Exhibit 10.1

                              EMPLOYMENT AGREEMENT
                              --------------------


                    THIS  EMPLOYMENT  AGREEMENT  (this  "Agreement") is made and
entered into as of this 22nd day of March, 1997, between Stimsonite Corporation,
a Delaware corporation (the "Company"), and Robert E. Stutz (the "Executive").

                    WHEREAS,   the  Company  expects  that  the  future  growth,
profitability  and success of the Company's  business will be substantially  and
materially advanced by the employment of the Executive by the Company;

                    WHEREAS,  the  Company  desires to secure for itself and its
subsidiaries  the benefit of the Executive's  background,  experience,  ability,
expertise and industry; and

                    WHEREAS,  the Company  desires to employ the Executive,  and
the  Executive has indicated  his  willingness  to provide his services,  on the
terms and conditions set forth herein;

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

                    1.  Employment.  The  Company  hereby  agrees to employ  the
Executive and the Executive hereby accepts  employment with the Company,  on the
terms and subject to the conditions hereinafter set forth in this Agreement.

                    2. Term.  Subject to the  provisions  and conditions of this
Agreement,  Executive's  employment  hereunder  shall commence on March 22, 1997
(the "Commencement Date") and, unless otherwise terminated pursuant to the terms
hereof, shall expire two years from such date (the "Expiration Date"); provided,
however,  that  the  term of this  Agreement  will,  on  each  Expiration  Date,
automatically  be extended for an additional  one-year  period unless,  no later
than sixty (60) days prior to each Expiration Date, the Company or the Executive
shall have given written  notice that it or the  Executive,  as the case may be,
does not wish to have the term of this Agreement extended  (hereinafter referred
to as the "Employment Term").

                    3. Compensation.

                         (a) As compensation  for the performance of Executive's
services  hereunder,  the Company  shall pay to the  Executive (i) a salary (the
"Regular  Base  Salary") of $225,000 per annum or such greater  amount as may be
determined  by the Board of Directors of the Company (the "Board of  Directors")
and (ii) an annual bonus (the "Bonus"), payable in accordance with the Company's
payroll  policy  and  the  Company's   annual   incentive   compensation   plan,
respectively,  as of the date of this Agreement,  as the same may be modified or
replaced by the Company from time to time.  The Board of  Directors  will review
the amount of the Regular Base Salary on an annual basis. Executive's Bonus with
respect to 1997 performance shall not be less than $100,000.

                         (b) During the Employment  Term, the Executive shall be
entitled to receive (i) a car  allowance not to exceed $900 per month payable in
accordance  with the Company's  payroll  policy,  as the same may be modified or
replaced  by the Company  from time to time,  and (ii) such other  benefits  and
conditions of employment,  including, without limitation,  participation in such
group health, life, retirement,  disability and dental benefit plans provided by
the Company (such benefits collectively,  the "Welfare Benefits"), and such paid
vacation,  as are afforded  from time to time  hereafter to the other  executive
officers of the Company.  Executive shall be entitled during the Employment Term
to  four  weeks  annual  paid  vacation  until  the  fifth  anniversary  of  the
Commencement Date and to five weeks annual paid vacation thereafter.

                         (c)  Executive  will be  entitled  to receive the stock
options described in Section 10.

                    4. Position and Duties.  Subject to the terms and conditions
contained herein, the Executive shall serve as the President and Chief Executive
Officer of the Company and, in such  capacity,  shall  provide such services and
perform such functions, consistent with the nature of such position, as shall be
determined  from time to time by, or  pursuant  to  authority  of,  the Board of
Directors. If elected or appointed, the Executive shall also serve as a director
or officer of any of the Company,  its  subsidiaries  or  affiliated  companies,
without further  compensation.  The Board of Directors will, effective as of the
Commencement Date or as soon as practicable thereafter, appoint the Executive to
fill the  vacancy  on the  Board of  Directors  existing  as of the date of this
Agreement  to  serve  the  remainder  of the  term of such  directorship,  which
terminates at the next annual meeting of the Company's  stockholders.  The Board
of  Directors  will  nominate the  Executive  for election as a director at each
annual meeting of the Company's  stockholders  held during the Employment  Term.
Notwithstanding  the preceding two sentences,  nothing contained herein shall be
construed  as limiting  any rights of the  Company's  stockholders  to elect and
remove members of the Board of Directors.  The Executive  understands and agrees
that he may be required to undertake normal business travel from time to time.

