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                                                                   EXHIBIT 10.32

                              ROYAL PRECISION, INC.

                                STOCK OPTION PLAN

                              ---------------------

                                 OCTOBER 5, 1997

                              ---------------------

                                    PREAMBLE:

         1. Royal Precision, Inc. a Delaware corporation (the "Company"), by
means of this Stock Option Plan (the "Plan"), desires to attract and retain
capable employees, officers, directors and consultants and to provide them with
long term incentives to continue their services to the Company, to maximize the
value of the Company to its stockholders and to acquire a continuing ownership
interest in the Company.

         2. The Company has determined that the foregoing objectives will be
promoted by granting Options (as hereinafter defined) under this Plan to certain
employees, officers, directors and consultants of the Company and of its Parent
and Subsidiaries, if any, pursuant to this Plan.



                                     TERMS:

ARTICLE 1. DEFINITIONS.

         Section 1.1. General. Certain words and phrases used in this Plan shall
have the meanings given to them below in this section:

         "Board of Directors" means the board of directors of the Company.

         "Code" means the Internal Revenue Code of 1986 and the regulations
thereunder, as now in effect or hereafter amended.

         "Committee" means the Committee of the Board of Directors that
administers the Plan under Section 2.1 below.

         "Common Stock" means the common stock with a par value of one mil
($0.001) per share, of the Company.

         "Consultant" means any person who provides services to any Employer
(other than as an Employee or a Director or in connection with the offer or sale
of securities of the Employer in a capital raising transaction) and who is a
consultant or an adviser to the Employer within the meaning of General
Instruction A.1. to Form S-8 promulgated by the SEC under the Securities Act of
1933.

         "Date of Grant" means the date an Option is first granted.

         "Director" means a member of the Board of Directors.

         "Effective Date" means the date this Plan is first adopted by the Board
of Directors.

         "Employee" means any common law employee of an Employer.

         "Employer" means the Company or any Parent or Subsidiary of the Company
which employs a given Employee or has engaged a given Consultant.

         "Exchange Act" means the Securities Exchange Act of 1934 and the
regulations thereunder, as now in effect or hereafter amended.



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         "Exercise Price" means, with respect to an Option, the amount of
consideration that must be delivered to the Company in order to purchase a
single Share thereunder.

         "Fair Market Value of a Share" means the amount determined to be the
fair market value of a single Share by the Committee based upon the trading
price of the Shares, their offering price in public and private offerings by the
Company and such other factors as it deems relevant. In the absence of such a
determination, the Fair Market Value of a Share shall be deemed to be (a) if the
Shares are listed or admitted to trading on a national securities exchange or
the NASDAQ - National Market System, the per Share closing price regular way on
the principal national securities exchange or the NASDAQ - National Market
System on which the Shares are listed or admitted to trading on the day prior to
the date of determination or, if no closing price can be determined for the date
of determination, the most recent date for which such price can reasonably be
ascertained, or (b) if the Shares are not listed or admitted to trading on a
national securities exchange or the NASDAQ - National Market System, the mean
between the representative bid and asked per Share prices in the
over-the-counter market at the closing of the day prior to the date of
determination or the most recent such bid and asked prices then available, as
reported by NASDAQ or if the Shares are not then quoted by NASDAQ as furnished
by any market maker selected from time to time by the Company for that purpose.

         "Grantee" means any Participant to whom an Option has been granted.

         "Holder" means any Grantee who holds a valid Option and any heir or
legal representative to whom such Grantee's Option has been transferred by will
or the laws of descent and distribution.

         "Incentive Stock Option" or "ISO" means a Stock Option intended to
comply with the terms and conditions set forth in Section 422 of the Code.

         "Meeting Date" means the date of each annual meeting of the
stockholders of the Company at which Directors are elected.

         "Nonqualified Option" means a Stock Option other than an Incentive
Stock Option.

         "Officer" means an officer of the Company as defined in 17 C.F.R.ss.
240.16a-1(f) as now in effect or hereafter amended.

         "Option" or "Stock Option" means a right granted under Article 5, 6 or
7 of the Plan to a Grantee to purchase a stated number of Shares at a stated
Exercise Price.

         "Option Agreement" means an agreement evidencing an Option
substantially in the form of Exhibit A, Exhibit B or Exhibit C attached hereto.

         "Parent" means a parent of a given corporation as such term is defined
in Section 424(e) of the Code.

         "Participant" means a person who is eligible to receive an Option under
the Plan.

