EXHIBIT 10.2


                       NONQUALIFIED STOCK OPTION AGREEMENT
                       -----------------------------------


                NONQUALIFIED STOCK OPTION AGREEMENT,  dated as of March 22, 1997
(this  "Agreement"),  between  Robert E. Stutz (the  "Optionee")  and Stimsonite
Corporation, a Delaware corporation (the "Company").


                              W I T N E S S E T H:
                              --------------------

                WHEREAS,  the Optionee has agreed to become  President and Chief
Executive  Officer  of the  Company  pursuant  to  the  terms  of an  Employment
Agreement  dated as of March 22, 1997  between  Optionee  and the  Company  (the
"Employment Agreement"); and

                WHEREAS,  Section 10 of the Employment  Agreement  provides that
the Optionee will receive certain options from the Company; and

                WHEREAS,  the execution of a Nonqualified Stock Option Agreement
in the form hereof was approved by a resolution of the Board of Directors of the
Company (the "Board") duly adopted on March 12, 1997 and is incorporated  herein
by reference; and

                WHEREAS, the option granted hereby is intended as a nonqualified
stock option and shall not be treated as an "incentive  stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986.

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

        1.      Option.

                (a) Pursuant to Section 10(a) of the Employment  Agreement,  the
Company  hereby  grants to the  Optionee  an option (the  "Option")  to purchase
100,000  shares of Common  Stock,  $.01 par value of the  Company  (the  "Option
Shares") at a purchase price per share of $6.00 (the "Option Price"), and agrees
to cause certificates for any shares purchased  hereunder to be delivered to the
Optionee upon payment of the Option Price in full, all subject,  however, to the
terms and conditions hereinafter set forth.

                (b)  Subject  to  Section  3(a)  hereof,   this  Option   (until
terminated as hereinafter  provided) shall be exercisable  only to the extent of
33% of the  shares  covered  hereby  after the  Optionee  shall have been in the
continuous employ of the Company or any Subsidiary through the first anniversary
of March 22,  1997 (the "Date of Grant") to the extent of an  additional  33% of
the shares  covered  hereby after the Optionee shall have been in the continuous
employ of the Company or any  Subsidiary  through the second  anniversary of the
Date of Grant  and to the  extent of an  additional  34% of the  shares  covered
hereby  after  the  Optionee  shall  have been in the  continuous  employ of the
Company or any  Subsidiary  through the third  anniversary of the Date of Grant.
For purposes of this Agreement,  the employment of the Optionee with the Company
or a Subsidiary shall not be deemed  interrupted,  and the Optionee shall not be
deemed to have  ceased to be an employee  of the  Company or any  Subsidiary  by
reason of the  transfer of his  employment  among or between the Company and its
Subsidiaries.  For the purpose of this paragraph,  leaves of absence approved by
the Board of Directors of the Company,  or any committee  thereof,  for illness,
military  or  government  service,  or  other  cause,  shall  be  considered  as
employment.

                (c) To the extent  exercisable,  the Option may be  exercised in
whole,  or in part from time to time,  until  expiration  as provided in Section
1(d).

                (d) This Option shall terminate on the earliest of the following
dates:

                (i) On the date on which the  Optionee  ceases to be an employee
of the  Company or a  Subsidiary  unless he ceases to be such an  employee  in a
manner described in (ii) or (iii) below.

                (ii) On the later to occur of (A) the second  anniversary of the
Commencement Date (as defined in the Employment  Agreement) or (B) 60 days after
the Optionee  ceases to be an employee of the Company or any  Subsidiary  if (I)
Optionee  retires  from  employment  with the  Company or any  Subsidiary  after
reaching  the age of 65  years,  or (II)  Optionee's  employment  is  terminated
pursuant to Section 7(d) of the Employment Agreement.

                (iii) On the later to occur of (A) the second anniversary of the
Commencement Date (as defined in the Employment  Agreement) or (B) 90 days after
the date on which Optionee's  employment is terminated as a result of Optionee's
death or Disability (as defined in the Employment Agreement).

                (iv) Ten years from the Date of Grant.

                In the  event the  Optionee  shall  intentionally  commit an act
materially  inimical to the  interests of the Company or a  Subsidiary,  and the
Board  shall  so find,  the  Option  shall  terminate  at the time of such  act,
notwithstanding any other provision of this Agreement.