                    5.  Exclusivity.  During the Employment  Term, the Executive
shall devote his working hours to the business of the Company,  shall faithfully
serve the Company,  shall in all respects  conform to and comply with the lawful
and  reasonable  directions  and  instructions  given  to him by  the  Board  of
Directors which are not otherwise  prohibited by this  Agreement,  shall use his
best  efforts to promote  and serve the  interests  of the Company and shall not
engage in any other business or commercial activity for compensation;  provided,
however, that nothing in this Agreement shall be deemed to prevent the Executive
from investing his personal assets, or the assets of his immediate family or any
trust for the benefit of Executive or his immediate family;  provided,  further,
that with respect to businesses  that compete with the Company's  business,  (i)
his participation, or that of his immediate family or such trust, is solely that
of a passive  investor  owning  no more  than 1% of any class of such  company's
publicly traded  outstanding debt or equity  securities and (ii) such activities
do not contravene the provisions of Section 8 hereof.

                    6.  Reimbursement  for Expenses.  Upon the  presentation  of
itemized vouchers,  the Company shall reimburse the Executive for travel, meals,
entertainment  and other  expenses  reasonably  incurred by the Executive in the
performance of his duties under this Agreement in accordance  with the Company's
expense  reimbursement  policy as the same may be modified  by the Company  from
time to time.

                    7. Termination.

                         (a)  After  an   occurrence  of  an  event  within  the
definition  of Cause (as defined in this  Section  7(a)),  the Company  shall be
entitled to terminate this Agreement  (other than Sections 8 and 9 hereof unless
otherwise specified by the Company) and the employment relationship  established
hereby  immediately  upon the giving of written  notice to the Executive of such
termination  specifying  the  grounds  therefor.  After  the  effective  date of
termination  under this Section 7(a), the Company shall not be obligated to make
any further payments under this Agreement,  except for amounts due the Executive
hereunder as of such effective date.  "Cause" means any of the following  events
which the Board of Directors  has  determined,  in good faith,  has occurred and
which has not been  remedied (to the fullest  extent  possible) by the Executive
within  ten (10) days  after  notice  thereof by the  Company:  (i)  Executive's
continual or deliberate neglect of the performance of his material duties;  (ii)
Executive's  failure  to devote  substantially  all of his  working  time to the
business  of the  Company  and  its  subsidiaries;  (iii)  Executive's  engaging
willfully in misconduct in connection with the performance of any of his duties,
including,  without  limitation,  the  misappropriation  of funds or securing or
attempting to secure  personally any profit in connection  with any  transaction
entered  into on behalf of the  Company or its  subsidiaries;  (iv)  Executive's
willful  breach of any  confidentiality  or  nondisclosure  agreements  with the
Company  (including  this Agreement) or Executive's  violation,  in any material
respect,  of any code or standard of behavior generally  applicable to employees
or executive employees of the Company;  (v) Executive's active disloyalty to the
Company,  including,  without  limitation,  willfully  aiding  a  competitor  or
improperly disclosing confidential information;  or (vi) Executive's engaging in
conduct which may reasonably  result in material injury to the reputation of the
Company, including commission of a felony, embezzlement, bankruptcy, insolvency,
or general assignment for the benefit of creditors.

                         (b) In the event  that the  Executive  resigns,  or the
Executive  gives notice  pursuant to Section 2 that he does not wish to have the
term of this Agreement extended as provided therein (other than for reasons that
would  entitle the  Executive to terminate  his  employment  pursuant to Section
7(d)),  this Agreement,  other than Sections 8 and 9 hereof,  and the employment
relationship  established hereby shall terminate immediately upon the receipt by
the Company of notice of the Executive's  resignation.  After the effective date
of termination  under this subsection (b), the Company shall not be obligated to
make any  further  payments  under this  Agreement,  except for  amounts due the
Executive hereunder as of such effective date.

                         (c) In the event that the Executive  dies,  Retires (as
hereinafter  defined) or becomes  Disabled (as  hereinafter  defined) during the
term of this  Agreement,  this  Agreement,  other than Sections 8 and 9, and the
employment relationship  established hereby shall terminate immediately upon the
date on which the Executive dies,  Retires or becomes Disabled,  as the case may
be. After the effective date of termination under this Section 7(c), the Company
shall not be obligated to make any further  payments under this Agreement to the
Executive  or  the  Executive's  heirs,   executors,   administrators  or  legal
representatives,  as the case  may be,  except  for  amounts  due the  Executive
hereunder as of such effective date,  including any amounts or benefits to which
the  Executive may be entitled  under the terms of any employee  benefit plan of
the  Company,  as in  effect  on the  effective  date of such  termination.  For
purposes of this Section 7(c) "Retires" shall mean the voluntary  termination of
employment by the Executive  after the Executive  attains age 65 and  "Disabled"
shall  mean,  as of any date,  the  permanent  disability  of the  Executive  in
accordance with the then applicable provisions of the disability benefit program
of the Company generally available to executive employees of the Company.