         "Plan" means this Plan as it may be amended or restated from time to
time.

         "Rule 16b-3" means Rule 16b-3 (17 C.F.R. ss. 240.16b-3) promulgated
under Section 16(b) of the Exchange Act as now in effect or hereafter amended.

         "SEC" means the Securities and Exchange Commission.

         "Shares" means shares of Common Stock.

         "Subsidiary" means a subsidiary of a given corporation as such term is
defined in Section 424(f) of the Code.

         "Ten Percent Stockholder" means a person who owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary of the Company. Ownership shall, for the
purposes of the previous sentence, be determined under the rules set forth in
Section 424 of the Code.

         "Termination without cause" means a termination by an Employer of the
employment or consulting relationship of a Grantee with the 



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Employer that is not for cause and is not occasioned by the resignation, death
or disability of the Grantee.

         Section 1.2. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles.

         Section 1.3. Effect of Definitions. The definitions set forth in
Section 1.1 above shall apply equally to the singular, plural, adjectival,
adverbial and other forms of any of the words and phrases defined regardless of
whether they are capitalized.

ARTICLE 2. ADMINISTRATION.

         Section 2.1. Committee. The Plan shall be administered by a committee
of the Board of Directors consisting of two or more Directors, each of whom is a
"Non--Employee Director" as described in paragraph (b)(3) of Rule 16b-3 and is
an "outside director" as described in Code Section 162(m) and the regulations
thereunder. Unless the Board of Directors designates another of its committees
to administer the Plan, the Plan shall be administered by a committee consisting
of those members of the Compensation Committee of the Board of Directors who are
disinterested persons and are outside directors, but, if the Compensation
Committee is abolished or its membership does not contain two persons who comply
with the requirements of the first sentence of this Section 2.1, the Board of
Directors shall either reconstitute the Compensation Committee in compliance
with, or create another Committee that complies with, the requirements of the
first sentence of this Section 2.1 to administer the Plan.

         Section 2.2. Authority. Subject to the express provisions of the Plan
and in addition to the powers granted by other sections of the Plan, the
Committee has the authority, in its discretion, to (a) determine the
Participants, grant Options and determine their timing, pricing and amount; (b)
define, prescribe, amend and rescind rules, regulations, procedures, terms and
conditions relating to the Plan; (c) make all other determinations necessary or
advisable for administering the Plan including, but not limited to, interpreting
the Plan, correcting defects, reconciling inconsistencies and resolving
ambiguities; and (d) review and resolve all claims of Employees, Consultants,
Directors, Grantees, Holders and Participants. The actions and determinations of
the Committee on matters related to the Plan shall be conclusive and binding
upon the Company and all Employees, Consultants, Directors, Grantees, Holders
and Participants.

ARTICLE 3. SHARES.

         Section 3.1. Number. The aggregate number of Shares in respect of which
Options may be granted under the Plan shall not exceed 750,000, which number of
Shares is hereby reserved for issuance under the Plan out of the authorized but
unissued Shares.

         Section 3.2. Cancellations. If any portion of an Option is canceled,
terminates or expires for any reason without having been exercised, the Shares
related to such unexercised portion, shall be available again for the purposes
of the Plan.

         Section 3.3. Anti-Dilution.

                  (a) If the Shares are split or if a dividend of Shares is paid
on the Shares, the number of Shares on which each then outstanding Option is
based and the number of Shares as to which Options may be granted under this
Plan shall be increased automatically by the ratio between the number of Shares
outstanding immediately after such event and the number of Shares outstanding
immediately before such event (ignoring for this purpose any provision for the
repurchase or cash payment of fractional shares) and the Exercise Price thereof
shall be decreased automatically by the same ratio. If the Shares are combined
into a lesser number of Shares, the number of Shares for which each then
outstanding Option is based and the number of Shares as to which Options may be
granted under the Plan shall be decreased automatically by such ratio and the
Exercise Price thereof shall be increased automatically by such ratio.

                  (b) If any other change occurs in the Shares, through
recapitalization, merger, consolidation or exchange of shares or otherwise,
there shall automatically be substituted for each Share subject to an
unexercised Option and each 



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Share available for additional grants of Options, the number and kind of shares
or other securities or property into which each outstanding Share was changed,
and the Exercise Price shall be increased or decreased proportionally so that
the aggregate Exercise Price for the securities subject to each Option shall
remain the same as immediately before such event. In addition, the Committee may
make such further equitable adjustments in the Plan and the then outstanding
Options as are deemed necessary and appropriate by the Committee including, but
not limited to, changing the number of Shares reserved under the Plan or covered
by outstanding Options, the Exercise Price of outstanding Options and the
vesting conditions of outstanding Options.

