's provisions.

ARTICLE 3

ADMINISTRATION

3.1 APPOINTMENT OF BOARD OF DIRECTORS AS ADMINISTRATOR. The Plan shall be
administered by the Board of Directors, subject to the restrictions set forth in
the Plan.

3.2 POWERS OF THE BOARD. The Board shall have full power, discretion, and
authority to interpret and administer the Plan in a manner which is consistent
with the Plan's provisions; provided, however, that in no event shall the Board
have the power to determine the criteria for eligibility to participate in the
Plan, the number of Options or Shares subject to Options granted under the Plan,
or the Option Price, vesting period, or timing of the grant of Options under the
Plan, all of which determinations shall be automatically made pursuant to the
provisions of the Plan.

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3.3 DECISIONS BINDING. All determinations and decisions made by the Board
pursuant to the provisions of the Plan shall be final, conclusive, and binding
on all Persons, including the Company, its stockholders, Participants, and
Permitted Transferees.

ARTICLE 4

SHARES SUBJECT TO THE PLAN

4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3
herein, the total number of Shares available for grant under the Plan may not
exceed one hundred thousand (100,000). Shares issued pursuant to the Plan may
consist of authorized and unissued Shares or Shares which have been or may be
held by the Company in treasury, as determined from time to time by the Board.
The grant of an Option shall reduce the number of Shares available for grant
under the Plan by the number of Shares subject to such Option.

4.2 LAPSED AWARDS. If any Option granted under the Plan terminates,
expires, is forfeited, or lapses for any reason, any Shares subject to such
Option shall again be available for grant under the Plan to the extent
consistent with Rule 16b-3 of the Exchange Act and the interpretations of the
Commission thereunder.

4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of corporate changes
affecting the Shares, this Plan or Options granted thereunder (including without
limiting the generality of the foregoing, stock dividends, stock splits,
recapitalizations, reorganizations, mergers, consolidations or other relevant
changes in capitalization), the Board shall make appropriate adjustments in
price and number of Shares and kind of securities subject to Options or in the
terms of such Options, which it deems equitable to prevent dilution or
enlargement of rights under the Options; provided, however, that no such
adjustment shall be made if the adjustment would cause the Plan to fail to
comply with the "formula award" exception under Rule 16b-3 under the Exchange
Act or any successor regulation. In addition, the Board may from time to time
equitably change the aggregate number or remaining number of Shares or kind of
securities which may be issued under the Plan to reflect any such corporate
changes; provided, however, that no such change shall be made if such change
would cause the Plan to fail to comply with the "formula award" exception under
Rule 16b-3 under the Exchange Act or any successor regulation.

ARTICLE 5

ELIGIBILITY AND PARTICIPATION

5.1 ELIGIBILITY. Persons eligible to participate in the Plan are limited to
Non-employee Directors who are serving on the Board on the date of each
scheduled grant under the Plan.

5.2 ACTUAL PARTICIPATION. All eligible Non-employee Directors shall receive
grants of Options pursuant to the terms and provisions set forth in Article 6
herein.

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ARTICLE 6

OPTIONS

6.1 INITIAL GRANT OF OPTIONS. Subject to the subsequent approval of the
Plan by the stockholders of the Company in accordance with Section 2.1, each
individual who is a Non-employee Director on the Effective Date shall be
granted, on the Effective Date, an Option to purchase two thousand (2,000)
Shares. Thereafter, each newly elected or appointed Non-employee Director shall
be granted, on the next business day following the date on which such
Non-employee Director is first elected or appointed to the Board, an Option to
purchase two thousand (2,000) Shares. The specific terms and provisions of such
Options shall be incorporated in Award Agreements, executed pursuant to Section
6.4 of the Plan.

6.2 SUBSEQUENT GRANTS OF OPTIONS. During the period beginning with the next
business day following the 1995 Annual Meeting and subject to the limitation on
the number of Shares subject to the Plan, on the next business day following
each annual meeting of the Company's stockholders, each Non-employee Director
(other than a Non-employee Director who has not then yet served at least six (6)
months on the Board) shall be granted an Option to purchase one thousand (1,000)
Shares, effective as of each such next business day following the annual
stockholders' meeting.

6.3 LIMITATION ON GRANT OF OPTIONS. Other than those grants of Options set
forth in Sections 6.1 and 6.2 herein, no additional Options shall be granted
under the Plan.

6.4 OPTION AWARD AGREEMENT. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the term of the Option, and
the number of Shares available for purchase under the Option, in accordance with
the provisions of the Plan.