                         (d) In the event that the Company  elects to  terminate
the full time employment of the Executive during the Employment Term (other than
as a result of  circumstances  described in subsections (a), (b) and (c) of this
Section 7), or if the Executive resigns from his employment  hereunder following
a Substantial  Breach, as defined in this Section 7(d) (such Substantial  Breach
having not been  corrected  by the Company  within 30 days of receipt of written
notice from the Executive of the occurrence of such  Substantial  Breach,  which
notice shall  specifically set forth the nature of the Substantial  Breach which
is the reason for such  resignation),  the  Company  shall  continue  to pay the
Executive as provided in Section 11 hereof.  "Substantial Breach" shall mean any
material breach by the Company of its obligation under this Agreement  including
without  limitation,  (A) the  assignment  of the  Executive  to any position or
duties materially  inconsistent  with the provisions of Section 4 hereof;  (B) a
reduction by the Company in the Regular Base Salary other than a reduction  that
is consistent with reductions in compensation among senior executive officers of
the Company generally;  or (C) the failure by the Company to allow the Executive
to participate in the Company's employee benefit plans generally  available from
time to time to executive employees of the Company; provided,  however, that the
term  "Substantial  Breach"  shall not include (x) an  immaterial  breach by the
Company of any  provisions  of this  Agreement  including  those  referred to in
clauses (A) through (C) above or (y) a termination  for Cause under Section 7(a)
hereof.  The date of termination of employment by the Company under this Section
7(d) (the  "Section 7(d)  Termination  Date") shall be the later of the date, if
any,  specified in a written  notice of termination to the Executive or the date
on which such notice is given to the Executive.  The date of  resignation  under
this  Section  7(d)  shall be 30 days after  receipt  by the  Company of written
notice of resignation,  provided that the Substantial  Breach  specified in such
notice shall not have been corrected by the Company during such 30-day period.

                         (e)  Notwithstanding  anything in this Section 7 to the
contrary,  the Executive's  rights in any employee  benefit plans offered by the
Company  shall be governed  by the rules of such plans as well as by  applicable
law.

                    8. Secrecy and Non-Competition.

                         (a) No Competing Employment. The Executive acknowledges
that (i) the agreements and covenants  contained in this Section 8 are essential
to protect the value of the Company's  business and assets and (ii) by virtue of
his  employment  with the Company,  the  Executive  will obtain such  knowledge,
know-how,  training  and  experience  of  such  a  character  that  there  is  a
substantial probability that such knowledge,  know-how,  training and experience
could be used to the substantial advantage of a competitor of the Company and to
the Company's substantial detriment.  Therefore,  the Executive agrees that, for
the period (the  "Restricted  Period")  commencing on the date of this Agreement
and  ending  on the  date  which  is two  years  after  the  termination  of the
Executive's  employment  hereunder  for any  reason,  the  Executive  shall  not
participate or engage, directly or indirectly, for himself or on behalf of or in
conjunction with any person,  partnership,  corporation or other entity, whether
as an employee,  agent,  investor or  otherwise,  in any business  activities (a
"Competitive   Activity")  if  such  activity   constitutes  the  manufacturing,
production,  sale or provision  of products or services  that are similar to, or
competitive with, products or services then being manufactured,  produced,  sold
or provided by the Company or any of its  subsidiaries  or which the Company (at
any time during the Employment  Term) planned to manufacture,  produce,  sell or
provide;  provided,  however,  that the Executive may maintain and/or  undertake
purely  passive  investments on behalf of himself,  his immediate  family or any
trust on behalf of himself or his  immediate  family in  companies  engaged in a
Competitive  Activity  so long as the  aggregate  interest  represented  by such
investments  does not exceed 1% of any class of the outstanding  publicly traded
debt or equity securities of any company engaged in a Competitive Activity.  The
Executive,  however,  shall not be bound by the  restrictions  contained in this
Section  8(a) if the Company  shall have  failed to comply with its  obligations
under Section 11 of this Agreement  after the  Executive's  employment  with the
Company is terminated pursuant to Section 7(d) hereof.

