Document:

<PAGE>

                                                                    Exhibit 10.8

                      SECOND AMENDMENT AND MODIFICATION OF
                     REVOLVING LINE OF CREDIT LOAN AGREEMENT
                         AND REAFFIRMATION OF GUARANTIES

      This Amendment and Modification of Revolving Line of Credit Loan Agreement
and Reaffirmation of Guaranties ("Amendment") is made effective the 3rd day of
May, 2004 ("Effective Date") by and among WSI Industries, Inc., a Minnesota
corporation, having an address of 18151 Territorial Road, Osseo, MN 55369
("Borrower"), Taurus Numeric Tool, Inc., having an address of 18151 Territorial
Road, Osseo, MN 55369 and WSI Rochester, Inc., having an address of 18151
Territorial Road, Osseo, MN 55369 (jointly "Guarantor") and Excel Bank
Minnesota, a Minnesota banking corporation, having an address of 50 South Sixth
Street, Suite 1000, Minneapolis MN 55402 ("Bank").

      WHEREAS, on or about December 4, 2002, (the "Loan Date") Borrower executed
a Revolving Line of Credit Promissory Note in favor of the Bank in the original
principal amount of One Million and 00/100 ($1,000,000.00) Dollars ("Note"); and

      WHEREAS, on or about the Loan Date, Borrower and the Bank executed that
certain Loan Agreement ("Loan Agreement") which Loan Agreement, among other
things, described the terms and conditions under which the Borrower would borrow
money from and repay the money to the Bank; and

      WHEREAS, to secure the sums due and payable to the Bank pursuant to the
Note and the Loan Agreement, Borrower also executed that certain Security
Agreement, also dated as of the Loan Date, whereby the Bank took a security
interest in all assets of Borrower ("Security Agreement); and

      WHEREAS, to further secure the sums due and payable to the Bank pursuant
to the Note and the Loan Agreement, to perform the covenants and conditions
thereof and of certain documents executed in conjunction therewith, each
Guarantor executed an unconditional and unlimited guaranty ("Guaranty"), also
dated as of the Loan Date, whereby each Guarantor unconditionally guaranteed the
Borrower's performance of the Note and the Loan Agreement and the other loan
documents executed therewith; and

      WHEREAS, the Note, the Loan Agreement, the Security Agreement and all of
the documents executed in conjunction therewith are sometimes jointly referred
to herein as the "Loan Documents"; and

      WHEREAS, the Loan Documents were amended by that certain Amendment and
Modification of Revolving Line of Credit Promissory Note, Loan Agreement and
Reaffirmation of Guaranties dated effective December 30, 2003; and

      WHEREAS, the Bank and the Borrower and each Guarantor desire that the Loan
Agreement be amended and modified as hereinafter described and each Guarantor
wishes to acknowledge and reaffirm the terms and conditions of such Guarantor's
Guaranty.

                                       -1-
<PAGE>

                                                                    Exhibit 10.8

      NOW, THEREFORE, in consideration of the above recitals, and in
consideration of credit given or to be given by the Bank to the Borrower and for
other good and valuable consideration, all of which consideration is hereby
acknowledged, the parties hereto agree as follows:

1.    Each of the above recitals is true and correct and is incorporated herein
      by this reference.

2.    The following sections of the Loan Agreement are hereby amended and
      modified as described below (all capitalized terms have the meanings given
      to them in the Loan Agreement):

      Section 5.09 RATIO OF DEBT TO TANGIBLE NET WORTH. So long as the Note
      shall remain unpaid or the Bank shall have any Commitment hereunder, the
      ratio of the Borrower's Debt to Tangible Net Worth shall not exceed 1.75
      to 1 measured at the end of each fiscal quarter end basis.

      Section 5.10 RATIO OF CURRENT ASSETS TO CURRENT LIABILITIES. The Borrower
      shall maintain, for each fiscal quarter end that the Note remains
      outstanding or the Bank shall have any Commitment hereunder, the ratio of
      its Current Assets to its Current Liabilities added to its outstanding
      debt under the Note at not less than 1.75 to 1.

