RECIPIENT:                    ____________________________

AWARD DATE:                   ____________________________

RESTRICTED SHARES:            ____________________________

LAPSE OF RESTRICTIONS:        Restrictions on the Restricted Shares lapse in
                              equal installments over a three (3) year period as
                              follows:

                              ______ Shares on and after the first anniversary
                              of the Award Date

                              ______ Shares on and after the second anniversary
                              of the Award Date

                              _____ Shares on and after the third anniversary
                              of the Award Date

THIS RESTRICTED STOCK AWARD AGREEMENT is made as of the Award Date set forth above, by and between WSI Industries, Inc., a Minnesota corporation (the "Company") and the Recipient named above (the "Recipient") setting forth the terms and conditions of an Award of Restricted Stock granted pursuant to WSI Industries, Inc., 2005 Stock Plan (the "Plan"). Capitalized terms used herein and not defined shall have the meaning given such terms in the Plan.

1. GRANT OF RESTRICTED SHARES. In accordance with the terms of the Plan and subject to the further terms, conditions and restrictions contained in this Agreement, the Company hereby grants to Recipient the number of Restricted Shares set forth above. "Restricted Shares" means shares of the Company's common stock, $0.10 par value (the "Shares") subject to the Restrictions set forth in Section 3 of this Agreement.

2. CERTIFICATES FOR SHARES. Certificates evidencing Restricted Shares shall be deposited with the Company to be held in escrow until such Shares are released to the Recipient or forfeited in accordance with this Agreement. The Recipient shall, simultaneously with the delivery of this Agreement, deliver to the Company a stock power, in blank, executed by the Recipient. If any Restricted Shares are forfeited, the Company shall direct the transfer agent of the Shares to make the appropriate entries in its records showing the cancellation of the certificate or certificates for such Restricted Shares and the Shares represented thereby shall have the status as authorized but unissued Shares.

3. RESTRICTIONS. During the period prior to the lapse of the restrictions as set forth in Section 5 (the "Restricted Period") and subject to earlier termination of the Restricted Period or forfeiture of the Restricted Shares, the Restricted Shares and all rights with respect to the Restricted Shares, may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered or disposed of

and shall be subject to the risk of forfeiture contained in Section 4 of this Agreement (such limitations on transferability and risk of forfeiture being herein referred to as "Restrictions"), but the Recipient shall have all other rights of a stockholder, including, but not limited to, the right to vote and receive cash dividends on Restricted Shares. Any cash dividend paid with respect to the Restricted Shares that have not yet vested will be reinvested (to the extent shares are available under the Plan) in additional Restricted Shares ("Reinvested Restricted Shares"), rounded down to the nearest whole Share, subject to the same restrictions on transferability and the possibility of forfeiture to the Company as the Restricted Shares to which the dividend relates; provided, however, that all Restrictions on the Reinvested Restricted Shares shall lapse on the first date after such Reinvested Restricted Shares are issued that Restrictions on any Restricted Shares lapse. The Restricted Shares received upon such reinvestment of cash dividends will be valued at the Fair Market Value on the date such dividend is paid.

4. FORFEITURE OF RESTRICTED SHARES. If Recipient shall cease to be an employee of the Company for any reason, all Shares that at that time are Restricted Shares shall thereupon be forfeited by the Recipient to the Company without payment of any consideration therefor, and neither the Recipient, nor any successor, heir, assign or personal representative shall have any right or interest in or to such Restricted Shares or the certificates evidencing the Restricted Shares.

5. LAPSE OF RESTRICTIONS.

(a) Except as provided in Section 4 or in Section 5(b), the Restrictions on the Restricted Shares granted under this Agreement shall lapse as to the number of Restricted Shares and at the times stated above under "Lapse of Restrictions." Upon lapse of the Restrictions in accordance with this Section, the Company shall, as soon as practicable thereafter, deliver to the Recipient a certificate for the Shares with respect to which such Restrictions have lapsed.

(b) Notwithstanding any other provision of this Agreement, all Restrictions with respect to any Restricted Shares shall lapse on the date determined by the Committee (as defined in the Plan) prior to, but in no event more than sixty (60) days prior to, the occurrence of any of the following events: (i) dissolution or liquidation of the Company, other than in conjunction with a bankruptcy of the Company or any similar occurrence; (ii) any merger, consolidation, acquisition, separation, reorganization or similar occurrence where the Company will not be the surviving entity; or (iii) the transfer of substantially all of the assets of the Company, or 75% or more of the outstanding Stock of the Company.