6.5 OPTION PRICE. The purchase price per Share for each Share which may be
purchased pursuant to an Option shall equal the Fair Market Value of a Share on
the date the Option is granted.

6.6 TERM OF OPTIONS. Except as otherwise provided in Section 6.8 hereof,
each Option shall expire, and all rights to purchase Shares thereunder shall
cease, on the date ten (10) years and one day from the date on which the Option
was granted.

6.7 VESTING OF SHARES SUBJECT TO OPTION. Subject to the terms of this Plan,
each Option granted under the Plan shall vest one hundred percent (100%) upon
the day preceding the first annual stockholder meeting following the date of
grant of such Option. Notwithstanding the provisions of the preceding sentence,
all Options held by a Participant or such Participant's Permitted Transferees
shall immediately become one hundred percent (100%) vested upon the first to
occur of the following:

(a) The death of the Participant during service on the Board; or

(b) Termination of service on the Board due to the Disability of the
Participant; or

6.8 TERMINATION OF DIRECTORSHIP. In the event that a Participant ceases to
be a Director for any reason other than death or Disability, (i) all Options
held by such Participant or such Participant's Permitted Transferees which are
not vested as of the date on which such Participant ceases to be a Director
shall be forfeited (with no further vesting to occur), and any Shares subject to
such Options shall again be available to the Company for grants under the Plan
in accordance with Section 4.2, and (ii) all Options held by such

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<PAGE> 40

Participant or such Participant's Permitted Transferees which are vested as of
such date shall remain exercisable for six (6) months following the date on
which such Participant's service on the Board terminates, or until their
expiration date, whichever period is shorter.

In the event of the termination of service on the Board due to the death of
a Participant, any Option held by such Participant or such Participant's
Permitted Transferees may be exercised at any time prior to its expiration date
or within (1) year following the date of death, whichever period is shorter.

In the event of termination of service on the Board due to the Disability
of a Participant, any Option held by such Participant or such Participant's
Permitted Transferees may be exercised at any time prior to its expiration date
or within (1) year following the date of such termination, whichever period is
shorter, by such Participant, such person or persons as shall have been named as
such Participant's legal representative, or such Participant's Permitted
Transferees.

Any Option which vests pursuant to a Change in Control may be exercised at
any time prior to the expiration date of such Option.

6.9 PAYMENT. Options shall be exercised by the delivery of a written notice
of exercise to the Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment for the Shares.
Payment for Shares purchased upon the exercise of an Option shall be made in
cash or, in the discretion of the Participant or such Participant's Permitted
Transferee and consistent with any applicable requirements under Section 16 of
the Exchange Act and the rules and regulations of the Commission thereunder, in
Shares valued at the then Fair Market Value of such Shares or by a combination
of cash and Shares. As soon as practicable after receipt of a written notice of
exercise and full payment, the Company shall deliver to the Participant or such
Participant's Permitted Transferee certificates evidencing the number of Shares
purchased pursuant to the exercise of the Option.

6.10 RESTRICTIONS ON SHARE TRANSFERABILITY. The Board may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option as may
be necessary to comply with applicable Federal securities laws, the requirements
of any stock exchange or market upon which such Shares are then listed and/or
traded, and any blue sky or state securities laws applicable to such Shares;
provided, however, that no such restriction shall be imposed if the restriction
would result in a failure of the grant of Options under the Plan to comply with
the "formula award" exception under Rule 16b-3 under the Exchange Act or any
successor regulation.

6.11 NON-TRANSFERABILITY OF OPTIONS. No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than (i) by will or by the laws of descent and distribution or, (ii) to
the extent permitted by Rule 16b-3 under the Exchange Act or any successor
regulation and solely for the purposes of estate planning by or on behalf of the
Participant, by transfer to members of such Participant's family, family
partnerships or trusts, provided that the sole beneficiaries of such trusts
consist of the Participant and members of the Participant's family. Any person
or entity to which an Option has been transferred in accordance with clause (i)
or (ii) of the preceding sentence is referred to elsewhere in this Plan as a
"Permitted Transferee." All Options granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant or such
Participant's Permitted Transferees.