      Section 6.10 CAPITAL EXPENDITURES. So long as the Note shall remain unpaid
      or the Bank shall have any Commitment hereunder, Borrower shall make no
      capital expenditures in excess of Eight Hundred Fifty Thousand and 00/100
      ($850,000.00) Dollars in any fiscal year. This covenant shall be exclusive
      of the acquisition of title to the real property located at 213 Chelsea
      Road, Monticello, Minnesota by the Borrower.

3.    A new Section 5.11 shall be added to the Loan Agreement as follows:

      Section 5.11 DEBT SERVICE COVERAGE RATIO. So long as the Note shall remain
      unpaid or the Bank shall have any Commitment hereunder, the Borrower will
      maintain an annual ratio of earnings before interest, taxes, depreciation
      and amortization, less distributions to shareholders, all for the same
      specified period to annual principal and interest payments due on all Debt
      of the Borrower of not less than 1 to 1 on December 31, 2004 and not less
      than 1.25 to 1 at each December 31st thereafter beginning on December 31,
      2005, as determined in accordance with generally recognized accounting
      principles consistently applied.

4.    A new Section 7.01(l) shall be added to the Loan Agreement as follows:

                                       -2-
<PAGE>

                                                                    Exhibit 10.8

      Any material event or condition of default (however defined) by Borrower
      shall occur and the applicable cure period, if any, shall have expired, in
      any promissory note or any agreement between Borrower and the Bank,
      including but not limited to that certain Promissory Note dated May 3,
      2004 and that certain Loan Agreement dated May 3, 2004 between Borrower
      and the Bank; or

5.    Borrower hereby acknowledges and reaffirms each and every representation,
      warranty, term, covenant and condition of the Loan Documents. Borrower
      further acknowledges and agrees that the Loan Documents (as hereby amended
      and modified) are fully enforceable against Borrower and that Borrower has
      no defense, right of offset or otherwise to preclude enforcement of the
      Loan Documents, as hereby amended and modified, by the Bank against
      Borrower.

6.    The Security Agreement shall continue to secure all sums owing to the Bank
      by the Borrower pursuant to the terms and conditions of the Note and the
      Loan Agreement, together with all interest thereon, in accordance with the
      terms and conditions of the Note and all other sums due and owing or to
      become due and owing pursuant to the terms and conditions of this
      Amendment, the Loan Agreement, the Security Agreement and the Note,
      including but not necessarily limited to any further or additional
      extensions or renewals thereof.

7.    Borrower and each Guarantor acknowledge that the principal balance
      remaining unpaid on the Note as of the Effective Date hereof is - zero-
      ($0.00) Dollars.

8.    Each Guarantor hereby acknowledges, ratifies and reaffirms each and every
      term, covenant, agreement, provision, and condition of their respective
      Guaranty and any collateral security documents securing such guaranty,
      including but not limited to the security agreement dated of even date
      with the Guaranty ("Collateral Security Documents"), and the Loan
      Documents and hereby acknowledges and agrees that the Guaranty guarantees
      to the Bank the repayment of all sums due and owing to the Bank pursuant
      to the terms, conditions and covenants of the Note and the performance of
      the terms and covenants of the balance of the Loan Documents. Each
      Guarantor hereby affirms and agrees that each such Guaranty is
      unconditional and unlimited and that such Guaranty along with the
      Collateral Security Documents related thereto are fully enforceable
      against such Guarantor. Each Guarantor hereby further affirms and agrees
      and that such Guarantor has no defense, right of offset, claim, cause of
      action or otherwise to preclude the absolute and immediate enforcement of
      the Guaranty and/or the Collateral Security Documents supporting such
      Guaranty by the Bank.

9.    On or before the execution hereof, Borrower shall pay to the Bank, the
      Bank's costs including its reasonable attorneys' fees, incurred in
      drafting this Amendment and related documents, if any.

10.   Except as herein specifically modified, amended or extended, all terms and
      conditions of

                                       -3-
<PAGE>

                                                                    Exhibit 10.8

      the Loan Documents shall otherwise remain unchanged and in full force and
      effect.