         Section 3.4. Source. Except as otherwise determined by the Board of
Directors, the Shares issued under the Plan shall be drawn from the Company's
authorized but unissued Shares. However, Shares which are to be delivered under
the Plan may be obtained by the Company from its treasury, by purchases on the
open market or from private sources, as well as by issuing authorized but
unissued Shares. The proceeds of the exercise of any Option shall be general
corporate funds of the Company. No Shares may be sold under any Option Agreement
for less than the par value thereof. No fractional Shares shall be issued or
sold under the Plan nor will any cash payment be made in lieu of fractional
Shares.

         Section 3.5. Rights of a Stockholder. No Holder nor any person claiming
under or through any Holder shall have any right, title or interest in or to any
Shares allocated or reserved under the Plan or subject to any Option except as
to such Shares, if any, for which certificates representing such Shares have
been issued to such Holder upon the due exercise of an Option.

         Section 3.6. Securities Laws. No Option shall be exercised nor shall
any Shares or other securities be issued or transferred pursuant to an Option
unless and until all applicable requirements imposed by federal and state
securities laws and by any stock exchanges upon which the Shares may be listed,
have been fully complied with. As a condition precedent to the exercise of an
Option or the issuance of Shares pursuant to the grant or exercise of an Option,
the Company may require the Holder to take any reasonable action to meet such
requirements including providing undertakings as to the investment intent of the
Holder, accepting transfer restrictions on the Shares issuable thereunder and
providing opinions of counsel, in form and substance acceptable to the Company,
as to the availability of exemptions from such requirements.

ARTICLE 4. ELIGIBILITY.

         Section 4.1. Article 5. Only Employees who are not members of the
Committee shall be eligible to receive Options under Article 5 below.

         Section 4.2. Article 6. Only Consultants shall be eligible to receive
Options under Article 6 below.

         Section 4.3. Article 7. Only Directors who are not Employees shall be
eligible to receive Options under Article 7 below.

ARTICLE 5. EMPLOYEES' STOCK OPTIONS.

         Section 5.1. Determinations. The Committee shall determine which
Participants shall be granted Options, the number of Shares for which the
Options may be exercised, the times when they shall receive them and the terms
and conditions of individual Option grants (which need not be identical).

         Section 5.2. Exercise Price. The Committee shall determine the Exercise
Price of each Option at the time that it is granted, but in no event shall the
Exercise Price of an Option be less than the Fair Market Value of a Share on the
Date of Grant. If no express determination of the Exercise Price of an Option is
made by the Committee, the Exercise Price thereof is equal to the Fair Market
Value of a Share on the Date of Grant.

         Section 5.3. Term. Subject to the rule set forth in the next sentence,
the Committee shall determine the times when an Option vests and the term during
which an Option is exercisable at the time that it is granted. No Option shall
be exercisable after the expiration of ten years from the Date of Grant. If no
express determination of the times when Options are exercisable is made by the
Committee:

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                  (a) each Option shall vest and first become exercisable
(subject to the rule set forth in Section 5.4(c) below) as to 25% of the Shares
subject to such Option on each of the first four anniversaries of the Date of
Grant provided the Grantee has been an Employee continuously during the time
beginning on the Date of Grant and ending on the date when such portion vests
and first becomes exercisable and further provided that no portion of an Option
shall vest and become exercisable after the employment of the Grantee by his
Employer has terminated, regardless of the reason for such termination.

                  (b) any portion of an Option that has vested and become
exercisable shall lapse and cease to be exercisable upon the earliest of:

(i) the expiration of ten years from the Date of Grant,

(ii) subject to the rule set forth in Section 5.4(d) below, nine months after
the Grantee ceases to be an Employee because of death or disability,

(iii) three months after the termination without cause of the Grantee's
employment with all Employers, or

(iv) immediately upon termination of the Grantee's employment with all Employers
by the applicable Employers for cause or by the Grantee's resignation.

Where both an Incentive Stock Option and a Nonqualified Option are granted, the
number of Shares which become exercisable under clause (a) of the previous
sentence at any time shall be calculated on the basis of the total of the Shares
subject to both Options and the Options shall become exercisable as to that
number of Shares first under the Incentive Stock Option and then under the
Nonqualified Option, unless the rule set forth in Section 5.4(c) below would
defer the exercisability of such Incentive Stock Option, in which case such
Nonqualified Options shall become exercisable first.

