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                                                                    EXHIBIT 10.2

                    EMPLOYMENT (CHANGE IN CONTROL) AGREEMENT

         AGREEMENT made effective as of this 11th day of January, 2001 by and
between WSI Industries, Inc., a Minnesota corporation with its principal offices
at Wayzata, Minnesota ("WSI") and Paul Sheely (the "Executive").

         WHEREAS, WSI considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the best interests
of WSI and its shareholders; and

         WHEREAS, the Executive has made and is expected to make, due to
Executive's intimate knowledge of the business and affairs of WSI, its policies,
methods, personnel and problems, a significant contribution to the
profitability, growth and financial strength of WSI; and

         WHEREAS, WSI, as a publicly held corporation, recognizes that the
possibility of a Change in Control may exist and that such possibility and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of the Executive in the performance of the Executive's
duties to the detriment of WSI and its shareholders; and

         WHEREAS, Executive is willing to remain in the employ of WSI upon the
understanding that WSI will provide income security if the Executive's
employment is terminated under certain terms and conditions; and

         WHEREAS, it is in the best interests of WSI and its stockholders to
reinforce and encourage the continued attention and dedication of management
personnel, including Executive, to their assigned duties without distraction and
to ensure the continued availability to WSI of the Executive in the event of a
Change in Control.

         THEREFORE, in consideration of the foregoing and other respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:

         1. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect until January 11, 2002. After January 11, 2002,
this Agreement shall automatically renew for successive one-year periods unless
WSI notifies the Executive of termination of the Agreement at least sixty (60)
days prior to the end of the initial term or any renewal term. Notwithstanding
the preceding sentence, if a Change in Control occurs, this Agreement shall
continue in effect for a period of 12 months from the date of the occurrence of
a Change in Control. Notwithstanding anything herein to the contrary, the
Executive's employment shall be at all times at the will of WSI, and nothing in
this Agreement shall prohibit or limit the right of WSI or Executive, prior to a
Change in Control, to terminate the employment of Executive for any reason or
for no reason.

         2. Change in Control. No benefits shall be payable hereunder unless
there shall have been a Change in Control, as set forth below.

                  (a) For purposes of this Agreement, a "Change in Control" of
         WSI shall be deemed to occur when and if any of the following occur:

                           (i) any "person" (as such term is used in Sections
                  13(d) and 14(d) of the Exchange Act) becomes a "beneficial
                  owner" (as defined in Rule 13d-3 under the Exchange Act),
                  directly or indirectly, of securities of WSI representing 50%
                  or more of the combined voting power of WSI's then outstanding
                  securities;

                           (ii) there ceases to be a majority of the Board of
                  Directors comprised of: (A) individuals who on the date hereof
                  constituted the Board of WSI, and (B) any new director (other
                  than a director whose initial assumption of office is in
                  connection with an actual or threatened contest, including but
                  not limited to a proxy or consent solicitation, relating to
                  the election of directors of WSI or a settlement of such
                  contest or consent solicitation) who subsequently was elected
                  or nominated for election by a majority of the directors who
                  held such office immediately prior to a Change in Control (the
                  individuals designated in (A) and (B) shall be referred to as
                  the "Incumbent Directors"); or

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                           (iii) WSI disposes of at least 75% of its assets,
                  other than to an entity owned 50% or greater by WSI or any of
                  its subsidiaries.

                  (b) A Change in Control which arises from a transaction or
         series of transactions which are not authorized, recommended or
         approved by formal action taken by a majority of the Incumbent
         Directors shall be referred to as an "Unapproved Change in Control." A
         Change in Control which has been authorized, recommended or approved by
         a majority of the Incumbent Directors shall be referred to as an
         "Approved Change in Control."

         3. Termination Following Change in Control. If a Change in Control
shall have occurred during the term of this Agreement and Executive's employment
is thereafter terminated, Executive shall be entitled to the benefits provided
in subsection 4(d) unless such termination is (A) because of Executive's Death
or Retirement, (B) by WSI for Cause or Disability, or (C) by Executive other
than for Good Reason.

                  (a) Disability; Retirement. If, as a result of incapacity due
         to physical or mental illness, the Executive shall have been absent
         from the full-time performance of Executive's duties with WSI for six
         consecutive months, and within 30 days after written Notice of
         Termination is given the Executive shall not have returned to the
         full-time performance of the Executive's duties, WSI may terminate
         Executive's employment for "Disability". Any question as to the
         existence of Executive's Disability upon which Executive and WSI cannot
         agree shall be determined by a qualified independent physician selected
         by Executive (or, if the Executive is unable to make such selection, it
         shall be made by any adult member of the Executive's immediate family),
         and approved by WSI. The determination of such physician made in
         writing to WSI and to Executive shall be final and conclusive for all
         purposes of this Agreement. Termination by Executive of Executive's
         employment based on "Retirement" shall mean retirement at or after the
         date the Executive has attained age 65.