11.   Notwithstanding anything to the contrary herein, this Amendment or any
      failure by the Bank to exercise any of its rights upon an event of default
      under the Loan Documents or the Guaranty or the Collateral Security
      Documents, whether prior to or subsequent to the effective date of this
      Amendment, shall not be deemed a waiver of the Bank's available remedies
      under the Loan Documents, the Guaranty, or the Collateral Security
      DOCUMENTS or any amendments thereof, or any other documents executed in
      conjunction therewith or incident thereto.

12.   All the terms of this Amendment shall be binding upon and inure to the
      benefit of and be enforceable by the successors and assigns of the parties
      hereto, to the extent assignment is permitted pursuant to the Loan
      Documents or the Guaranty.

13.   This Amendment is being executed in and is intended to be performed in the
      State of Minnesota and shall be construed and enforced in accordance with
      the laws of such state.

14.   This Amendment contains the entire agreement between the parties with
      respect to the covenants and promises contemplated herein and may be
      amended only in a writing signed by each of the parties hereto.

      IN WITNESS WHEREOF, the parties have executed this Amendment on the day
and year first above written.

                                       BORROWER:

                                       WSI INDUSTRIES, INC., a Minnesota
                                       corporation

                                       By:   /s/  Paul D. Sheely
                                             -----------------------------------
                                             Paul D. Sheely
                                       Its:  Chief Financial Officer

                                       GUARANTOR:

                                       TAURUS NUMERIC TOOL, INC., a
                                       Minnesota corporation

                                       By:   /s/  Paul D. Sheely
                                             -----------------------------------
                                             Paul D. Sheely
                                       Its:  Chief Financial Officer

                                       -4-
<PAGE>

                                                                    Exhibit 10.8

                                       WSI ROCHESTER, INC., a Minnesota
                                       corporation

                                       By:   /s/  Paul D. Sheely
                                             -----------------------------------
                                             Paul D. Sheely
                                       Its:  Chief Financial Officer

                                       EXCEL BANK MINNESOTA, a
                                       Minnesota banking corporation,

                                       By:   /s/ Daniel D. Poppe
                                             -----------------------------------
                                             Daniel D. Poppe
                                       Its:  Managing Director

                                       -5-<PAGE>
                                                                   Exhibit 10.28

                          CONSULTING SERVICES AGREEMENT
                        EFFECTIVE DATE: JANUARY 17, 2004

         THIS CONSULTING SERVICES AGREEMENT (the "Agreement") is made by and
between OPLINK COMMUNICATIONS, INC. ("Client"), a Delaware corporation, and
ALLEN HSU, an individual ("Consultant").

     1. ENGAGEMENT OF SERVICES. Client may issue Project Assignments to
Consultant in the form attached to this Agreement as EXHIBIT A ("Project
Assignment"). Subject to the terms of this Agreement, Consultant will render the
services set forth in Project Assignment(s) accepted by Consultant by the
completion dates set forth therein.

     2. COMPENSATION. Consultant will be compensated as set forth in each
Project Assignment for services rendered pursuant to this Agreement. Consultant
will be reimbursed only for expenses that are expressly provided for in a
Project Assignment or that have been approved in advance in writing by Client,
provided Consultant has furnished such documentation for authorized expenses as
Client may reasonably request. Upon termination of this Agreement for any
reason, Consultant will be compensated on the basis stated in the Project
Assignment(s) for work that has been completed.

     3. OWNERSHIP OF WORK PRODUCT. Consultant hereby assigns to Client all
right, title and interest in and to any work product created by Consultant, or
to which Consultant contributes, pursuant to this Agreement (the "Work
Product"), including all copyrights, trademarks and other intellectual property
rights contained therein. Consultant agrees to execute, at Client's request and
expense, all documents and other instruments necessary or desirable to confirm
such assignment, including without limitation, the copyright assignment set
forth as EXHIBIT B ("Assignment of Copyright"). In the event that Consultant
does not, for any reason, execute such documents within a reasonable time of
Client's request, Consultant hereby irrevocably appoints Client as Consultant's
attorney-in-fact for the purpose of executing such documents on Consultant's
behalf, which appointment is coupled with an interest.