                         (b)  Nondisclosure  of  Confidential  Information.  The
Executive,  except  in  connection  with his  employment  hereunder,  shall  not
disclose to any person or entity or use, either during the Employment Term or at
any time  thereafter,  any  information  not in the public domain,  in any form,
acquired  by the  Executive  while  employed  by the  Company  or,  if  acquired
following the  Employment  Term,  such  information  which,  to the  Executive's
knowledge, has been acquired,  directly or indirectly, from any person or entity
owing  a duty  of  confidentiality  to  the  Company  or any of its  affiliates,
relating to the Company,  its  subsidiaries  and  affiliates,  including but not
limited to trade secrets, technical information,  designs, drawings,  processes,
systems, procedures,  formulae, test data, know-how,  improvements, price lists,
financial or other data  (including  the revenues,  costs or profits  associated
with any of the Company's  products),  business and product  plans,  code books,
invoices and other financial statements, computer programs, discs and printouts,
sketches, plans (engineering, architectural or otherwise), customer and supplier
lists or  names,  personnel  files,  equipment  maintenance  records,  equipment
warranty information,  sales and advertising material, telephone numbers, names,
addresses or any other compilation of information,  written or unwritten,  which
is or was used in the business of the Company, any predecessor of the Company or
any subsidiary  thereof.  The Executive agrees and acknowledges that all of such
information,  in any form, and copies and extracts  thereof are and shall remain
the sole and  exclusive  property of the Company,  and upon  termination  of his
employment  with the  Company,  the  Executive  shall  return to the Company the
originals and all copies (and shall delete all such items in electronic  format)
of any such  information  provided to or acquired by the Executive in connection
with the  performance  of his duties for the  Company,  and shall  return to the
Company all files,  correspondence  and/or other  communications  (including any
such materials in electronic  format) received,  maintained and/or originated by
the Executive during the course of his employment.

                         (c) No Interference.  During the Restricted Period, the
Executive shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization (other
than the Company),  solicit,  endeavor to entice away from the Company or any of
its subsidiaries, or otherwise interfere with the relationship of the Company or
any of its subsidiaries with, any person who, to the knowledge of the Executive,
is employed by or otherwise  engaged to perform  services for the Company or any
of its  subsidiaries  (including,  but not  limited  to, any  independent  sales
representatives  or  organizations) or any entity who is, or was within the then
most  recent  twelve-month  period,  a customer  or client of the  Company,  any
predecessor or any of its subsidiaries (a "Customer");  provided,  however, that
this Section 8(c) shall not prohibit the Executive from  employing,  for his own
account,  following a termination of the employment of the Executive, any person
employed by a Customer or supplier, if such employment is not in connection with
a Competitive Activity.

                         (d) Inventions.  The Executive hereby sells,  transfers
and assigns to the Company or to any person or entity  designated by the Company
all of the entire  right,  title and  interest  of the  Executive  in and to all
inventions, ideas, disclosures and improvements, whether patented or unpatented,
and copyrightable material, made, authored or conceived by the Executive, solely
or jointly,  or in whole or in part,  during his  employment  by the Company and
which (i) relate to methods, apparatus,  designs, products, processes or devices
sold,  leased,  used or under  construction or development by the Company or any
subsidiary  of the Company and (ii) arise (wholly or partly) from the efforts of
the  Executive  during his  employment  with the Company (an  "Invention").  The
Executive shall communicate  promptly and disclose to the Company,  in such form
as the Company  requests,  all  information,  details and data pertaining to any
such Inventions;  and, whether during the Restricted  Period or thereafter,  the
Executive  shall  execute and deliver to the Company such form of transfers  and
assignments and such other papers and documents as reasonably may be required of
the  Executive to permit the Company or any person or entity  designated  by the
Company  to file,  prosecute,  obtain  or  otherwise  protect  or  transfer  any
intellectual  property,  including any patent,  patent application or copyright.
The Company  shall pay all costs  incident to the execution and delivery of such
transfers,  assignments  and other  documents.  Any  invention by the  Executive
within six months following the termination of his employment hereunder shall be
deemed to fall within the  provisions  of this Section 8(d) unless the Executive
bears the burden of proof of showing that the Invention was first  conceived and
made following such termination.

