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                                                                    EXHIBIT 10.2

                        INCENTIVE STOCK OPTION AGREEMENT

      THIS AGREEMENT IS ENTERED INTO AND EFFECTIVE AS OF THE ___ DAY OF _______,
200__ BY AND BETWEEN IKONICS CORPORATION (THE "COMPANY") AND
_________________________ (THE "OPTIONEE").

      A. THE COMPANY HAS ADOPTED THE IKONICS CORPORATION 1995 STOCK INCENTIVE
PLAN (THE "PLAN") AUTHORIZING THE BOARD OF DIRECTORS OF THE COMPANY, OR A
COMMITTEE AS PROVIDED FOR IN THE PLAN (THE BOARD OR SUCH A COMMITTEE TO BE
REFERRED TO AS THE "COMMITTEE"), TO GRANT INCENTIVE STOCK OPTIONS TO EMPLOYEES
OF THE COMPANY AND ITS SUBSIDIARIES (AS DEFINED IN THE PLAN).

      B. THE COMPANY DESIRES TO GIVE THE OPTIONEE AN INDUCEMENT TO ACQUIRE A
PROPRIETARY INTEREST IN THE COMPANY AND AN ADDED INCENTIVE TO ADVANCE THE
INTERESTS OF THE COMPANY BY GRANTING TO THE OPTIONEE AN OPTION TO PURCHASE
SHARES OF COMMON STOCK OF THE COMPANY PURSUANT TO THE PLAN.

         ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:

1. GRANT OF OPTION.

      THE COMPANY HEREBY GRANTS TO THE OPTIONEE THE RIGHT, PRIVILEGE, AND OPTION
(THE "OPTION") TO PURCHASE __________________________________ SHARES (THE
"OPTION SHARES") OF THE COMPANY'S COMMON STOCK, $0.10 PAR VALUE (THE "COMMON
STOCK"), ACCORDING TO THE TERMS AND SUBJECT TO CONDITIONS HEREINAFTER SET FORTH
AND AS SET FORTH IN THE PLAN. THE OPTION IS INTENDED TO BE AN "INCENTIVE STOCK
OPTION," AS THAT TERM IS USED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

2. OPTION EXERCISE PRICE.

      THE PER SHARE PRICE TO BE PAID BY OPTIONEE IN THE EVENT OF AN EXERCISE OF
THE OPTION WILL BE $______.

3. DURATION OF OPTION AND TIME OF EXERCISE.

       1.INITIAL PERIOD OF EXERCISABILITY. THE OPTION WILL BECOME EXERCISABLE
WITH RESPECT TO THE OPTION SHARES IN ONE INSTALLMENT. THE FOLLOWING TABLE SETS
FORTH THE INITIAL DATES OF EXERCISABILITY OF EACH INSTALLMENT AND THE NUMBER OF
OPTION SHARES AS TO WHICH THIS OPTION WILL BECOME EXERCISABLE ON SUCH DATE:

          INITIAL DATE OF                            NUMBER OF OPTION SHARES
          EXERCISABILITY                             AVAILABLE FOR EXERCISE
          --------------                             ----------------------
THE FOREGOING RIGHTS TO EXERCISE THIS OPTION WILL BE CUMULATIVE WITH RESPECT TO
THE OPTION SHARES BECOMING EXERCISABLE ON EACH SUCH DATE, BUT IN NO EVENT WILL
THIS OPTION BE EXERCISABLE AFTER, AND THIS OPTION WILL BECOME VOID AND EXPIRE AS
TO ALL UNEXERCISED OPTION SHARES AT, 5:00 P.M. (DULUTH, MINNESOTA TIME) ON
__________________ (THE "TIME OF TERMINATION").

       2. TERMINATION OF EMPLOYMENT.

      (a) TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT. IN THE EVENT THE
OPTIONEE'S EMPLOYMENT WITH THE COMPANY AND ALL SUBSIDIARIES IS TERMINATED BY
REASON OF DEATH, DISABILITY OR

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RETIREMENT (AS SUCH TERMS ARE DEFINED IN THE PLAN), THIS OPTION WILL REMAIN
EXERCISABLE TO THE EXTENT EXERCISABLE AS OF SUCH TERMINATION FOR A PERIOD OF 30
DAYS AFTER SUCH TERMINATION (BUT IN NO EVENT AFTER THE TIME OF TERMINATION).