     4. ARTIST'S AND MORAL RIGHTS. If Consultant has any rights, including
without limitation "artist's rights" or "moral rights," in the Work Product
which cannot be assigned, Consultant agrees to waive enforcement worldwide of
such rights against Client. In the event that Consultant has any such rights,
that cannot be assigned or waived, Consultant hereby grants to Client an
exclusive, worldwide, irrevocable, perpetual license to use, reproduce,
distribute, create derivative works of, publicly perform and publicly display
the Work Product in any medium or format, whether now known of later developed.

     5. REPRESENTATIONS AND WARRANTIES. Consultant represents and warrants that:
(a) Consultant has the right and unrestricted ability to assign the Work Product
to Client as set forth in Section 3 (including without limitation the right to
assign any Work Product created by Consultant's employees or contractors), and
(b) the Work Product will not infringe upon any copyright, patent, trademark,
right of publicity or privacy, or any other proprietary right of any person,
whether contractual, statutory or common law. Consultant agrees to indemnify
Client from any and all damages, costs, claims, expenses or other liability
(including reasonable attorneys' fees) arising from or relating to the breach or
alleged breach by Consultant of the representations and warranties set forth in
this Section 5.
<PAGE>

     6. INDEPENDENT CONTRACTOR RELATIONSHIP. Consultant's relationship with
Client is that of an independent contractor, and nothing in this Agreement is
intended to, or should be construed to, create a partnership, agency, joint
venture or employment relationship. Consultant will not be entitled to any of
the benefits which Client may make available to its employees, including, but
not limited to, group health or life insurance, profit-sharing or retirement
benefits. Consultant is not authorized to make any representation, contract or
commitment on behalf of Client unless specifically requested or authorized in
writing to do so by a Client officer. Consultant is solely responsible for, and
will file, on a timely basis, all tax returns and payments required to be filed
with, or made to, any federal, foreign, state or local tax authority with
respect to the performance of services and receipt of fees under this Agreement.
Consultant is solely responsible for, and must maintain adequate records of,
expenses incurred in the course of performing services under this Agreement. No
part of Consultant's compensation will be subject to withholding by Client for
the payment of any social security, federal, foreign, state or any other
employee payroll taxes. Client will regularly report amounts paid to Consultant
by filing Form 1099-MISC with the Internal Revenue Service as required by law.

     7. CONFIDENTIAL INFORMATION. Consultant agrees to hold Client's
Confidential Information in strict confidence and not to disclose such
Confidential Information to any third parties. "Confidential Information" as
used in this Agreement shall mean all information disclosed by Client to
Consultant that is not generally known in the Client's trade or industry and
shall include, without limitation, (a) concepts and ideas relating to the
development and distribution of content in any medium or to the current, future
and proposed products or services of Client or its subsidiaries or affiliates;
(b) trade secrets, drawings, inventions, know-how, software programs, and
software source documents; (c) information regarding plans for research,
development, new service offerings or products, marketing and selling, business
plans, business forecasts, budgets and unpublished financial statements,
licenses and distribution arrangements, prices and costs, suppliers and
customers; (d) existence of any business discussions, negotiations or agreements
between the parties; and (e) any information regarding the skills and
compensation of employees, contractors or other agents of the Client or its
subsidiaries or affiliates. Confidential Information also includes proprietary
or confidential information of any third party who may disclose such information
to Client or Consultant in the course of Client's business. Consultant's
obligations set forth in this Section 7 shall not apply with respect to any
portion of the Confidential Information that Consultant can document by
competent proof that such portion: (a) was in the public domain at the time it
was communicated to Consultant by Client; (b) entered the public domain through
no fault of Consultant, subsequent to the time it was communicated to Consultant
by Client; (c) was in Consultant's possession free of any obligation of
confidence at the time it was communicated to Consultant by Client; (d) was
rightfully communicated to Consultant free of any obligation of confidence
subsequent to the time it was communicated to Consultant by the Client; (e) was
developed by employees or agents of Consultant independently of and without
reference to any information communicated to Consultant by Client; or (f) was
communicated by Client to an unaffiliated third party free of any obligation of
confidence. In addition, Consultant may disclose Client's Confidential
Information in response to a valid order by a court or other governmental body,
or as otherwise required by law. All Confidential Information furnished to
Consultant by Client is the sole and exclusive property of Client or its
suppliers or customers. Upon request by Client, Consultant agrees to promptly
deliver to Client the original and any copies of such Confidential Information.
Consultant further agrees to immediately return to Client all Client documents