                    9. Deductions from  Compensation.  The Executive agrees that
the  Company  shall be  entitled to deduct and  withhold  from any  compensation
payable to the  Executive  hereunder  (i) any taxes in respect of the  Executive
that the Company is  required to deduct and  withhold  under  federal,  state or
local law whether  arising from  compensation  hereunder  or otherwise  and (ii)
offsets for any other  amounts  lawfully due from the Executive as determined in
good faith by the Company  and/or the Board of Directors.  In the event that the
Executive  is no longer  employed  by the  Company  at a time  when the  Company
otherwise  would be entitled to deduct and withhold  any amount  pursuant to the
preceding sentence,  the Executive shall remit such amount to the Company within
five (5) days  after the  receipt of notice  from the  Company  specifying  such
amount or otherwise in accordance with the Executive's  obligations with respect
thereto.

                    10. Stock  Options.  Executive  shall  receive the following
options:

                         (a) On the Commencement Date,  Executive will receive a
stock option to purchase 100,000 shares of the Company's Common Stock,  $.01 par
value (the "Common Stock") at an exercise price per share equal to the lesser of
(i) the fair market  value of the Common Stock on the  Commencement  Date (which
shall be deemed to be the closing price reported on the Nasdaq NMS system on the
Commencement  Date or, if no trades occur on such date,  on the most recent date
preceding the Commencement Date on which trades occurred) or (ii) $6.50 and with
such additional terms as are set forth in the form of non-qualified stock option
agreement attached to this Agreement as Exhibit A.

                         (b) On the  first  date  (before  the date  Executive's
employment with the Company is terminated for whatever reason (the  "Termination
Date")) on which the Common  Stock has a closing  price equal to or greater than
$7.50 per share for a 30th  consecutive  trading day,  Executive  will receive a
stock option to purchase 100,000 shares of Common Stock at an exercise price per
share equal to $7.50 and with such additional terms as are set forth in the form
of non-qualified stock option agreement attached to this Agreement as Exhibit B.

                         (c) On the first date (before the Termination  Date) on
which the Common  Stock has a closing  price equal to or greater  than $9.00 per
share for a 30th consecutive  trading day, Executive will receive a stock option
to purchase  100,000 shares of Common Stock at an exercise price per share equal
to  $9.00  and  with  such  additional  terms  as are set  forth  in the form of
non-qualified stock option agreement attached to this Agreement as Exhibit C.

                         (d) On the first date (before the Termination  Date) on
which the Common  Stock has a closing  price equal to or greater than $11.00 per
share for a 30th consecutive  trading day, Executive will receive a stock option
to purchase  100,000  shares of Common  Stock at an exercise  price per share of
$11.00  and  with  such  additional  terms  as are  set  forth  in the  form  of
non-qualified stock option agreement attached to this Agreement as Exhibit D.

                    The  Executive  will not receive any stock options after the
Termination Date.

                    11.  Termination  Benefits.  Subject to Section 9 hereof, if
the Executive's full time employment with the Company is terminated  pursuant to
Section 7(d) hereof,  the Executive shall be entitled to receive the termination
benefits  provided  under  this  Section  11  for a  period  ("Minimum  Period")
commencing on the Section 7(d) Termination Date and ending on the later to occur
of (i) the last day of the Employment Term or (ii) the first  anniversary of the
Section 7(d)  Termination  Date. In the event that the  Executive  obtains other
employment,  whether full or part time,  after the Section 7(d) Termination Date
and prior to the end of the Minimum Period, the Executive shall forthwith notify
the Company.  The Company  shall not be entitled to set off from amounts due the
Executive  under  subsections (a) and (b) below amounts paid to the Executive in
respect of other employment.

                         (a) Compensation-Regular Base Salary. After the Section
7(d)  Termination  Date and until the  expiration  of the  Minimum  Period,  the
Executive shall be paid his Regular Base Salary  periodically,  according to the
Company's wage practices,  at the rate in effect on the Section 7(d) Termination
Date.

                         (b)   Compensation-Bonus.   After  the   Section   7(d)
Termination  Date  and  until  the  earlier  to occur of (i) the last day of the
Employment  Term or (ii) the first  anniversary of the Section 7(d)  Termination
Date, the Executive shall be paid in periodic ratable installments,  at the same
time as payments of the Regular Base Salary are made to the  Executive  pursuant
to Section 11(a), an amount equal to the annual Bonus, if any,  actually paid on
account of the most recently  concluded  fiscal year to the Executive  under the
Company's  annual  incentive  compensation  plan  or any  predecessor  plan,  if
applicable.

