EXHIBIT 10.6
                       SECOND AMENDMENT TO LOAN AGREEMENT


         THIS SECOND  AMENDMENT TO LOAN AGREEMENT  (this "Second  Amendment") is
entered  into as of the 18 day of July 1997,  by and  between  LaSalle  National
Bank, a national banking association ("LaSalle"), Harris Trust and Savings Bank,
an Illinois banking  corporation  ("Harris") (LaSalle and Harris are referred to
herein  collectively  as the "Banks"),  and Stimsonite  Corporation,  a Delaware
corporation ("Borrower"). LaSalle National Bank, a national banking association,
as agent for the Banks for certain  limited  purposes  ("Agent"),  shall also be
deemed a party hereto for the purpose of acting as agent.

                              W I T N E S S E T H:

         WHEREAS,  Banks, Agent and Borrower entered into a Loan Agreement dated
as of July 23, 1996 as amended by the  Amendment to Loan  Agreement  dated as of
March  24,  1997  (the  "Agreement"),  and now  desire  to  further  amend  such
Agreement.

         NOW,  THEREFORE,  for and in  consideration  of the premises and mutual
agreements  herein contained and for the purposes of setting forth the terms and
conditions of this Second Amendment, the parties,  intending to be bound, hereby
agree as follows:

1.       Incorporation  of the Agreement.  All  capitalized  terms which are not
         defined  hereunder  shall  have the same  meanings  as set forth in the
         Agreement,  and the Agreement, to the extent not inconsistent with this
         Second  Amendment,  is incorporated  herein by this reference as though
         the same was set forth in its  entirety.  To the  extent  any terms and
         provisions of the Agreement are  inconsistent  with the  amendments set
         forth in paragraph 2 below,  such terms and provisions  shall be deemed
         superseded  hereby.  Except  as  specifically  set  forth  herein,  the
         Agreement  shall  remain in full force and  effect  and its  provisions
         shall be binding on the parties hereto.

2.       Amendment of the Agreement. The Agreement is hereby amended as follows:

         a.       Paragraph 9.2(g) of the Agreement is hereby amended and
                  restated in its entirety as follows:

                  (g)  Financial  Covenants  (each of which in clauses (i), (ii)
         and (iii) below shall be measured  each  quarter on a rolling  four (4)
         quarter basis taking into account the immediately preceding four fiscal
         quarters of Borrower).

                           (i) Not  permit  the ratio of  Funded  Debt to EBITDA
                  minus Capital  Expenditures to exceed (A) 4.50:1 as of the end
                  of each  fiscal  quarter  through  September  30, 1997 and (B)
                  3.75:1  for the  fiscal  quarter  ending  December  31,  1997.
                  Notwithstanding the foregoing, such ratio shall be immediately
                  reduced  to 3.75:1 if  Borrower  sells the  Waukegan  Facility
                  prior to December 31, 1997.

                           (ii)     Not permit the Cash Flow Coverage Ratio to
                  be less than 1.3:1.

                           (iii) Not permit the Leverage Ratio to exceed (A) for
                  the fiscal  quarters  ending  June 30, 1996 to  September  30,
                  1997,  .60:1;  (B) for the fiscal quarters ending December 31,
                  1997 to  September  30,  1998,  .55:1;  and (C) for the fiscal
                  quarters ending December 31, 1998 and each quarter thereafter,
                  .40:1.

         b.       The final  sentence  of  Paragraph  9.3(b) is hereby  amended
                  and  restated  in its  entirety as follows:

                  Notwithstanding the foregoing,  Borrower may sell or otherwise
         dispose of the  Waukegan  Facility if, and only if, the net proceeds of
         such sale are $5,700,000 or greater and Borrower  complies in full with
         the provisions of Paragraph 5.18.

3.       Closing Documents.   The following  documents and other items shall be
         delivered  concurrently  with this Second Amendment:

         a.       Four executed copies of this Second Amendment.

4.       Representations   and   Warranties;    No   Event   of   Default.   The
         representations  and  warranties  set forth in  Paragraph  9 are deemed
         remade as of the date hereof and,  upon full  execution  of this Second
         Amendment in accordance with Section 5 below,  Borrower represents that
         such representations and warranties are true and correct as of the date
         hereof (other than representations and warranties made as of a specific
         date).  Upon full execution of this Second Amendment in accordance with
         Section 5 below,  no Event of Default  exists nor does there  exist any
         event  or  condition  which  with  notice,  lapse  of time  and/or  the
         consummation of the transactions  contemplated  hereby would constitute
         an Event of Default.

5.       Effectuation.  The  amendments  to the Agreement  contemplated  by this
         Second Amendment shall be deemed effective as of the date first written
         above upon the full execution of this Second  Amendment and without any
         further action required by the parties hereto.  There are no conditions
         precedent or subsequent to the  effectiveness  of this Second Amendment
         except as set forth in Section 3 above.

6.       Counterparts.  This Second Amendment may be executed in two or more
         counterparts,  each of which shall be deemed to be an original, but all
         of which together shall constitute one and the same instrument.

         IN WITNESS  WHEREOF,  the parties hereto have duly executed this Second
Amendment as of the date first above written.





LASALLE NATIONAL BANK                       STIMSONITE CORPORATION



By:      By:
            Its Vice President              Its President



HARRIS TRUST AND SAVINGS BANK



By:
         Its Vice President