      (b) TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR RETIREMENT. IN
THE EVENT THE OPTIONEE'S EMPLOYMENT WITH THE COMPANY AND ALL SUBSIDIARIES IS
TERMINATED FOR ANY REASON OTHER THAN DEATH, DISABILITY OR RETIREMENT, OR THE
OPTIONEE IS IN THE EMPLOY OF A SUBSIDIARY AND THE SUBSIDIARY CEASES TO BE A
SUBSIDIARY OF THE COMPANY (UNLESS THE OPTIONEE CONTINUES IN THE EMPLOY OF THE
COMPANY OR ANOTHER SUBSIDIARY), ALL RIGHTS OF THE OPTIONEE UNDER THE PLAN AND
THIS AGREEMENT WILL IMMEDIATELY TERMINATE WITHOUT NOTICE OF ANY KIND, AND THIS
OPTION WILL NO LONGER BE EXERCISABLE; PROVIDED, HOWEVER, THAT IF SUCH
TERMINATION IS DUE TO ANY REASON OTHER THAN TERMINATION BY THE COMPANY OR ANY
SUBSIDIARY FOR "CAUSE" (AS DEFINED IN THE PLAN), THIS OPTION WILL REMAIN
EXERCISABLE TO THE EXTENT EXERCISABLE AS SUCH TERMINATION FOR A PERIOD OF 30
DAYS AFTER SUCH TERMINATION (BUT IN NO EVENT AFTER THE TIME OF TERMINATION).

3. CHANGE IN CONTROL.

      (a) IMPACT OF CHANGE IN CONTROL. IF ANY EVENTS CONSTITUTING A CHANGE IN
CONTROL (AS DEFINED IN THE PLAN) OF THE COMPANY OCCUR, THIS OPTION WILL BECOME
IMMEDIATELY EXERCISABLE IN FULL AND WILL REMAIN EXERCISABLE UNTIL THE TIME OF
TERMINATION, REGARDLESS OF WHETHER THE OPTIONEE REMAINS IN THE EMPLOY OF THE
COMPANY OR ANY SUBSIDIARY. IN ADDITION, IF A CHANGE IN CONTROL OF THE COMPANY
OCCURS, THE COMMITTEE, IN ITS SOLE DISCRETION AND WITHOUT THE CONSENT OF THE
OPTIONEE, MAY DETERMINE THAT THE OPTIONEE WILL RECEIVE, WITH RESPECT TO SOME OR
ALL OF THE OPTION SHARES, AS OF THE EFFECTIVE DATE OF ANY SUCH CHANGE IN CONTROL
OF THE COMPANY, CASH IN AN AMOUNT EQUAL TO THE EXCESS OF THE FAIR MARKET VALUE
(AS DEFINED IN THE PLAN) OF SUCH OPTION SHARES IMMEDIATELY PRIOR TO THE
EFFECTIVE DATE OF SUCH CHANGE IN CONTROL OF THE COMPANY OVER THE OPTION EXERCISE
PRICE PER SHARE OF THIS OPTION.

      (b) LIMITATION ON CHANGE IN CONTROL PAYMENTS. NOTWITHSTANDING ANYTHING IN
THIS SECTION 3.3 TO THE CONTRARY, IF, WITH RESPECT TO THE OPTIONEE, ACCELERATION
OF THE VESTING OF THIS OPTION OR THE PAYMENT OF CASH IN EXCHANGE FOR ALL OR PART
OF THE OPTION SHARES AS PROVIDED ABOVE (WHICH ACCELERATION OR PAYMENT COULD BE
DEEMED A "PAYMENT" WITHIN THE MEANING OF SECTION 280G(b)(2) OF THE CODE),
TOGETHER WITH ANY OTHER PAYMENTS WHICH THE OPTIONEE HAS THE RIGHT TO RECEIVE
FROM THE COMPANY OR ANY CORPORATION WHICH IS A MEMBER OF AN "AFFILIATED GROUP"
(AS DEFINED IN SECTION 1504(a) OF THE CODE WITHOUT REGARD TO SECTION 1504(b) OF
THE CODE) OF WHICH THE COMPANY IS A MEMBER, WOULD CONSTITUTE A "PARACHUTE
PAYMENT" (AS DEFINED IN SECTION 280G(b)(2) OF THE CODE), THE PAYMENTS TO THE
OPTIONEE AS SET FORTH HEREIN WILL BE REDUCED TO THE IMPOSED BY SECTION 4999 OF
THE CODE; PROVIDED, HOWEVER, THAT IF THE OPTIONEE IS SUBJECT TO A SEPARATE
AGREEMENT WITH THE COMPANY OR A SUBSIDIARY THAT SPECIFICALLY PROVIDES THAT
PAYMENTS ATTRIBUTABLE TO ONE OR MORE FORMS OF EMPLOYEE STOCK INCENTIVES OR TO
PAYMENTS MADE IN LIEU OF EMPLOYEE STOCK INCENTIVES WILL NOT REDUCE OF OTHER
PAYMENTS UNDER SUCH AGREEMENT, EVEN IF IT WOULD CONSTITUTE AN EXCESS PARACHUTE
PAYMENT, OR PROVIDES THAT THE OPTIONEE WILL HAVE THE DISCRETION TO DETERMINE
WHICH PAYMENTS WILL BE REDUCED IN ORDER TO AVOID AN EXCESS PARACHUTE PAYMENT,
THEN THE LIMITATIONS OF THIS SECTION 3.3(b) WILL, TO THAT EXTENT, NOT APPLY.