                         (c) Vacation Pay. Any accrued  vacation pay due but not
yet taken at the Section 7(d) Termination Date shall be paid to the Executive on
the date upon which the  Executive  receives  his first  payment  under  Section
11(a).

                         (d)   Welfare    Benefits,    etc.   The    Executive's
participation  (including  dependent  coverage) in any life,  disability,  group
health and dental benefit plans provided by the Company,  in effect  immediately
prior to the Section 7(d) Termination Date, shall be continued after the Section
7(d) Termination  Date, in accordance with Company policy relating to such plans
as of the Section 7(d) Termination  Date, or substantially  equivalent  benefits
shall be provided by the Company until the earlier of (i) the end of the Minimum
Period  or (ii) the date upon  which the  Executive  accepts  other  employment,
whether full or part time.  Following  the Section 7(d)  Termination  Date,  the
Company  shall not be  obligated  to (i)  provide  business  accident  insurance
covering the Executive or (ii) make contributions in respect of the Executive to
any qualified retirement and pension plans or profit sharing plans.

                         (e) Executive Outplacement Counseling. Upon the request
of the Executive, within thirty (30) days following the Section 7(d) Termination
Date, the Company shall engage an  outplacement  counseling  service of national
reputation,  at its own expense  provided  that such expense shall not exceed in
the aggregate  Twenty  Thousand  Dollars  ($20,000),  to assist the Executive in
obtaining  employment,  until the  earlier  of two years from the  Section  7(d)
Termination Date or such date as the Executive has obtained employment.

                    12. Limitation on Termination Benefits Payments.

                         (a)  Definitions.  For purposes of this Section,  (1) a
"Payment"  shall mean any payment or  distribution in the nature of compensation
to or for the benefit of the Executive, whether paid or payable pursuant to this
Agreement or otherwise;  (2)  "Agreement  Payment"  shall mean a Payment paid or
payable pursuant to this Agreement  (disregarding this Section);  (3) "Net After
Tax Receipt"  shall mean the Present Value of a Payment net of all taxes imposed
on the Executive with respect  thereto under Sections 1 and 4999 of the Internal
Revenue  Code of 1986,  as amended  (the  "Code"),  determined  by applying  the
highest  marginal  rate  under  Section  1 of  the  Code  which  applied  to the
Executive's  taxable income for the immediately  preceding taxable year; and (4)
"Present  Value" shall mean such value  determined  in  accordance  with section
280G(d)(4) of the Code.

                         (b) Reduction of Payments.  Notwithstanding anything in
this  Agreement to the  contrary,  if receipt of all Payments  would subject the
Executive  to tax  under  Section  4999 of the  Code,  the  aggregate  Agreement
Payments  shall be reduced to an amount (but not below zero) which would  result
in the  maximum  possible  Net After Tax  Receipts  for the  Executive  from all
Payments (the "Reduced  Amount").  The Reduced Amount and the  applicability  of
Section 4999 of the Code shall be determined within 10 days after termination of
the  employment  of the  Executive  at the  Company's  expense  by a  nationally
recognized  accounting firm, whose decision shall be final and binding upon both
parties.

                         (c) Manner of Reduction.  If it is determined  that the
Executive  should receive a Reduced Amount,  the Company shall promptly give the
Executive notice to that effect and a copy of the detailed  calculation thereof.
Within ten (10) days after receiving such notice and calculations, the Executive
shall  advise  the  Company  in  writing  of the  manner in which the  Agreement
Payments shall be reduced.  If no such election is made by the Executive  within
such ten (10) day period,  the Company shall make the Agreement  Payments in the
manner  prescribed in Section 11 above until the Reduced Amount has been paid to
the Executive, after which the Agreement Payments shall cease.

                    13. Confidentiality of Employment Terms. The Executive shall
not disclose to any person other than the Executive's lawyer, financial advisor,
accountant  and members of his immediate  family any of the terms and conditions
of his employment  with the Company,  whether  contained  herein or in any other
agreement,  unless such  disclosure  (i) shall be  required  by law,  government
regulation,  or the  order  of any  court,  administrative  authority  or  other
government agency or (ii) shall have been publicly disclosed by the Company.