                  (b) Cause. Termination by WSI of Executive's employment for
         "Cause" shall mean: (i) the willful and continued failure of Executive
         to perform his essential duties; (ii) the willful engaging by Executive
         in illegal conduct, or (iii) willful misconduct materially injurious to
         WSI, which, in the case of clause (i) and (iii), the Executive has not
         cured, in the sole opinion of the Board, determined in good faith,
         within 10 days of receipt of the Notice of Termination. An act of
         Executive shall not be deemed "willful" unless done or omitted to be
         done by Executive not in good faith and without reasonable belief that
         the act or omission was in WSI's best interests.

                  (c) Good Reason. Executive shall be entitled to terminate his
         employment for Good Reason. For purposes of this Agreement, "Good
         Reason" shall mean, without Executive's express written consent, any of
         the following:

                           (i) the assignment to Executive of any duties
                  inconsistent with Executive's status or position with WSI, or
                  a substantial reduction in the nature or status of Executive's
                  responsibilities from those in effect immediately prior to the
                  Change in Control;

                           (ii) a reduction by WSI in Executive's annual base
                  salary in effect immediately prior to a Change in Control;

                           (iii) the relocation of Executive's principal
                  executive offices to a location more than fifty miles from
                  Executive's principal office prior to the Change in Control,
                  except for required travel on WSI's business to an extent
                  substantially consistent with Executive's prior business
                  travel obligations;

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                           (iv) the failure by WSI to continue to provide
                  Executive with benefits substantially similar to those enjoyed
                  by Executive under any of WSI's pension, life insurance,
                  medical, health and accident, disability, deferred
                  compensation, incentive awards, incentive stock options, or
                  savings plans in which Executive was participating at the time
                  of the Change in Control, the taking of any action by WSI
                  which would directly or indirectly materially reduce any of
                  such benefits or deprive Executive of any material fringe
                  benefit enjoyed at the time of the Change in Control, or the
                  failure by WSI to provide Executive with the number of paid
                  vacation days to which Executive is entitled at the time of
                  the Change in Control, provided, however, that WSI may amend
                  any such plan or programs as long as such amendments do not
                  reduce any benefits to which Executive would be entitled upon
                  termination;

                           (v) the failure of WSI to obtain a satisfactory
                  agreement from any successor to assume and agree to perform
                  this Agreement, as contemplated in Section 7; or

                           (vi) any purported termination of Executive's
                  employment which is not made pursuant to a Notice of
                  Termination satisfying the requirements of subsection (e)
                  below; for purposes of this Agreement, no such purported
                  termination shall be effective.

                  (d) Voluntary Termination Deemed Good Reason. If an Unapproved
         Change in Control occurs, Executive may voluntarily terminate his
         employment for any reason during the period commencing on the 91st day
         following a Change in Control and ending on the 180th day following a
         Change in Control. Any such termination shall be deemed "Good Reason"
         for all purposes of this Agreement.

                  (e) Notice of Termination. Any purported termination of
         Executive's employment by WSI or by Executive shall be communicated by
         written Notice of Termination to the other party hereto in accordance
         with Section 8. For purposes of this Agreement, a "Notice of
         Termination" shall mean a notice which shall indicate the specific
         termination provision in this Agreement relied upon and shall set forth
         the facts and circumstances claimed to provide a basis for termination
         of Executive's employment.

                  (f) Date of Termination. For purposes of this Agreement, "Date
         of Termination" shall mean:

                           (i) if Executive's employment is terminated for
                  Disability, 30 days after Notice of Termination is given
                  (provided that the Executive shall not have returned to the
                  full-time performance of the Executive's duties during such 30
                  day period); and

                           (ii) if Executive's employment is terminated pursuant
                  to subsections (b), (c) or (d) above or for any other reason
                  (other than Disability), the date specified in the Notice of
                  Termination (which, in the case of a termination pursuant to
                  subsection (b) above shall not be less than 10 days, and in
                  the case of a termination pursuant to subsection (c) or (d)
                  above shall not be less than 10 nor more than 30 days,
                  respectively, from the date such Notice of Termination is
                  given).

                  (g) Dispute of Termination. If, within 10 days after any
         Notice of Termination is given, the party receiving such Notice of
         Termination notifies the other party in good faith that a dispute
         exists concerning the termination, the Date of Termination shall be the
         date on which the dispute is finally determined, either by mutual
         written agreement of the parties, or by a final judgement, order or
         decree of a court of competent jurisdiction in accordance with
         subsection 11(a) (which is not appealable or the time for appeal
         therefrom having expired and no appeal having been perfected);
         provided, that the date of Termination shall be extended by a notice of
         dispute only if such notice is given in good faith and the party giving
         such notice pursues the resolution of such dispute with reasonable
         diligence. Notwithstanding the pendency of any such dispute, WSI shall
         continue to pay Executive full compensation in effect when the notice
         giving rise to the dispute was given (including, but not limited to,
         base salary) and continue Executive as a participant in all
         compensation, benefit and insurance plans in which the Executive was
         participating when the notice giving rise to the dispute was given,
         until the dispute is finally resolved in

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         accordance with this subsection. Amounts paid under this subsection are
         in addition to all other amounts due under this Agreement and shall not
         be offset against or reduce any other amounts under this Agreement.