4. MANNER OF OPTION EXERCISE.

      1. NOTICE. THIS OPTION MAY BE EXERCISED BY THE OPTIONEE IN WHOLE OR IN
PART FROM TIME TO TIME, SUBJECT TO THE CONDITIONS CONTAINED IN THE PLAN AND IN
THIS AGREEMENT, BY DELIVERY, IN PERSON, BY FACSIMILE OR ELECTRONIC TRANSMISSION
OR THROUGH THE MAIL, TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE IN DULUTH,
MINNESOTA (ATTENTION: TREASURER), OF A WRITTEN NOTICE OF EXERCISE. SUCH NOTICE
WILL BE IN A FORM SATISFACTORY OF THE COMMITTEE, WILL IDENTIFY THE OPTION, WILL
SPECIFY THE NUMBER OF OPTION SHARES WITH RESPECT TO WHICH THE OPTION IS BEING
EXERCISED, AND WILL BE SIGNED BY

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THE PERSON OR PERSONS SO EXERCISING THE OPTION. SUCH NOTICE WILL BE ACCOMPANIED
BY PAYMENT IN FULL OF THE TOTAL PURCHASE PRICE OF THE OPTION SHARES PURCHASED.
IN THE EVENT THAT THE OPTION IS BEING EXERCISED, AS PROVIDED BY THE PLAN AND
SECTION 3.2 ABOVE, BY ANY PERSON OR PERSONS OTHER THAN THE OPTIONEE, THE NOTICE
WILL BE ACCOMPANIED BY APPROPRIATE PROOF OF RIGHT OF SUCH PERSON OR PERSONS TO
EXERCISE THE OPTION. AS SOON AS PRACTICABLE AFTER THE EFFECTIVE EXERCISE OF THE
OPTION, THE OPTIONEE WILL BE RECORDED ON THE STOCK TRANSFER BOOKS OF THE COMPANY
AS THE OWNER OF THE OPTION SHARES PURCHASED, AND THE COMPANY WILL DELIVER TO THE
OPTIONEE ONE OR MORE DULY ISSUED STOCK CERTIFICATES EVIDENCING SUCH OWNERSHIP.

      2. PAYMENT. AT THE TIME OF EXERCISE OF THIS OPTION, THE OPTIONEE WILL PAY
THE TOTAL PURCHASE PRICE OF THE OPTION SHARES TO BE PURCHASED ENTIRELY IN CASH
(INCLUDING A CHECK, BANK DRAFT OR MONEY ORDER, PAYABLE TO THE ORDER OF THE
COMPANY): PROVIDED, HOWEVER, THAT THE COMMITTEE, IN ITS SOLE DISCRETION, MAY
ALLOW SUCH PAYMENT TO BE MADE, IN WHOLE OR IN PART, BY TENDER OF A PROMISSORY
NOTE (ON TERMS ACCEPTABLE TO THE COMMITTEE IN ITS SOLE DISCRETION) OR A BROKER
EXERCISE NOTICE OR PREVIOUSLY ACQUIRED SHARES (AS SUCH TERMS ARE DEFINED IN THE
PLAN), OR BY A COMBINATION OF SUCH METHODS. IN THE EVENT THE OPTIONEE IS
PERMITTED TO PAY THE TOTAL PURCHASE PRICE OF THIS OPTION IN WHOLE OR IN PART
WITH PREVIOUSLY ACQUIRED SHARES, THE VALUE OF SUCH SHARES WILL BE EQUAL TO THEIR
FAIR MARKET VALUE ON THE DATE OF EXERCISE OF THIS OPTION.

5. RIGHTS OF OPTIONEE; TRANSFERABILITY.

      1. EMPLOYMENT. NOTHING IN THIS AGREEMENT WILL INTERFERE WITH OR LIMIT IN
ANY WAY THE RIGHT OF THE COMPANY OR ANY SUBSIDIARY TO TERMINATE THE EMPLOYMENT
OF THE OPTIONEE AT ANY TIME, NOR CONFER UPON THE OPTIONEE ANY RIGHT TO CONTINUE
IN THE EMPLOY OF THE COMPANY OR ANY SUBSIDIARY AT ANY PARTICULAR POSITION OR
RATE OF PAY OR FOR ANY PARTICULAR PERIOD OF TIME.