         Section 5.4. Incentive Stock Options.

                  (a) The Committee shall determine whether any Option is an
Incentive Stock Option or a Nonqualified Option at the time that it is granted
and, if no express determination is made by the Committee, all Options shall be
Nonqualified Options.

                  (b) If the Committee grants Incentive Stock Options, they
shall be on such terms and conditions as may be necessary to render them
"incentive stock options" pursuant to Section 422 of the Code.

                  (c) The aggregate Fair Market Value of the Shares, determined
as of the time the Option is granted, which first become exercisable under all
Incentive Stock Options granted to any one Grantee under this Plan or any other
plan of the Company or any Parent or Subsidiary of the Company, shall not exceed
$100,000 during any calendar year and, if the foregoing limit would be exceeded
in any given calendar year by the terms of any Incentive Stock Option granted
hereunder, the exercisability of such portion of such Option as would exceed
such limit shall be deferred to the first day of the next calendar year and, if
such excess involves more than one Option, the exercisability of the most
recently granted Option shall be deferred first.

                  (d) If the employment of a Grantee, who holds an ISO, with any
Employer is terminated because of a "disability" (within the meaning of Section
22(e)(3) of the Code), the unexercised portion of the ISO may be exercised only
within six months after the date on which employment was terminated, and only to
the extent that such Grantee could have otherwise exercised such ISO as of the
date of termination. If a Grantee, who holds an ISO, dies while employed by an
Employer (or within six months after termination of employment by reason of a
disability or within 30 days after termination of employment without cause), the
unexercised portion of the ISO at the time of death may be exercised only within
six months after the date of death, and only to the extent that the Grantee
could have otherwise exercised such ISO at the time of death. In such event,
such ISO may be exercised by the executor or administrator of the Grantee's
estate or by any Holder.

                  (e) No Ten Percent Stockholder shall be granted an Incentive
Stock Option unless, at the time such Incentive Stock Option is granted, the



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Exercise Price thereof is at least 110% of the Fair Market Value of a Share on
the Date of Grant and the Incentive Stock Option, by its terms, is not
exercisable after the expiration of five years from the Date of Grant.

                  (f) If a Holder exercises an Incentive Stock Option and
disposes of any of the Shares received by such Holder as a result of such
exercise within two years from the Date of Grant or within one year after the
issuance of such Shares to such Holder upon such exercise, such Holder shall
notify the Company of such disposition and the consideration received as a
result thereof and pay or provide for the withholding taxes on such disposition
as required by Section 8.3 below.

                  (g) An Option that is designated as a Nonqualified Option
under this Plan shall not be treated as an "incentive stock option" as such term
is defined in Section 422(b) of the Code.

         Section 5.5. Exercise.

                  (a) An Option shall be exercised by the delivery of the Option
Agreement therefor, with the notice of exercise attached thereto properly
completed and duly executed by the Holder, to the Treasurer of the Company,
together with the aggregate Exercise Price for the number of Shares as to which
the Option is being exercised, after the Option has vested and become
exercisable and before it has lapsed and ceased to be exercisable.

                  (b) An Option may be exercised as to less than all of the
Shares purchasable thereunder, but not for a fractional share. No Option may be
exercised as to less than 100 Shares unless it is exercised as to all of the
Shares then available thereunder. If an Option is exercised as to less than all
of the Shares purchasable thereunder, a new duly executed Option Agreement
reflecting the decreased number of Shares exercisable under such Option, but
otherwise of the same tenor, shall be returned to the Holder.

                  (c) The Committee may, in its sole discretion and upon such
terms and conditions as it shall determine at or after the Date of Grant, permit
the Exercise Price to be paid in cash, by the tender to the Company of Shares
owned by the Holder, or by a combination thereof. If the Committee does not make
such determination, the Exercise Price shall be paid in cash.

                  (d) If any portion of the Exercise Price of an Option is
payable in cash, it may be paid by (i) delivery of a certified or cashier's
check payable to the order of the Company in such amount, (ii) wire transfer of
immediately available funds to a bank account designated by the Company or (iii)
reduction of a debt of the Company to the Holder.