<PAGE>

(and all copies thereof) and other Client property in Consultant's possession or
control, including, but not limited to: Client files, notes, memoranda,
correspondence, agreements, draft documents, notebooks, logs, drawings, records,
plans, proposals, reports, forecasts, financial information, sales and marketing
information, research and development information, personnel information,
specifications, computer-recorded information, tangible property and equipment,
credit cards, entry cards, identification badges and keys; and any materials of
any kind that contain or embody any proprietary or confidential information of
Client (and all reproductions thereof in whole or in part); provided, however,
that Consultant is permitted during the term of this Agreement to retain
possession of any Client documents or property necessary to carry out
Consultant's duties under this Agreement.

     8. NO CONFLICT OF INTEREST. During the term of this Agreement, Consultant
will not accept work, enter into a contract, or accept an obligation from any
third party, inconsistent or incompatible with Consultant's obligations, or the
scope of services rendered for Client, under this Agreement. Consultant warrants
that there is no other contract or duty on his part inconsistent with this
Agreement. Consultant agrees to indemnify Client from any and all loss or
liability incurred by reason of any alleged breach by Consultant of any services
agreement with any third party.

     9. TERM AND TERMINATION.

          9.1 TERM. The term of this Agreement is for one (1) year from the
Effective Date set forth above, unless earlier terminated as provided in this
Agreement.

          9.2 TERMINATION BY CLIENT. Client may terminate this Agreement with or
without cause, at any time upon fifteen (15) days prior written notice to
Consultant, or immediately in its sole discretion upon Consultant's material
breach of Section 7 ("Confidential Information") or 10 ("Noninterference with
Business").

          9.3 SURVIVAL. The rights and obligations contained in Sections 3
("Ownership of Work Product"), 4 ("Artist's and Moral Rights"), 5
("Representations and Warranties"), 7 ("Confidential Information") and 10
("Noninterference with Business") will survive any termination or expiration of
this Agreement.

     10. NONINTERFERENCE WITH BUSINESS. During this Agreement, and for a period
of two (2) years immediately following its termination, Consultant agrees not to
interfere with the business of Client in any manner. By way of example and not
of limitation, Consultant agrees not to solicit or induce any employee or
independent contractor to terminate or breach an employment, contractual or
other relationship with Client.

     11. SUCCESSORS AND ASSIGNS. Consultant may not subcontract or otherwise
delegate its obligations under this Agreement without Client's prior written
consent. Subject to the foregoing, this Agreement will be for the benefit of
Client's successors and assigns, and will be binding on Consultant's assignees.

     12. NOTICES. Any notice required or permitted by this Agreement shall be in
writing and shall be delivered as follows with notice deemed given as indicated:
(i) by personal delivery when delivered personally; (ii) by overnight courier
upon written verification of receipt; (iii) by telecopy or facsimile
transmission upon acknowledgment of receipt of electronic transmission; or (iv)
by certified or registered mail, return receipt requested, upon verification of
receipt. Notice shall be sent to the Client at its San Jose headquarters, and to
Consultant at the address set forth below or such other address as Consultant
may specify in writing.

     13. GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the United States of America and by the laws of the State of California,
as such laws are applied to agreements entered into and to be performed entirely
within California between California residents.
<PAGE>

     14. SEVERABILITY. Should any provisions of this Agreement be held by a
court of law to be illegal, invalid or unenforceable, the legality, validity and
enforceability of the remaining provisions of this Agreement shall not be
affected or impaired thereby.