      2. RIGHTS AS A SHAREHOLDER. THE OPTIONEE WILL HAVE NO RIGHTS AS A
SHAREHOLDER UNLESS AND UNTIL ALL CONDITIONS TO THE EFFECTIVE EXERCISE OF THIS
OPTION (INCLUDING, WITHOUT LIMITATION, THE CONDITIONS SET FORTH IN SECTION 4 OF
THIS AGREEMENT AND SECTION 15 OF THE PLAN) HAVE BEEN SATISFIED AND THE OPTIONEE
HAS BECOME THE HOLDER OF RECORD OF SUCH SHARES. NO ADJUSTMENT WILL BE MADE FOR
DIVIDENDS OR DISTRIBUTIONS WITH RESPECT TO THIS OPTION AS TO WHICH THERE IS A
RECORD DATE PRECEDING THE DATE THE OPTIONEE BECOMES THE HOLDER OF RECORD OF SUCH
SHARES, EXCEPT AS MAY OTHERWISE BE PROVIDED IN THE PLAN OR DETERMINED BY THE
COMMITTEE IN ITS SOLE DISCRETION.

      3. RESTRICTIONS ON TRANSFER. EXCEPT PURSUANT TO TESTAMENTARY WILL OR THE
LAWS OF DESCENT AND DISTRIBUTION OR AS OTHERWISE EXPRESSLY PERMITTED BY THE
PLAN, NO RIGHT OR INTEREST OF THE OPTIONEE IN THIS OPTION PRIOR TO EXERCISE MAY
BE ASSIGNED OR TRANSFERRED, OR SUBJECT TO ANY LIEN, DURING THE LIFETIME OF THE
OPTIONEE, EITHER VOLUNTARILY OR INVOLUNTARILY, DIRECTLY OR INDIRECTLY, BY
OPERATION OF LAW OR OTHERWISE. THE OPTIONEE WILL, HOWEVER, BE ENTITLED TO
DESIGNATE A BENEFICIARY TO RECEIVE THIS OPTION UPON SUCH OPTIONEE'S DEATH, AND ,
IN THE EVENT OF THE OPTIONEE'S DEATH, EXERCISE OF THIS OPTION (TO THE EXTENT
PERMITTED PURSUANT TO SECTION 3.2(a) OF THIS AGREEMENT) MAY BE MADE BY THE
OPTIONEE'S LEGAL REPRESENTATIVES, HEIRS AND LEGATEES.

6. WITHHOLDING TAXES.

      THE COMPANY IS ENTITLED TO (a) WITHHOLD AND DEDUCT FROM FUTURE WAGES OF
THE OPTIONEE (OR FROM OTHER AMOUNTS THAT MAY BE DUE AND OWING TO THE OPTIONEE
FROM THE COMPANY), OR MAKE OTHER ARRANGEMENTS FOR THE COLLECTION OF, ALL LEGALLY
REQUIRED AMOUNTS NECESSARY TO SATISFY ANY FEDERAL, STATE OR LOCAL WITHHOLDING
AND EMPLOYMENT-RELATED TAX REQUIREMENTS ATTRIBUTABLE TO THE GRANT OR EXERCISE
OF, OR A DISQUALIFYING DISPOSITION WITH RESPECT TO, THIS OPTION OR OTHERWISE
INCURRED WITH RESPECT TO THIS OPTION, OR (b) REQUIRE THE OPTIONEE PROMPTLY TO
REMIT THE AMOUNT OF SUCH WITHHOLDING TO THE COMPANY BEFORE ACTING ON THE
OPTIONEE'S NOTICE OF EXERCISE OF THIS OPTION. IN THE EVENT THAT THE COMPANY IS
UNABLE TO WITHHOLD SUCH AMOUNTS, FOR WHATEVER REASON, THE

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OPTIONEE AGREES TO PAY TO THE COMPANY AN AMOUNT EQUAL TO THE AMOUNT THE COMPANY
WOULD OTHERWISE BE REQUIRED TO WITHHOLD UNDER FEDERAL, STATE OR LOCAL LAW.