6. NON-TRANSFERABILITY. Neither the Restricted Shares nor this Restricted Stock Award Agreement nor any interest in the Shares or Award may be anticipated, alienated, encumbered, sold, pledged, assigned, transferred or subjected to any charge or legal process, other than by will or the laws of descent and distribution, so long as the Restrictions have not lapsed as to any Restricted Share and the Shares have not been delivered in accordance with the Plan, and any sale, pledge, assignment or other attempted transfer shall be null and void.

7. ADJUSTMENTS. In the event of a corporate transaction involving the Company, the Common Stock or the Company's corporate or capital structure, including but not limited to any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation reclassification, split-up, spin-off combination or exchange of shares, or a sale of the Company or of all or part of its assets or any distribution to stockholders other than a normal cash dividend, the Committee shall make such proportional adjustments as are necessary to preserve the benefits or potential benefits of the Awards of Restricted Shares. Action by the Committee may include all or any adjustment in (a) the maximum number and kind of securities subject to the Plan as set forth in this section; (b) the maximum number and kind of securities that may be made subject to an Award of Restricted Shares for any individual; (c) the number and kind of securities subject to any outstanding Award; and (d) any other adjustments that the Committee determines to be equitable.

8. SUCCESSORS AND HEIRS. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company's assets and business.

9. GOVERNING LAW. This Restricted Stock Award Agreement and the Restricted Shares will be construed, administered and governed in all respects under and by the applicable laws of the State of Minnesota, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this agreement, the Plan, the award or the Restricted Shares to the substantive law of another jurisdiction.

10. TAX WITHHOLDING. The Company shall deduct from the number of Shares deliverable upon lapse of the Restrictions under this Restricted Stock Award Agreement such number of Shares as may be required to pay the amount of any federal, state or local taxes of any kind required by law to be withheld with respect to the grant, lapse of Restrictions, payment or settlement of an Award under this Restricted Stock Award Agreement. Shares withheld or surrendered to satisfy tax withholding will be valued at Fair Market Value as of the date such Shares are withheld or surrendered.

11. MISCELLANEOUS. Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall be subject to the terms of the Plan. In accordance with the Plan, all decisions of the Committee shall be final and binding upon Recipient and the Company.

IN WITNESS WHEREOF, the Company and the Recipient have each executed and delivered this Agreement as of the date first above written.

WSI INDUSTRIES, INC.

RECIPIENT:

EXHIBIT 10.2

WSI INDUSTRIES, INC.
NON-QUALIFIED STOCK OPTION AND
STOCK APPRECIATION RIGHTS AGREEMENT (2005 PLAN)

THIS AGREEMENT, made as of this ___ day of __________, 2007, between WSI Industries, Inc., a Minnesota corporation (the "Company") and ________________, an employee of the Company (the "Employee.

In accordance with the Company's 2005 Stock Plan (the "Plan"), the Company desires, by affording the Employee an opportunity to purchase its Common Shares, par value $0.10 (the "Shares"), to provide the Employee with an added incentive to continue his services to the Company, and through his proprietary interest, to increase his personal participation in the success of the Company.

THEREFORE, the parties agree:

1. Grant of Option. The Company hereby grants to the Employee, as a matter of separate agreement and not in lieu of salary or any other compensation for services, the right and non-incentive stock option (the "Option"), to purchase all or any part of an aggregate of _______ Thousand (__,000) Shares on the terms and conditions herein set forth, at the price of $_____ per Share.

2. Term of Option. Subject to the other provisions of this Agreement, the number of Shares specified in paragraph 1 shall be purchasable, in whole or in part, at any time and from time to time during a period of ten
(10) years from the date hereof.

3. Time of Exercise. Subject to the other provisions of this Agreement, the number of Shares specified in paragraph 1 shall be purchasable in whole or in part, at any time and from time to time in the amounts and during the periods respectively indicated:

(a) during the period beginning _______, 200_ and ending _______, 20__, _____ Thousand (__,000) Shares;

(b) during the period beginning _______, 200_ and ending _______, 20__, an additional _____ Thousand (__,000) Shares; and

(c) during the period beginning _______, 200_ and ending _______, 20__, an additional _____ Thousand (__,000) Shares.

4. Termination of Option. This Option is exercisable by the Employee as provided in paragraph 3 above, but only while he is an employee of the Company or a subsidiary of the Company or under the following circumstances:

(a) Except in the event of death or Disability (as defined in the Plan), in the event Employee ceases to be employed by the Company or a subsidiary of the Company, the Employee may exercise the Option within three months after such termination of employment. Neither the Plan nor this Agreement confers any right with respect to continuance of employment by the Company or by a subsidiary of the Company, nor will the Plan or this Agreement interfere in any way with the Employee's right, or the Company's right, to terminate employment of the Employee at any time. When employment is terminated because of deliberate, willful or gross misconduct as determined by the Company, all rights under the Option shall terminate and expire upon such termination of employment. Neither the transfer of the Employee from employment by the Company to employment by a subsidiary of the Company, nor the transfer of the Employee from employment by a subsidiary of the Company to employment by the Company or by another subsidiary of the Company shall be deemed a termination of employment of the Employee by the Company or by a subsidiary of the Company. A temporary leave of absence granted to the Employee shall not be deemed a termination of employment.