                Nothing in this  Section  1(d) shall be  construed  to modify or
enlarge the rights of the Optionee and the conditions of exercising  this Option
as set forth in Section 1(b) hereof,  and at no time shall any right to exercise
this Option accrue to the Optionee  unless and to the extent that the conditions
set forth in Section 1(b) shall have been satisfied.

                (e) Nothing  contained in this  Agreement  shall limit  whatever
right the  Company or any  Subsidiary  might  otherwise  have to  terminate  the
employment of the Optionee.

        2.      Exercise; Payment for Shares.

                (a) This Option  shall be  exercised  by Optionee by delivery to
the Company of (i) an Exercise  Notice in the form attached to this Agreement as
Annex A,  appropriately  completed  and duly executed and dated by the Optionee,
(ii)  payment  in full of the Option  Price for the  number of shares  which the
Optionee is purchasing  hereunder as required by Section 2(b), and (iii) payment
in full to the  Company of any amounts  required to be paid  pursuant to Section
2(c).

                (b) The Option  Price  shall be payable  (i) in cash or by check
(certified,   personal  or  bank  check)   acceptable   to  the  Company,   (ii)
nonforfeitable  unrestricted  shares of Common Stock which are already  owned by
the  Optionee  and  have a value at the  time of  exercise  that is equal to the
Option Price, or (iii) a combination of the foregoing.

                (c) If the Company  shall be required to withhold  any  Federal,
state,  local or foreign tax in connection with exercise of the Option, it shall
be a  condition  to such  exercise  that  the  Optionee  pay or  make  provision
satisfactory to the Company for payment of all such taxes.

        3.      Change in Control; Adjustments.

                (a)  Upon  the  earlier  to  occur  of (i)  Optionee's  death or
Disability,  (ii) Optionee's  termination of employment pursuant to Section 7(d)
of the  Employment  Agreement  or  (iii) a Change  in  Control  (as  hereinafter
defined),  the Option shall,  notwithstanding  Section 1(b), become  immediately
exercisable  in full. If any event or series of events  constituting a Change in
Control shall be abandoned,  the effect  thereof shall be null and of no further
force and effect and the  provisions  of Section  1(b) shall be  reinstated  but
without  prejudice to any exercise of the Option that may have occurred prior to
such nullification.

                (b) (i) The Board may make or provide  for such  adjustments  in
the  number  and kind of shares of the  Company's  Common  Stock  covered by the
Option and in the Option Price,  as the Board may in good faith  determine to be
equitably  required in order to prevent  dilution or  expansion of the rights of
the Optionee  that  otherwise  would result from (a) any stock  dividend,  stock
split,  combination of shares,  recapitalization  or other change in the capital
structure of the Company, or (b) any merger, consolidation,  spin-off, spin-out,
split-off,  split-up,  reorganization,  partial or complete liquidation or other
distribution  of  assets,  issuance  of  warrants  or other  rights to  purchase
securities or any other corporate  transaction or event having an effect similar
to the foregoing.

                (ii) In the event of any such  transaction  or event,  the Board
may provide in substitution for the Option such alternative  consideration as it
may in good faith  determine to be  equitable  under the  circumstances  and may
require in connection therewith the surrender of this Option.

        4.      No Transfer of Option.

                The Option may not be transferred by the Optionee except by will
or the laws of descent and distribution.  The Option may not be exercised during
the  Optionee's  lifetime  except  by  the  Optionee  or,  in the  event  of the
Optionee's legal incapacity, by his guardian or legal representative acting in a
fiduciary  capacity  on  behalf  of the  Optionee  under  state  law  and  court
supervision.

        5.      Modification of Option.

                The Option may be  amended by the Board;  provided  that no such
amendment  that adversely  affects the Optionee  shall be effective  without the
consent of the Optionee.

        6.      Limitations on Exercise of Option.

                The  Option  shall not be  exercisable  if such  exercise  would
involve a violation of any applicable Federal or state securities law and unless
under such laws at the time of exercise the shares purchasable upon exercise are
exempt,  are the subject  matter of an exempt  transaction,  are  registered  by
description  or by  qualification,  or at such time are the subject  matter of a
transaction which has been registered by description.