7. ADJUSTMENTS.

      IN THE EVENT OF ANY REORGANIZATION, MERGER, CONSOLIDATION,
RECAPITALIZATION, LIQUIDATION, RECLASSIFICATION, STOCK DIVIDEND, STOCK SPLIT,
COMBINATION OF SHARES, RIGHTS OFFERING, DIVESTITURE OR EXTRAORDINARY DIVIDEND
(INCLUDING A SPIN-OFF), OR ANY OTHER CHANGE IN THE CORPORATE STRUCTURE OR SHARES
OF THE COMPANY, THE COMMITTEE (OR, IF THE COMPANY IS NOT THE SURVIVING
CORPORATION IN ANY SUCH TRANSACTION, THE BOARD OF DIRECTORS OF THE SURVIVING
CORPORATION), IN ORDER TO PREVENT DILUTION OR ENLARGEMENT OF THE RIGHTS OF THE
OPTIONEE, WILL MAKE APPROPRIATE ADJUSTMENT (WHICH DETERMINATION WILL BE
CONCLUSIVE) AS TO THE NUMBER, KIND AND EXERCISE PRICE OF SECURITIES SUBJECT TO
THIS OPTION.

8. SUBJECT TO PLAN.

      THE OPTION AND THE OPTION SHARES GRANTED AND ISSUED PURSUANT TO THIS
AGREEMENT HAVE BEEN GRANTED AND ISSUED UNDER, AND ARE SUBJECT TO THE TERMS OF,
THE PLAN. THE TERMS OF THE PLAN ARE INCORPORATED BY REFERENCE IN THIS AGREEMENT
IN THEIR ENTIRETY, AND THE OPTIONEE, BY EXECUTION OF THIS AGREEMENT,
ACKNOWLEDGES HAVING RECEIVED A COPY OF THE PLAN. THE PROVISIONS OF THIS
AGREEMENT WILL BE INTERPRETED AS TO BE CONSISTENT WITH THE PLAN, AND ANY
AMBIGUITIES IN THIS AGREEMENT WILL BE INTERPRETED BY REFERENCE TO THE PLAN. IN
THE EVEN THAT ANY PROVISION OF THIS AGREEMENT IS INCONSISTENT WITH THE TERMS OF
THE PLAN, THE TERMS OF THE PLAN WILL PREVAIL.

9. MISCELLANEOUS.

      1.    BINDING EFFECT. THIS AGREEMENT WILL BE BINDING UPON THE HEIRS,
EXECUTORS, ADMINISTRATORS AND SUCCESSORS OF THE PARTIES TO THIS AGREEMENT.

      2.    GOVERNING LAW. THIS AGREEMENT AND ALL RIGHTS AND OBLIGATIONS UNDER
THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH THE PLAN AND GOVERNED BY THE
LAWS OF THE STATE OF MINNESOTA, WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS.
ANY LEGAL PROCEEDING RELATED TO THIS AGREEMENT WILL BE BROUGHT IN AN APPROPRIATE
MINNESOTA COURT, AND THE PARTIES OF THIS AGREEMENT CONSENT TO THE EXCLUSIVE
JURISDICTION OF THE COURT FOR THIS PURPOSE.

      3.    ENTIRE AGREEMENT. THIS AGREEMENT AND THE PLAN SET FORTH THE ENTIRE
AGREEMENT AND UNDERSTANDING OF THE PARTIES TO THIS AGREEMENT WITH RESPECT TO THE
GRANT AND EXERCISE OF THIS OPTION AND THE ADMINISTRATION OF THE PLAN AND
SUPERSEDE ALL PRIOR AGREEMENTS, ARRANGEMENTS, PLANS AND UNDERSTANDINGS RELATING
TO THE GRANT AND EXERCISE OF THIS OPTION AND THE ADMINISTRATION OF THE PLAN.

      4.    AMENDMENT AND WAIVER. OTHER THAN AS PROVIDED IN THE PLAN, THIS
AGREEMENT MAY BE AMENDED, WAIVED, MODIFIED OR CANCELED ONLY BY A WRITTEN
INSTRUMENT EXECUTED BY THE PARTIES TO THE AGREEMENT OR, IN THE CASE OF A WAIVER,
BY THE PARTY WAIVING COMPLIANCE.

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      THE PARTIES TO THIS AGREEMENT HAVE EXECUTED THIS AGREEMENT EFFECTIVE THE
DAY AND YEAR FIRST ABOVE WRITTEN.

                                               IKONICS CORPORATION

                                               BY  _____________________________

                                               ITS _____________________________

BY EXECUTION OF THIS AGREEMENT,                OPTIONEE

THE OPTIONEE ACKNOWLEDGES

HAVING RECEIVED A COPY OF THE PLAN.            _________________________________
                                                    (SIGNATURE)

                                               _________________________________
                                                    (NAME AND ADDRESS)

                                               _________________________________

                                               _________________________________

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