         4. Compensation Upon Termination or During Disability. Following a
Change in Control of WSI, as defined in subsection 2(a), upon termination of
Executive's employment or during a period of Disability, Executive shall be
entitled to the following benefits:

                  (a) During any period that Executive fails to perform
         full-time duties with WSI as a result of a Disability, WSI shall pay
         Executive the base salary of the Executive at the rate in effect at the
         commencement of any such period, until such time as the Executive is
         determined to be eligible for long term disability benefits in
         accordance with WSI's insurance programs then in effect.

                  (b) If Executive's employment shall be terminated by WSI for
         Cause or by Executive other than for Good Reason or Retirement, WSI
         shall pay to Executive his full base salary through the Date of
         Termination at the rate in effect at the time Notice of Termination is
         given and WSI shall have no further obligation to Executive under this
         Agreement.

                  (c) If Executive's employment shall be terminated by WSI for
         Disability or by Executive for Retirement, or by reason of Death, WSI
         shall immediately commence payment to the Executive (or Executive's
         designated beneficiaries or estate, if no beneficiary is designated)
         any and all benefits to which the Executive is entitled under WSI's
         retirement and insurance programs then in effect.

                  (d) If Executive's employment by WSI shall be terminated (A)
         by WSI other than for Cause or Disability or (B) by Executive for Good
         Reason, then Executive shall be entitled to the benefits provided
         below:

                           (i) WSI shall pay Executive the Executive's full base
                  salary through the Date of Termination at the rate in effect
                  at the time the Notice of Termination is given;

                           (ii) In lieu of any further salary payments for
                  periods subsequent to the Date of Termination, WSI shall pay a
                  severance payment (the "Severance Payment") equal to the
                  amount described in (A) or (B) below, whichever is applicable:
                  (A) if an Unapproved Change in Control occurs, 2.99 times the
                  average of the annual Compensation (as defined below) paid to
                  Executive by WSI (or any corporation ("Affiliate") affiliated
                  with WSI within the meaning of Section 1504 of the Internal
                  Revenue Code of 1986, as amended (the "Code")) for the five
                  calendar years (or, if Executive has been employed by WSI for
                  less than five years, the number of complete calendar years of
                  employment or portions thereof calculated on an annualized
                  basis) (the "Base Period") preceding the earlier of the
                  calendar year in which a Change in Control of WSI occurred or
                  the calendar year of the Date of Termination; or (B) if an
                  Approved Change in Control occurs, 1.0 times the average of
                  the annual Compensation (as defined below) for the Base
                  Period. Such average (including the effect of bonuses paid in
                  the Base Period) shall be determined in accordance with the
                  temporary or final regulations promulgated under Section
                  280G(e) of the Code. For purposes of this Section 4,
                  "Compensation" payable to Executive by WSI (or an Affiliate)
                  shall mean every type and form of compensation includable in
                  Executive's gross income for federal income tax purposes for
                  each year, shall include any voluntary salary deferral
                  contributions to WSI's cash or deferred arrangement under the
                  WSI profit sharing plan (the 401(k) contributions) and the WSI
                  cafeteria plan, but shall exclude taxable compensation
                  recognized as the result of the exercise of stock options or
                  sale of the stocks acquired or any payments actually or
                  constructively received with respect to a plan of deferred
                  compensation between WSI and Executive. The Severance Payment
                  shall be made within 60 days after the Date of Termination, or
                  such earlier date as any required rescission period in respect
                  of the release given by Executive under Section 5 has expired.

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                           (iii) For the period of (A) 12 months following the
                  Termination Date in the event of an Approved Change in Control
                  or (B) 36 months following the Termination Date in the event
                  of an Unapproved Change in Control, Executive shall be
                  entitled to continue participation in the life, disability,
                  accident and health insurance benefit plans of WSI
                  substantially similar to those which the Executive is
                  receiving or entitled to receive immediately prior to the
                  Notice of Termination. WSI and Executive shall share the cost
                  associated with such coverage as if Executive were still
                  actively employed by WSI. If Executive cannot be covered under
                  any of WSI's group plans or policies, WSI shall reimburse
                  Executive for his full cost of obtaining comparable
                  alternative group or individual coverage elsewhere, less any
                  contribution that Executive would have been required to make
                  under WSI's group plans or policies. Benefits otherwise
                  receivable by Executive pursuant to this paragraph (iii) shall
                  be reduced to the extent comparable benefits are actually
                  received by Executive during such period, and any such
                  benefits actually received by Executive shall be reported to
                  WSI.