        7.      Rights as Stockholder.

                The  holder of this  Option  shall  not be,  nor have any of the
rights or privileges  of, a holder of the  Company's  Common Stock in respect of
any shares  purchasable  upon the exercise of any part of the Option  unless and
until  certificates  representing  such  shares  shall  have been  issued by the
Company to such holder.

        8.      Fractional Shares.

                The Company shall not be required to issue any fractional shares
of Common Stock pursuant to the Option.

        9.      Defined Terms.  As used in this Agreement,

                (a)  "Change  in  Control"  means the  occurrence  of any of the
following events:

                (i) The execution by the Company of an agreement for the merger,
consolidation or reorganization  into or with another corporation or other legal
person; provided, however, that no such merger,  consolidation or reorganization
shall   constitute  a  Change  in  Control  if  as  a  result  of  such  merger,
consolidation or reorganization  not less than a majority of the combined voting
power  of  the  then-outstanding   securities  of  such  corporation  or  person
immediately  after such  transaction are held in the aggregate by the holders of
securities  entitled  to vote  generally  in the  election of  directors  of the
Company ("Voting Stock") immediately prior to such transaction;

                (ii) The  execution by the Company of an agreement  for the sale
or  other  transfer  of  all or  substantially  all of  its  assets  to  another
corporation or other legal person; provided, however, that no such sale or other
transfer  shall  constitute  a Change in  Control if as a result of such sale or
transfer  not  less  than  a  majority  of  the  combined  voting  power  of the
then-outstanding securities of such corporation or person immediately after such
sale or transfer is held in the  aggregate by the holders of Voting Stock of the
Company immediately prior to such sale or transfer;

                (iii) There is a report filed on Schedule 13D or Schedule  14D-1
(or any successor schedule, form or report), each as promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act") disclosing that
any person (as the term "person" is used in Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act) other than Terrence D. Daniels or any of his affiliates has
or intends to become the  beneficial  owner (as the term  "beneficial  owner" is
defined under Rule 13d-3 or any successor rule or regulation  promulgated  under
the Exchange Act) of securities  representing a majority or more of the combined
voting  power  of  the  then-outstanding   Voting  Stock,   including,   without
limitation, pursuant to a tender offer or exchange offer;

                (iv) If, during any period of two consecutive years, individuals
who at the beginning of any such period  constitute the directors of the Company
cease for any  reason  to  constitute  at least a  majority  thereof;  provided,
however,  that for purposes of this  subsection  (iv) each director who is first
elected,  or first  nominated for election by the Company's  stockholders,  by a
vote of at least  two-thirds  of the  directors  of the  Company (or a committee
thereof) then still in office who were directors of the Company at the beginning
of any such period shall be deemed to have been a director of the Company at the
beginning of such period; or

                (v) Except pursuant to a transaction described in the proviso to
subsection (i) of this definition, the Company adopts a plan for the liquidation
or dissolution of the Company.

                (b)  "Subsidiary"  means  a  corporation,   partnership,   joint
venture, unincorporated association or other entity in which the Corporation has
a direct or indirect ownership or other equity interest.

                EXECUTED at Niles, Illinois as of the 22nd day of March, 1997.

                       STIMSONITE CORPORATION


                       By /s/Terrence D. Daniels
                       -------------------------
                              Terrence D. Daniels
                              Chairman of the Board


ACCEPTED AND AGREED


By /s/Robert E. Stutz
---------------------
      Robert E. Stutz

<PAGE>


                                     ANNEX A
                                       to
                       Nonqualified Stock Option Agreement

                             Form of Exercise Notice


                Pursuant to the Non-Qualified Stock Option Agreement dated as of
March  __,  1997  between  the  undersigned  and  Stimsonite   Corporation  (the
"Company"), the undersigned hereby elects to exercise his option as follows:

     (a)   Number of shares purchased:

     (b)   Total purchase price ((a) x Option Exercise Price):  $

                Please issue a single certificate for the shares being purchased
in the name of the  undersigned.  The  registered  address  on such  certificate
should be:



The undersigned's social security number is:                    .



Date:  ________________                 ____________________________________
                                                 Optionee