                    14.  Injunctive  Relief.  Without  intending  to  limit  the
remedies available to the Company,  the Executive  acknowledges that a breach of
any of the  covenants  contained  in  Section 8 hereof  may  result in  material
irreparable  injury to the  Company  or its  affiliates  for  which  there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries  precisely and that,  in the event of such a breach or threat  thereof,
the Company shall be entitled to obtain a temporary  restraining  order and/or a
preliminary or permanent  injunction  restraining the Executive from engaging in
activities  prohibited  by  Section  8 hereof  or such  other  relief  as may be
required to specifically  enforce any of the covenants in Section 8 hereof.  The
Executive  hereby agrees and consents that such injunctive  relief may be sought
in any  state or  federal  court  of  record  in the  County  of Cook,  State of
Illinois,  or in the state and county in which such  violation may occur,  or in
any other court, at the election of the Company.

                    15.  Extension  of  Restricted  Period.  In  addition to the
remedies  the  Company  may seek  and  obtain  pursuant  to  Section  14 of this
Agreement, the Restricted Period shall be extended by any and all periods during
which the  Executive  shall be found by a court to have been in violation of the
covenants contained in Section 8 hereof.

                    16. Successors; Binding Agreement.

                         (a) In the  event of any  sale of all or  substantially
all of the  assets  of  the  Company,  or the  merger,  consolidation  or  other
corporate  reorganization involving the Company, any successor to the Company by
reason  of  any  such  transaction   shall  succeed  to  all  of  the  Company's
obligations, rights and benefits hereunder.

                         (b) Except as provided in subsection (a) above, neither
this  Agreement,  nor  any  rights  or  benefits  hereunder,  may  be  assigned,
delegated,  transferred,  pledged or hypothecated without the written consent of
both parties hereto, and any such assignment,  delegation,  transfer,  pledge or
hypothecation shall be null and void and shall be disregarded by the Company.

                         (c) The Company will require any  transferee  of all or
substantially  all of its assets (whether or not by merger or  consolidation) to
assume,  whether by operation of law or  otherwise,  the  Company's  obligations
under  Section 11 of this  Agreement  in the same  manner and to the same extent
that the Company  would be required to perform  them if no such  succession  had
taken  place.  Failure of the  Company  to obtain  such  agreement  prior to the
effectiveness of any such succession  shall  constitute a Substantial  Breach by
the Company and shall entitle the Executive to benefits  described in Section 11
hereof upon his  resignation  from the Company within three business days of the
date such  succession  becomes  effective.  For  purposes  of  implementing  the
foregoing,  the  later  of (i) the date on which  any  such  succession  becomes
effective or (ii) the date upon which the Company receives written notice of the
Executive's resignation shall be deemed the Section 7(d) Termination Date.

                    17.  Waiver and  Modification.  Any  waiver,  alteration  or
modification  of any of the terms of this Agreement  shall be valid only if made
in writing and signed by the parties hereto;  provided,  however,  that any such
waiver,  alteration or modification is consented to on the Company's behalf by a
majority of the Board of Directors of the Company  (not  counting the  Executive
should he then be a director of the Company). No waiver by either of the parties
hereto of their  rights  hereunder  shall be deemed to  constitute a waiver with
respect to any subsequent  occurrences  or  transactions  hereunder  unless such
waiver specifically states that it is to be construed as a continuing waiver.

                    18.   Severability   and   Governing   Law.  The   Executive
acknowledges  and agrees  that the  covenants  set forth in Section 8 hereof are
reasonable  and  valid in  geographical  and  temporal  scope  and in all  other
respects.  If any of such  covenants or such other  provisions of this Agreement
are found to be invalid or unenforceable by a final  determination of a court of
competent  jurisdiction  (a) the remaining terms and provisions  hereof shall be
unimpaired  and (b) the  invalid or  unenforceable  term or  provision  shall be
deemed  replaced by a term or provision that is valid and  enforceable  and that
comes closest to expressing the intention of the invalid or  unenforceable  term
or provision.  This Agreement shall be governed by and interpreted in accordance
with the internal laws of the State of Illinois  without  regard to the contract
provision thereof.

                    19. Blue-Pencilling.  In the event that, notwithstanding the
first sentence of Section 18 hereof, any of the provisions of Section 8 relating
to the  covenants  contained  therein  shall be declared by a court of competent
jurisdiction to exceed the maximum restrictiveness such court deems enforceable,
such provision shall be deemed to be replaced herein by the maximum  restriction
deemed enforceable by such court.