                           (iv) Notwithstanding the foregoing, the Severance
                  Payment shall be reduced to that maximum amount permitted such
                  that no portion of the Severance Payment, together with any
                  other payment or the value of any benefit received or to be
                  received by Executive (whether payable pursuant to the terms
                  of this Agreement, any other plan, agreement or arrangement
                  with WSI or an Affiliate) that is contingent upon a change in
                  control of WSI as that term is defined in Section 280G of the
                  Code would constitute a "parachute payment" within the meaning
                  of Section 280G(b)(2) of the Code or would be nondeductible
                  solely by reason of the application of such Section 280G. In
                  determining the amount of the Severance Payment, in full or as
                  partially reduced as the case may be, payable pursuant to this
                  Section 4(d), the opinion of tax counsel selected by WSI and
                  acceptable to Executive with respect to all issues arising in
                  connection with the application of Section 280G of the Code to
                  such payments and benefits shall be final and binding on the
                  parties. The Executive may elect to have the benefit
                  continuation under Section 4(d)(iii) reduced or eliminated
                  prior to any reduction of the Severance Payment.

                           (v) If it is established pursuant to a final
                  determination of a court or an Internal Revenue Service
                  proceeding that, notwithstanding the good faith of Executive
                  and WSI in applying the terms of this Subsection 4(d), any
                  portion of the Severance Payment constitutes a "parachute
                  payments" and would result in part or all of such Severance
                  Payment being nondeductible by WSI or its Affiliates by reason
                  of Section 280G of the Code, then Executive shall repay to WSI
                  upon demand an amount equal to the sum of: (1) that portion of
                  the Severance Payment in excess of the maximum amount that
                  could have been paid to or for the Executive's benefit without
                  any portion constituting a "parachute payment" and being
                  nondeductible by reason of section 280G of the Code; and (2)
                  interest on the amount set forth in clause (1) of this
                  sentence at the applicable Federal rate (as defined in section
                  1274(d) of the Code) from the date of Executive's receipt of
                  such excess until the date of such payment.

                           (vi) The Severance Payment shall be in lieu of and
                  offset the amount of any payment or other benefits to which
                  the Executive may be entitled to in connection with the
                  termination of employment pursuant to the provisions of WSI's
                  Severance Pay Plan, as amended from time to time, or any
                  successor to such policy.

                  (e) Executive shall not be required to mitigate the amount of
         any payment provided for in this Section 4 by seeking other employment
         or otherwise, nor shall the amount of any payment or benefit provided
         for in this Section 4 be reduced by any compensation earned by
         Executive as the result of employment by another employer or by
         retirement benefits after the Date of Termination, or otherwise except
         as specifically provided in this Section 4.

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                  (f) In addition to all other amounts payable to Executive
         under this Section 4, Executive shall be entitled to receive all
         benefits payable to the Executive under the WSI, Inc. Employee Savings
         Plan and any other plan or agreement relating to retirement benefits or
         otherwise generally applicable to executive employees.

         5. General Release. Executive agrees that the amounts payable to
Executive under Section 4 shall be contingent upon the execution by Executive of
a release agreement with WSI, which release agreement shall include language
releasing and holding WSI and its affiliates, officers, directors, shareholders,
employees, agents and insurers harmless from any and all claims, comply with all
applicable laws and contain other provisions standard in such agreements.

         6. Funding of Payments. In order to assure the performance by WSI or
its successor of its obligations under this Agreement, WSI shall, no later than
immediately prior to the closing of the transaction that constitutes an
Unapproved Change in Control, deposit in a so-called "rabbi trust" or similar
escrow arrangement an amount equal to the maximum payment that will be due the
Executive under the terms hereof. Under a written trust instrument, the Trustee
shall be instructed to pay to the Executive (or the Executive's legal
representative, as the case may be) the amount to which the Executive shall be
entitled under the terms hereof, and the balance, if any, of the trust not so
paid or reserved for payment shall be repaid to WSI. If and to the extent there
are not amounts in trust sufficient to pay Executive under this Agreement, WSI
shall remain liable for any and all payments due to Executive. In accordance
with the terms of such trust, at all times during the term of this Agreement
Executive shall have no rights, other than as an unsecured general creditor of
WSI, to any amounts held in trust and all trust assets shall be general assets
of WSI and subject to the claims of creditors of WSI. With respect to an
Approved Change in Control, WSI's obligations in this Section 6 shall not be
mandatory but rather shall be permissive.