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ARTICLE 7

AMENDMENT, MODIFICATION AND TERMINATION

7.1 AMENDMENT, MODIFICATION AND TERMINATION. Subject to the terms set forth
in this Section 7.1, the Board may terminate, amend, or modify the Plan at any
time and from time to time; provided, however, that the provisions set forth in
the Plan governing the criteria for eligibility to participate in the Plan, the
number of Options and Shares subject to Options to be awarded to Directors, the
Option Price, the vesting period and the timing of grants of Options to
Directors may not be amended more than once within any six (6) month period,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended from time to time, or the rules thereunder.
Notwithstanding the foregoing, without the prior approval of the stockholders of
the Company, the Board may not (i) materially increase the total number of
Shares which may be available for grants of Options under the Plan, except in
accordance with Section 4.3 hereof, (ii) change the class of persons eligible to
participate in the Plan, (iii) materially increase the benefits accruing to
Participants under the Plan, or (iv) adopt any other amendment or modification
for which stockholder approval may be required in order to comply with the
requirements of the Code or any regulations thereunder, Rule 16b-3 under the
Exchange Act or any successor regulation, or any national securities exchange on
which the Shares are then listed or reported.

7.2 AWARDS PREVIOUSLY GRANTED. Unless required by law, no termination,
amendment, or modification of the Plan shall in any material manner adversely
affect the rights of any holder of an Option previously granted under the Plan,
without the written consent of the Participant holding such Option.

ARTICLE 8
MISCELLANEOUS

8.1 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

8.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provisions had not been included.

8.3 BENEFICIARY DESIGNATION. Each Participant under the Plan may, from time
to time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in the event of
his or her death (and/or who may exercise the Participant's vested Options
following his or her death). Each designation will revoke all prior designations
by the same Participant, shall be in a form prescribed by the Board, and will be
effective only when filed by the Participant in writing with the Board during
his or her lifetime. In the absence of any such designation or in the event that
all designated beneficiaries have predeceased the Participant, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate (and, subject to the terms and provisions of the Plan, any unexercised
vested Options may be exercised by the administrator or executor of the
Participant's estate).

8.4 NO RIGHT OF NOMINATION. Nothing in the Plan shall be deemed to create
any obligation on the part of the Board to nominate any Director for reelection
by the Company's stockholders.

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8.5 SUCCESSORS. All obligations of the Company under the Plan with respect
to Options granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase of all or substantially all of the business and/or assets of the
Company or a merger or consolidation with the Company.

8.6 REQUIREMENTS OF LAW. The granting of Options under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.

8.7 GOVERNING LAW. To the extent not preempted by Federal law, the Plan and
all agreements hereunder shall be construed in accordance with and governed by
the laws of the State of Delaware.

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APPENDIX

The following graphic material cannot be transmitted pursuant to EDGAR:

1. A map of the area of Vernon Hills, Illinois, indicating directions
to the site of the annual meeting, including directions from
O'Hare airport, which appears on the page following the cover
letter.

2. The graph captioned "Comparison of Five Year Cumulative Total
Return, Scotsman Industries, Russell 2000, and S&P Diversified
Manufacturing" which appears on page 20 of the Proxy Statement,
which has been separately submitted under cover of Form SE.

<PAGE> 44
REVOCABLE PROXY

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF SCOTSMAN INDUSTRIES, INC.

The undersigned hereby appoint(s) Richard C. Osborne and Donald D.
Holmes, or either of them, as proxies for the undersigned, with full power of
substitution, to act and to vote all the shares of capital stock of Scotsman
Industries, Inc. that the undersigned would be entitled to vote if personally
present at the annual meeting of shareholders to be held on Thursday, May 18,
1995, or at any adjournment thereof. Said proxies are directed to vote as
instructed on the matters set forth below and otherwise at their discretion.
Receipt of a copy of the notice of said meeting and proxy statement is hereby
acknowledged.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTIONS ARE GIVEN, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED UNDER PROPOSAL 1
AND FOR PROPOSAL 2 ON THE REVERSE SIDE OF THIS CARD.

(PLEASE SIGN AND DATE THE REVERSE SIDE AND MAIL IN THE
ENCLOSED RETURN ENVELOPE.)

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL THE NOMINEES AND "FOR"
PROPOSAL 2.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /

1. Election of Directors Withhold For All
Nominees: Richard C. For Authority Except the Nominee(s) Written Below
Osborne, Donald C.
Clark, Timothy C.
Collins / / / / / /
---------------------------
2. Proposal to Approve For Against Abstain
the Non-Employee
Directors Stock
Option Plan. / / / / / /

------------------------------------
Signature

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Signature (if held jointly)

Dated: ,1995
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IMPORTANT: Please sign exactly as
your name or names appear on the
left. If stock is held jointly, all
joint owners must sign. Executors,
administrators, trustees, guardians,
custodians, corporate officers and
others signing in a representative
capacity should put their full title.