                  (e) If any portion of the Exercise Price of an Option is
payable in Shares, it may be paid by delivery of certificates representing a
number of Shares having a total fair market value on the date of exercise equal
to or greater than the required amount, duly endorsed for transfer with all
signatures guaranteed by a medallion signature guarantee. If more Shares than
are necessary to pay such Exercise Price based on their fair market value on the
date of exercise are delivered to the Company, it shall return to the Holder a
certificate for the balance of the whole number of Shares and a check payable to
the order of the Holder for any fraction of a Share. Shares may not be delivered
to the Company as payment for the exercise of an Option if such Shares have been
owned by the Holder (together with his decedent or testator) for less than six
months or if the disposition of such Shares would require the giving of a notice
under Section 5.4(f) above.

                  (f) Promptly after an Option is properly exercised, the
Company shall issue to the Holder a certificate representing the Shares
purchased thereunder.

         Section 5.6. Option Agreement. Promptly after the Date of Grant, the
Company shall duly execute and deliver to the Grantee an Option Agreement
setting forth the terms of the Option. Option Agreements are not negotiable
instruments or securities (as such term is defined in Article 8 of the Uniform
Commercial Code). Lost and destroyed Option Agreements may be replaced without
bond.

         Section 5.7. New Hires. A person to whom the Company is offering
employment may be granted 



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a Nonqualified Option under this Article 5, but any such grant shall lapse if
the person does not subsequently become an Employee pursuant to such offer.

ARTICLE 6. CONSULTANTS' STOCK OPTIONS.

         Section 6.1. Determinations. The Committee shall determine which
Participants shall be granted Options, the number of Shares for which the
Options may be exercised, the times when they shall receive them and the terms
and conditions of individual Option grants (which need not be identical).

         Section 6.2. Exercise Price. The Committee shall determine the Exercise
Price of each Option at the time that it is granted, but in no event shall the
Exercise Price of an Option be less than the Fair Market Value of a Share on the
Date of Grant. If no express determination of the Exercise Price of an Option is
made by the Committee, the Exercise Price thereof is equal to the Fair Market
Value of a Share on the Date of Grant.

         Section 6.3. Term. Subject to the rule set forth in the next sentence,
the Committee shall determine the times when an Option vests and the term during
which an Option is exercisable at the time that it is granted. No Option shall
be exercisable after the expiration of ten years from the Date of Grant. If no
express determination of the times when Options are exercisable is made by the
Committee:

                  (a) each Option shall vest and first become exercisable as to
25% of the Shares subject to such Option on each of the first four anniversaries
of the Date of Grant provided the Grantee has been a Consultant continuously
during the time beginning on the Date of Grant and ending on the date when such
portion vests and first becomes exercisable and further provided that no portion
of an Option shall vest and become exercisable after the termination of the
Grantee's consulting relation with his Employer, regardless of the reason for
such termination.

                  (b) any portion of an Option that has vested and become
exercisable shall lapse and cease to be exercisable upon the earliest of:

(i) the expiration of ten years from the Date of Grant,

(ii) nine months after the Grantee ceases to be a Consultant because of death or
disability, or

(iii) three months after the termination without cause of the Grantee's
consulting relation with the Employer, or

(iv) immediately upon termination of the Grantee's consulting relation with the
Employer for cause or by the Grantee's resignation.

         Section 6.4. Not Incentive Stock Options. An Option under this Article
6 shall not be treated as an Incentive Stock Option.

         Section 6.5. Exercise.

                  (a) An Option shall be exercised by the delivery of the Option
Agreement therefor, with the notice of exercise attached thereto properly
completed and duly executed by the Holder, to the Treasurer of the Company,
together with the aggregate Exercise Price for the number of Shares as to which
the Option is being exercised, after the Option has vested and become
exercisable and before it has lapsed and ceased to be exercisable.

                  (b) An Option may be exercised as to less than all of the
Shares purchasable thereunder, but not for a fractional share. No Option may be
exercised as to less than 100 Shares unless it is exercised as to all of the
Shares then available thereunder. If an Option is exercised as to less than all
of the Shares purchasable thereunder, a new duly executed Option Agreement
reflecting the decreased number of Shares exercisable under such Option, but
otherwise of the same tenor, shall be returned to the Holder.

                  (c) The Committee may, in its sole discretion and upon such
terms and conditions as it shall determine at or after the Date of Grant, permit
the Exercise Price to be paid in cash, by the tender to the Company of Shares
owned by the Holder, or by a combination thereof. If the Committee does not make
such determination, the Exercise Price shall be paid in cash.