         7. Successors; Binding Agreement.

                  (a) WSI will require any successor (whether direct or
         indirect, by purchase, merger, consolidation or otherwise) to all or
         substantially all of the business and/or assets of WSI to expressly
         assume and agree to perform this Agreement in the same manner and to
         the same extent that WSI would be required to perform it if no such
         succession had taken place. Failure of WSI to obtain such assumption
         and agreement prior to the effectiveness of any such succession shall
         be a breach of this Agreement and shall entitle Executive to
         compensation from WSI in the same amount and on the same terms as he
         would be entitled hereunder if he terminated his employment for Good
         Reason following a Change in Control, except that for purposes of
         implementing the foregoing, the date on which any such succession
         becomes effective shall be deemed the Date of Termination.

                  (b) This Agreement shall inure to the benefit of and be
         enforceable by Executive's personal or legal representatives,
         successors, heirs, and designated beneficiaries. If executive should
         die while any amount would still be payable to Executive hereunder if
         the Executive had continued to live, all such amounts, unless otherwise
         provided herein, shall be paid in accordance with the terms of this
         Agreement to the Executive's designated beneficiaries, or, if there is
         no such designated beneficiary, to the Executive's estate.

         8. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage pre-paid,
addressed to the last known residence address of the Executive or in the case of
WSI, to its principal office to the attention of each of the then directors of
WSI with a copy to its Secretary, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

         9. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the parties. No waiver by either party thereto at
anytime of any breach by the other party to this Agreement of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar

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provisions or conditions at the same or at any prior or similar time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Minnesota.

         10. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceablity of any other
provision of this Agreement, which shall remain in full force and effect.

         11. Arbitration and Award of Attorneys' Fees.

                  (a) Any dispute arising between the parties relating to this
         Agreement shall be resolved by binding arbitration held in the City of
         Minneapolis pursuant to the Rules of the American Arbitration
         Association, except as hereinafter expressly modified. If the disputing
         and responding parties are unable to agree upon a resolution within
         forty-five business days after the responding party's receipt of
         written notice from the disputing party setting forth the nature of the
         dispute, within the following ten business days the disputing and
         responding parties shall select a mutually acceptable single arbitrator
         to resolve the dispute or, if the parties fail or are unable to do so,
         each shall within the following ten business days select a single
         arbitrator, and the two so selected shall select a third arbitrator
         within the following ten business days. Such single arbitrator or, as
         the case may be, panel of three arbitrators acting by majority
         decision, shall resolve the dispute within sixty days after the date
         such arbitrator, or the last of them so selected, is selected, or as
         soon thereafter as practicable. If either party refuses or fails to
         select an arbitrator within the time therefor, the other party may do
         so on such refusing or failing party's behalf. The arbitrators shall
         have no power to award any punitive or exemplary damages but may
         construe or interpret but shall not ignore or vary the terms of this
         Agreement and shall be bound by controlling law. The parties
         acknowledge the Executive's failure to comply with any confidentiality,
         non-solicit, and non-compete provisions of any agreement to which the
         Executive is bound will cause immediate and irreparable injury to WSI
         and that therefore the arbitrators, or a court of competent
         jurisdiction if an arbitration panel cannot be immediately convened,
         will be empowered to provide injunctive relief, including temporary or
         preliminary relief, to restrain any such failure to comply. The
         arbitration award or other resolution may be entered as a judgment at
         the request of the prevailing party by any court of competent
         jurisdiction in Minnesota or elsewhere.

                  (b) In the event WSI fails to pay Executive any amounts owing
         to Executive under this Agreement or to provide Executive any benefits
         to which Executive is ultimately determined, by settlement, mediation,
         arbitration, or by any court or other decision making body with
         jurisdiction, to be entitled to under this Agreement, WSI shall pay the
         legal expenses (including reasonable attorneys' fees, court costs and
         other out-of-pocket expenses), incurred by Executive to enforce his
         rights under this Agreement and collect or obtain such amounts or
         benefits.

         12. Confidential Information. Executive will not while this Agreement
is in effect or after its expiration or termination, use, other than in
connection with Executive's employment with WSI, or disclose any confidential
information to any person not employed by WSI or not authorized by WSI to
receive such information without the prior written consent of WSI. Executive
will use reasonable and prudent care to safeguard, protect and prevent the
unauthorized disclosure of confidential information. The obligations contained
in this Section 12 will survive for as long as WSI in its sole judgment
considers the information to be confidential information.

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         13. Disclosure and Assignment.

                  (a) Disclosure. Executive will disclose promptly in writing to
         WSI all inventions, improvements, discoveries and writings and other
         works of authorship ("works") which are conceived, made, discovered or
         written jointly or singly on WSI time or on Executive's time, providing
         the invention, improvement, discovery, writing or other work is capable
         of being used by WSI in the normal course of business, and all such
         inventions, improvements, discoveries, writings and works are hereby
         assigned to, and belong solely and exclusively to WSI.