                    20.  Arbitration.  The  parties  agree to submit any dispute
arising under this  Agreement to  arbitration  to be held in Chicago,  Illinois.
Arbitration shall be by a single arbitrator  experienced in the matters at issue
selected by the Company and the  Executive  in  accordance  with the  commercial
arbitration rules of the American Arbitration  Association.  The decision of the
arbitrator  shall be final and binding as to any matter  submitted  to him under
this  Agreement.  All  costs  and  expenses  incurred  in  connection  with such
arbitration  proceeding shall be borne by the party against whom the decision is
rendered.

                    21. Notices. All notices and other communications under this
Agreement  shall be in  writing  and shall be deemed  effective  and given  upon
actual delivery if presented personally, one business day after the date sent if
sent by prepaid  telegram,  overnight  courier  service,  telex, or by facsimile
transmission  or five  business days after the date sent if sent by certified or
registered  mail,  postage  prepaid,  return receipt  requested,  which shall be
addressed,  in the  case of the  Company,  to  Stimsonite  Corporation,  7524 N.
Natchez Avenue, Niles, Illinois 60714, Attention:  Chairman, Fax (847) 647-1205,
with a copy to Timothy  J.  Melton,  Esq.,  Jones,  Day Reavis & Pogue,  77 West
Wacker Drive, Chicago,  Illinois, 60610, FAX: (312) 782-8585 and, in the case of
the Executive,  to Robert E. Stutz,  1030 Old Barn Lane,  Lake Forest,  Illinois
60045 or, in each case, to such other address as may be designated in writing by
any such party.

                    22.  Captions and Paragraph  Headings.  Captions and section
headings herein are for convenience only, are not a part hereof and shall not be
used in construing this Agreement.

                    23. Entire Agreement.  This Agreement constitutes the entire
understanding  and agreement of the parties  hereto  regarding the employment of
the Executive and supersedes any prior agreements or understandings with respect
thereto.

                    24.   Counterparts.   This  Agreement  may  be  executed  in
counterparts,  each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.

                    IN WITNESS  WHEREOF,  the parties  hereto have executed this
Agreement as of the day and year first above written.


                     STIMSONITE CORPORATION



                     By:/s/Terrence D. Daniels
                        Terrence D. Daniels, Chairman



                     EXECUTIVE



                     By:/s/Robert E. Stutz
                        Robert E. Stutz

<PAGE>
                                                                   EXHIBIT 10-1A
                                                            FORM OF STOCK OPTION
                                                             UNDER SECTION 10(a)



                       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 $_____  (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      _________________________________
                              Name:
                              Title:



ACCEPTED AND AGREED


By
        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

<PAGE>
                                                                   EXHIBIT 10.1B
                                                            FORM OF STOCK OPTION
                                                             UNDER SECTION 10(b)


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


                  NONQUALIFIED STOCK OPTION AGREEMENT, dated as of ____________,
____ (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(b) 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 $7.50 (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  second
anniversary  of  __________,  ____ (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 third
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 fourth  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 the
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  or (ii) 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 _____ day of ___________, ____.

                      STIMSONITE CORPORATION


                      By       ____________________________________
                               Name:
                               Title:



ACCEPTED AND AGREED


By       ________________________________
         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  ____________,  ____ 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

<PAGE>
                                                                   EXHIBIT 10.1C
                                                            FORM OF STOCK OPTION
                                                             UNDER SECTION 10(c)


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


                  NONQUALIFIED STOCK OPTION AGREEMENT, dated as of ____________,
____ (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(c) 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 $9.00 (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 third anniversary
of __________,  ____ (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 fourth  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 fifth  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 under
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 the
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  or (ii) 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 _____ day of ___________, ____.

                   STIMSONITE CORPORATION


                   By       __________________________________
                            Name:
                            Title:



ACCEPTED AND AGREED


By       ______________________________________
         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  ____________,  ____ 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

<PAGE>
                                                                   EXHIBIT 10.1D
                                                            FORM OF STOCK OPTION
                                                             UNDER SECTION 10(d)


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


                  NONQUALIFIED STOCK OPTION AGREEMENT, dated as of ____________,
____ (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(d) 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 $11.00  (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 third anniversary
of __________,  ____ (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 fourth  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 fifth  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 the
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  or (ii) 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 _____ day of ___________, ____.

              STIMSONITE CORPORATION


              By       _______________________________
                       Name:
                       Title:



ACCEPTED AND AGREED


By       _____________________________________
         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  ____________,  ____ 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