(b) If the Employee's employment by the Company or a subsidiary terminates by reason of death or disability, this Option may be exercised at any time within twelve months following such termination due to death or disability, by Employee's personal representative or by the person or persons to whom Employee's rights under the Option shall pass by will or by the laws of descent and distribution.

None of the provisions of this Agreement shall be considered to permit, under any circumstances, the exercise of this Option, by any person, after ____________, 20__.

5. Grant of Stock Appreciation Right. As part of and not in addition to the Option granted above, the Employee is granted and may exercise, in lieu of exercise of the Option as provided above, a "Stock Appreciation Right" or "SAR" for the equivalent number of Shares subject to this Option, which entitles the Employee to be paid the excess, as of the Time of Exercise, of (i) the Fair Market Value of the Shares associated with this Option (or the portion thereof that is surrendered on exercise) over (ii) the exercise price of such Shares as set forth in Section 1 above.

(a) A SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. SARs may be exercised for all or part of the Shares subject to this Option upon the surrender of the right to exercise the equivalent number of Shares of this Option. The exercise of the Option shall reduce the number of Shares subject to the SAR by the number of Shares exercised.

(b) Upon the exercise of a SAR, the Employee shall be entitled to receive Shares of equivalent value (based on the Fair Market Value on the Time of Exercise of the SAR), rounded down to the nearest whole Share equal to the amount set forth above.

(c) The term "Option" as used in this Agreement, unless the context clearly indicates otherwise, shall refer to the SAR. The right to exercise and the terms and conditions thereof, and the rights of the Employee under the Plan and this Agreement with respect to the Shares subject to the SAR shall be the same as the terms and conditions to which the Option is subject.

(d) The Company shall deduct from the number of Shares deliverable upon exercise of a SAR such number of Shares as may be required to pay the amount of any federal, state or local taxes of any kind required by law to be withheld with respect to the settlement of a SAR under the Agreement. Shares withheld or surrendered to satisfy tax withholding will be valued at Fair Market Value as of the date such Shares are withheld or surrendered.

6. Rights of Shareholder. The Employee shall have none of the rights of a shareholder with respect to the Shares subject to this Option until the Shares shall have been issued to him upon exercise of the Option.

7. Transferability of Option. This Option shall not be transferable by the Employee otherwise than by will or the laws of descent and distribution, and is exercisable, during his lifetime, only by him. Any attempt to assign, transfer, pledge, hypothecate, or otherwise dispose of this Option contrary to the provisions hereof, or any attachment or similar process upon this Option, shall be null and void and without effect.

8. Adjustments to Option. In the event that, prior to the purchase of the maximum number of Shares purchasable under this Option, the Company shall have effected one or more reclassifications, combinations, stock dividends or split-ups of the Shares of the Company, or other like transactions, or mergers, consolidations or other transactions relating to the Shares, the number of Shares thereafter purchasable under this Option may be adjusted, upward or downward, by the Board of Directors of the Company as it deems equitable to prevent dilution or enlargement of the option rights herein granted. The determination by the Board of Directors shall be final.

9. Procedure for Exercise. Exercise of this Option shall be by delivery of written notice and this Agreement to the Company at its principal office specifying the number of Shares with respect to which this Option is being exercised. If less than the full number of Shares purchasable are to be purchased, the number of Shares purchased shall be noted on this Agreement. Cash or a check acceptable to the Company in an amount equal to the full purchase price of the Shares to be purchased shall accompany such written notice. In the event this Option is being exercised by any person or persons other than the Employee, the notice of exercise shall be accompanied by appropriate proof of the right of such person or persons to exercise this Option.

10. Transfer of Shares. The Employee understands that upon exercise of this Option, in whole or in part, the Shares purchased may not be sold, transferred, pledged or otherwise disposed of unless the Shares are registered under the Securities Act of 1933, or unless the

Company has received an opinion of counsel satisfactory to the Company that said registration is not required.

11. Incorporation of Plan. In addition to the terms and conditions set forth herein, this Option is also subject to all of the terms, provisions and conditions set forth in the Plan pursuant to which this Option is granted, a copy of which is available for review at the principal offices of the Company.

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

WSI INDUSTRIES, INC.