                  (b) Assignment. Executive will sign and execute all
         instruments of assignment and other papers to evidence vestiture of the
         entire right, title, and interest in such inventions, improvements,
         discoveries, writings, or works in WSI, and will do all acts and sign
         all papers that WSI may reasonably request, relating to applications
         for patents, to patents, to copyrights, and to the enforcement and
         protection thereof. If such acts are requested and performed when
         Executive is not a WSI employee, WSI will pay a fee, determined by WSI,
         covering authorized time and expenses of Executive but no others.

                  (c) Limitations. Notwithstanding anything in this Section 13
         to the contrary, Executive is hereby given NOTICE that the assignment
         and statement of WSI ownership does not apply to any INVENTION for
         which no equipment, supplies, facility or trade secret information of
         WSI was used and which was developed entirely on Executive's own time,
         and (1) which does not relate (i) directly to the business of WSI or
         (ii) to WSI's actual or demonstrably anticipated research or
         development, or (2) which does not result from any work performed by
         Executive for WSI.

                  (d) Survival of Obligations.

                           (i) The obligations of this Section 13 survive the
                  expiration or termination of this Agreement.

                           (ii) This Agreement, or any termination hereof, has
                  no effect on any other Employee Agreement previously executed
                  by Executive which remains in full force and effect. To the
                  extent there are any conflicts between this Agreement and such
                  other Agreement, this Agreement prevails.

                           (iii) Upon termination of employment, Executive will
                  not take or retain, and will return to WSI all WSI property of
                  any nature or kind.

         14. Prior Agreement. This Agreement supersedes and replaces in its
entirety all prior agreements related to a change in control of WSI.

                                       WSI INDUSTRIES, INC.

                                       By
                                         ---------------------------------------
                                         Michael J. Pudil, President

                                       EXECUTIVE
                                                --------------------------------
                                                Paul Sheely

                                       8Exhibit 4.4

                              M. S. CARRIERS, INC.
                           INCENTIVE STOCK OPTION PLAN

     THIS IS THE INCENTIVE STOCK OPTION PLAN (the "Plan"), of M. S. CARRIERS,
INC., a Tennessee corporation (the "Company"), under which options may be
granted from time to time to eligible employees of the Company to purchase
shares of the Company's common stock, $.0l par value, subject to the
limitations, provisions and requirements hereinafter stated. The Plan is as
follows:

     1. PURPOSES. The purposes of the M. S. Carriers, Inc. Incentive Stock
Option Plan (the "Plan") are as follows:

          (a) To further the growth, success, and interest of M. S. Carriers,
Inc. (the "Company") and its shareholders by enabling key employees of the
Company, who have been or will be given substantial responsibility for the
direction and management of the Company, to acquire shares of the Company's
common stock under the terms and conditions and in the manner contemplated by
this Plan, thereby increasing their personal involvement in the Company,
providing them with an additional incentive to promote its success and
encouraging them to remain in its employ; and

          (b) To provide an incentive stock option plan which qualifies for
treatment under ss. 422(A) of the Internal Revenue Code to transfers of common
stock made pursuant to it.

          The term "Option" shall mean an incentive stock option granted
pursuant to the Plan.

     2. ADMINISTRATION OF PLAN. This Plan shall be administered by a Committee
consisting of three directors who shall be appointed by the Company's Board of
Directors for the purposes of this Plan. This Committee shall interpret the Plan
in a manner consistent with its purposes; and, subject to the terms of the Plan,
will have discretion to determine who shall participate in the Plan and how many
shares shall be sold to each participant. All actions and determinations of the
Committee taken in connection with the Plan, including the awarding of Options,
shall be final and conclusive. The Committee may adopt rules from time to time
for carrying out the Plan.

     3. TIME OF GRANT. Any and all Options granted pursuant to this Plan must be
granted within ten (10) years from the date of the adoption of the Plan by the
Board of Directors. An Option shall be deemed to have been granted on the date
on which the Committee awards the Option.

     4. ELIGIBLE EMPLOYEES. Key employees, including officers, of the Company
whom the Committee selects shall be eligible to receive Options; provided that
such key employees must agree, in writing, to remain in the employ of, and
render services to, the Company for a period of at least two (2) years from the
date of the granting of the Option. No member of the Board of Directors of the
Company shall be eligible to receive Options unless he is also an employee of
the Company, and no member of the Committee shall be eligible to receive Options
hereunder. Further, no employee who owns more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company shall be
eligible to receive Options except in compliance with paragraph 8 below.
<PAGE>
     5. STOCK SUBJECT TO PLAN. An aggregate of 200,000 shares of the common
stock, $.0l par value, of the Company shall be subject to this Plan either from
authorized but previously unissued shares or from shares reacquired by the
Company, including shares purchased in the open market. If prior to the
termination of the Plan, shares issued under it shall have been repurchased by
the Company in connection with the restrictions imposed on such shares pursuant
to this Plan, such repurchased shares shall again become available for
reissuance under the Plan.