     15. WAIVER. The waiver by Client of a breach of any provision of this
Agreement by Consultant shall not operate or be construed as a waiver of any
other or subsequent breach by Consultant.

     16. INJUNCTIVE RELIEF FOR BREACH. Consultant's obligations under this
Agreement are of a unique character that gives them particular value; breach of
any of such obligations will result in irreparable and continuing damage to
Client for which there will be no adequate remedy at law; and, in the event of
such breach, Client will be entitled to injunctive relief and/or a decree for
specific performance, and such other and further relief as may be proper
(including monetary damages if appropriate).

     17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties relating to this subject matter and supersedes all prior or
contemporaneous oral or written agreements concerning such subject matter. The
terms of this Agreement will govern all services undertaken by Consultant for
Client; PROVIDED, HOWEVER, THAT in the event of any conflict between the terms
of this Agreement and any Project Assignment, the terms of the applicable
Project Assignment will control. This Agreement may only be changed by mutual
agreement of authorized representatives of the parties in writing.

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

OPLINK COMMUNICATIONS, INC.              ALLEN HSU

By: /s/ Joseph Y. Liu                     /s/ Allen Hsu
   ---------------------------------     ---------------------------------

Name: Joseph Y. Liu                      Address:
     -------------------------------             -------------------------

Title: CEO                               Address:
      ------------------------------             -------------------------
<PAGE>

                                    EXHIBIT A

                              PROJECT ASSIGNMENT #1
                       UNDER CONSULTING SERVICES AGREEMENT

                             DATED: JANUARY 17, 2004

PROJECT:

Consultant shall render such services as Client may from time to time request,
including (without limitation) the following: providing strategic advice to
Client concerning Asian affairs; assisting with Client shareholder
communications; identifying and building business development opportunities for
Client in Asia; and helping to maintain and develop Client's customer
relationships and goodwill in Asia. Services required shall not exceed [fifteen
(15)] hours per month.

COMPENSATION:

Consultant shall be compensated in the form of accelerated vesting of all shares
subject to the stock options that he was granted by Client while serving as a
member of Client's Board of Directors (the "Options"), such that all shares
subject to the Options shall be fully vested and exercisable as of the Effective
Date of this Agreement. The Options shall continue to be governed in all
respects by the terms of the applicable stock option agreements, grant notices,
and plan documents, and shall also be subject to the extended post-termination
exercise period provided to members of Client's Board of Directors as approved
on March 18, 2002.

EXPENSES:

Consultant shall be reimbursed for the following, as approved in advance in
writing by Client:

         1.       Outside services at cost.
         2.       Direct charges at cost.
         3.       Travel and subsistence at cost.

Consultant shall invoice Client monthly for expenses and shall provide such
reasonable receipts or other documentation of expenses as Client might request.

         IN WITNESS WHEREOF, the parties have executed this Project Assignment
as of the date first written above.

OPLINK COMMUNICATIONS, INC.              ALLEN HSU

By: /s/ Joseph Y. Liu                     /s/ Allen Hsu
   ---------------------------------     ---------------------------------

Name: Joseph Y. Liu
     -------------------------------

Title: CEO
      ------------------------------

<PAGE>

                                                             B-1
                                    EXHIBIT B

                             ASSIGNMENT OF COPYRIGHT

For good and valuable consideration which has been received, the undersigned
sells, assigns and transfers to Client and its successors and assigns, the
copyright in and to the following work, which was created by the following
indicated author(s):

Title:                    N/A
      ------------------------------------------------------------------------

Author(s):                    N/A
          --------------------------------------------------------------------

Copyright Office Identification No. (if any):
                                             ---------------------------------

and all of the right, title and interest of the undersigned, vested and
contingent, therein and thereto.

Executed this _________ day of ____________________, 20__.

                                Signature:  /s/ Allen Hsu
                                           -------------------------------------

                                Printed Name:  Allen Hsu
                                              ----------------------------------

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