     6. GRANTING OF OPTIONS. The Company hereby grants Options to the following
key employees: J.W. Welch, M.J. Barrow and Robert P. Hurt, as provided in
separate Incentive Stock Option Agreements between the Company and these
respective key employees. Thereafter, from time to time until termination of the
Plan, the Committee shall determine if and when a key employee is to be granted
an Option and shall determine the number of shares to be covered by each Option,
subject to the provision regarding continuous employment set forth in paragraph
4. The selection of a key employee to be a recipient of an Option shall not be
deemed to entitle such key employee to such Option prior to the time it is
granted by the Committee.

     7. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by Stock
Option Agreements in such form not inconsistent with this Plan as the Committee
shall from time to time determine, provided that the substance of the following
shall be included therein:

          (a) NUMBER OF SHARES. The number of shares to which the Option
pertains shall be stated.

          (b) OPTION PRICE. The option price shall not be less than 100% of the
fair market value of the stock on the date the Option is granted. The fair
market value of the stock shall be determined in good faith by the Committee. If
the stock is traded in the over-the-counter market, such fair market value shall
be deemed to be the mean between the asked and the bid prices on the date of
grant as reported by NASDAQ. If the stock is traded on an exchange, such fair
market value shall be deemed to be the mean of the high and low prices at which
it is quoted or traded on the exchange on the date of grant.

          (c) METHOD OF EXERCISE. Shares purchased under Options shall at the
time of purchase be paid for in full. To the extent that the right to purchase
shares has accrued thereunder, Options may be exercised from time to time by the
key employee (or other person entitled to exercise the Option) (the "optionee")
giving written notice to the Company stating the number of shares with respect
to which the Option is being exercised and the time of the delivery thereof.
Time of delivery shall be at least 15 days after the giving of such notice
unless an earlier date shall have been mutually agreed upon. At the time
specified in such notice, the Company shall, without transfer or issue tax to
the optionee deliver to the optionee at the main office of the Company, or such
other place as shall be mutually acceptable, a certificate or certificates for
such shares out of theretofore authorized but unissued or reacquired common
shares as the Company may elect. The shares shall be paid for by certified or
bank cashier's check or the equivalent thereof acceptable to the Company. If the

                                       2
<PAGE>
optionee fails to accept delivery of and pay for all or any part of the number
of shares specified in such notice under tender of delivery thereof, his right
to exercise the Option with respect to such undelivered shares may be
terminated.

          (d) OPTION TERM. All Options issued hereunder shall be for such period
as the Committee shall determine but for not more than ten (10) years from the
date the Option is granted.

          (e) EXERCISE OF OPTIONS. Each Option granted under this Plan shall
become exercisable only after two (2) years of continuous employment of the key
employee with the Company immediately following the date the Option is granted.
An Option shall be exercisable in the manner set out in subparagraph 7(c)
according to the following terms. Except as otherwise provided herein, no Option
shall be exercisable until the second anniversary of the grant thereof when it
shall become exercisable for one-third (1/3) of the shares covered thereby.
Thereafter, an Option shall be exercisable for an additional one-third (1/3) of
the shares covered thereby on each of the third and fifth anniversaries of the
date of grant thereof. Thereafter, an Option may be exercised at any time and
from time to time, within its terms, in whole or in part, but it shall not be
exercisable after the expiration of ten (10) years from the date on which it
became exercisable or after the earlier termination of the Option as provided
for in subparagraph 7(g) below. The Committee may, in its discretion, alter such
exercise schedule in any particular Option granted and such Option shall reflect
the exercise schedule approved by the Committee; provided, however, each Option
granted under this Plan shall become immediately exercisable if Michael S.
Starnes is not serving in any of the following capacities: Chairman of the
Board, Chief Executive Officer or President of the Company.

          (f) NONASSIGNABILITY OF OPTION RIGHTS. No Option shall be assignable
or transferable by a key employee except by will or by the laws of descent and
distribution. During the life of a key employee, the Option shall be
exercisable only by him.

          (g) EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY, OR DEATH. In the
event a key employee terminates his employment by reason of (i) discharge for
cause or (ii) voluntary termination by the key employee, any Option or Options
theretofore granted to him under this Plan to the extent not theretofore
exercised by him shall immediately terminate; provided, however, the employee
shall have thirty (30) days from the date on which he ceases to be an employee
to exercise any Option or portion thereof which was exercisable at the date of
his termination. In the event a key employee during his life ceases to be an
employee of the Company for any other reason, including retirement, other than
total disability, any Option or unexercised portion thereof granted to him shall
immediately become exercisable and employee shall have thirty (30) days from the
date on which he ceases to be an employee to exercise such Option or any portion
thereof. In the event a key employee ceases to be an employee of the Company by
reason of his total disability, as defined in ss. 105(d)(4) of the Internal
Revenue Code, an Option or unexercised portion thereof granted to him shall
terminate one (1) year after the date on which he ceases to be an employee. In
the event of the death of a key employee during his employment, any Option or
unexercised portion thereof granted to him may be exercised by his personal
representatives, heirs, or legatees at any time prior to the earlier of one (1)
year after the date of his death or the expiration of the term of the Option. If
a key employee's employment ceases on account of his disability or death, all
restrictions hereunder shall be waived and all Options heretofore granted shall
immediately be exercisable.

                                        3
<PAGE>
          (h) RIGHTS AS SHAREHOLDER. The key employee shall have no rights as a
shareholder with respect to any shares covered by his Option until the date of
issuance of a certificate to him for such shares. No adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such certificate is issued.

          (i) AMOUNT OF OPTIONS. The aggregate fair market value of the stock
determined as of the date on which an Option is granted, for which a key
employee may be granted Options in any calendar year, shall not exceed $100,000
plus any unused limit carryover. "Unused limit carryover" shall mean one-half of
the amount by which $100,000 exceeds the aggregate fair market value of the
stock of which a key employee was granted Options in any calendar year. The
unused limit carryover may be used in the three years next succeeding the year
it occurs but shall be reduced by the amount used each such year.

          (j) OTHER OUTSTANDING OPTIONS. No Option granted under this Plan may
be exercised while there is outstanding any other Option to purchase stock in
the Company which was granted before the granting of such Option and which has
not been exercised in full or which has not expired by reason of lapse of time.

     8. GREATER THAN 10% SHAREHOLDER. A key employee who owns more than 10% of
the total combined voting power of all classes of stock of the Company may be
granted an Option pursuant to this Plan, if and only if, in addition to the
other terms and restrictions of the Plan, the following restrictions are
complied with: (i) the option price is at least 110% of the fair market value of
the stock subject to the Option on the date the Option is granted; and (ii) such
Option is not exercisable after five (5) years from the date the Option is
granted.

     9. ADJUSTMENTS. In the event of the declaration of any stock dividend on
the stock, or in the event of any reorganization, merger, consolidation,
acquisition, separation, recapitalization, split-up, combination or exchange of
shares of stock, or like adjustment, the number of shares of stock pursuant to
this Plan, and the option prices, may be adjusted by appropriate changes in this
Plan and in any Options outstanding pursuant to this Plan. Any such adjustment
to the Plan or to Options or option prices shall be made by action of the
Committee, whose determination shall be conclusive.

     10. STOCK PURCHASED FOR INVESTMENT. At the discretion of the Committee, an
option agreement may provide that the option holder shall, by accepting an
Option, represent and agree, for himself and his transferees by will or by the
laws of descent and distribution that all shares of stock purchased upon
exercise of the Option will be acquired for investment and not for resale or
distribution, and that upon each exercise of any portion of an Option, the
person entitled to exercise the same shall furnish evidence satisfactory to the
Company (including a written and signed representation) to the effect that the
shares are being acquired in good faith for investment and not for resale or
distribution.

                                        4
<PAGE>
     11. REGISTRATION REQUIREMENTS. No shares shall be issued and delivered upon
exercise of any Option, unless and until, in the opinion of counsel for the
Company, any applicable registration requirements of the Securities Act of 1933,
as amended, any applicable listing requirements of any national securities
exchange on which stock of the same class is then listed, and any other
requirements of law or of any regulatory bodies having jurisdiction over such
issuance and delivery, shall have been fully complied with.

     12. SHAREHOLDER APPROVAL. This Plan shall be approved by at least a
majority of the shareholders of the Company entitled to vote at a meeting of the
shareholders of the Company held within twelve (12) months of the date the Plan
is adopted by the Company's Board of Directors.

     13. RESTRICTIONS ON TRANSFER OF SHARES. Shares purchased under Options may
not be sold or transferred within one (1) year after the transfer of the shares
to the optionee.

     14. AMENDMENT OF PLAN. The Board of Directors may at any time amend the
Plan, provided that, without the approval of the shareholders, there shall be,
except by operation of the provisions of paragraph 9 above, no increase in the
total number of shares covered by the Plan, there shall be no change in the
class of employees eligible to receive Options granted under the Plan, there
shall be no reduction in the option price, there shall be no extension of the
latest date upon which Options may be exercised and, provided further, that no
amendment may affect any then outstanding Options or any unexercised portions
thereof.

     15. USE OF PROCEEDS. The proceeds from the sale of shares pursuant to
Options granted under this Plan shall constitute general funds of the Company.

     16. TERMINATION. This Plan shall terminate and no further shares shall be
sold or issued hereunder on February 28, 1996, which is ten (10) years from the
date on which the Plan was originally approved by the Board of Directors of the
Company, or such earlier date as may be determined by the Committee. The
termination of this Plan, however, shall not affect the continued existence of
rights created under Options issued pursuant to this Plan and outstanding on
said date which by their terms extend beyond said date.

                                        /s/ M.J Barrow
                                        ----------------------------------------
                                        Secretary

                                        5

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