                  (d) If any portion of the Exercise Price of an Option is
payable in cash, it may be paid 



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by (i) delivery of a certified or cashier's check payable to the order of the
Company in such amount, (ii) wire transfer of immediately available funds to a
bank account designated by the Company or (iii) reduction of a debt of the
Company to the Holder.

                  (e) If any portion of the Exercise Price of an Option is
payable in Shares, it may be paid by delivery of certificates representing a
number of Shares having a total fair market value on the date of exercise equal
to or greater than the required amount, duly endorsed for transfer with all
signatures guaranteed by a medallion signature guarantee. If more Shares than
are necessary to pay such Exercise Price based on their fair market value on the
date of exercise are delivered to the Company, it shall return to the Holder a
certificate for the balance of the whole number of Shares and a check payable to
the order of the Holder for any fraction of a Share. Shares may not be delivered
to the Company as payment for the exercise of an Option if such Shares have been
owned by the Holder (together with his decedent or testator) for less than six
months or if the disposition of such Shares would require the giving of a notice
under Section 5.4(f) above.

                  (f) Promptly after an Option is properly exercised, the
Company shall issue to the Holder a certificate representing the Shares
purchased thereunder.

         Section 6.6. Option Agreement. Promptly after the Date of Grant, the
Company shall duly execute and deliver to the Grantee an Option Agreement
setting forth the terms of the Option. Option Agreements are neither negotiable
instruments nor securities (as such term is defined in Article 8 of the Uniform
Commercial Code). Lost and destroyed Option Agreements may be replaced without
bond.

ARTICLE 7. DIRECTORS' OPTIONS.

         Section 7.1. Grant. On each Meeting Date, an Option shall be
automatically granted to each Director who is eligible to receive Options under
Section 4.3 above and who attended at least seventy five per cent (75%) of the
total number of meetings of the Board of Directors (and committees thereof of
which he is a member) during the most recently ended fiscal year of the Company.
The number of Shares subject to each Option granted under this Section 7.1 shall
be determined by a resolution adopted by the [{Committee}{Board of Directors}]
on or before a Meeting Date, uniformly applying to all eligible Directors, which
establishes, increases or decreases the number of Shares subject to such Option
Any such resolution shall continue in force for the next Meeting Date, unless it
is amended or repealed, the Meeting Date is more than ten years after the
Effective Date or there are not a sufficient number of Shares remaining
available under Section 3.1 above. This Section 7.1 shall not be operative until
such time as such a resolution is adopted.

         Section 7.2. Exercise Price. The Exercise Price of an Option shall be
equal to the Fair Market Value of a Share on the Date of Grant.

         Section 7.3. Term.

                  (a) Each Option shall vest and first become exercisable as to
25% of the Shares originally subject to the Option on each Meeting Date which is
held more than six months after the Date of Grant if the Grantee is a Director
at the time of the adjournment of the meeting of stockholders held on such
Meeting Date and further provided that no portion of an Option shall vest and
become exercisable after the Grantee has ceased to be a Director, regardless of
the reason for such cessation.

                  (b) any portion of an Option that has vested and become
exercisable shall lapse and cease to be exercisable upon the earliest of:

(i) the expiration of ten years from the Date of Grant,

(ii) nine months after the Grantee ceases to be a Director because of his death
or disability,

(iii) immediately upon resignation by the Grantee as a Director, or

(iv) three months after the Grantee ceases to be a Director for any reason other
than his death, disability or resignation.

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         Section 7.4. Not Incentive Stock Options. An Option under this Article
7 shall not be treated as an Incentive Stock Option.

         Section 7.5. Exercise.

                  (a) An Option shall be exercised by the delivery of the Option
Agreement therefor, with the notice of exercise attached thereto properly
completed and duly executed by the Holder, to the Treasurer of the Company,
together with the aggregate Exercise Price for the number of Shares as to which
the Option is being exercised, after the Option has vested and become
exercisable and before it has lapsed and ceased to be exercisable.

                  (b) An Option may be exercised as to less than all of the
Shares purchasable thereunder but not for a fractional Share. No Option may be
exercised as to less than 100 Shares unless it is exercised as to all of the
Shares then available thereunder. If an Option is exercised as to less than all
of the Shares purchasable thereunder, a new duly executed Option Agreement
reflecting the decreased number of Shares exercisable under such Option, but
otherwise of the same tenor, shall be returned to the Holder.

                  (c) The Committee may, in its sole discretion and upon such
terms and conditions as it shall determine at or after the Date of Grant, permit
the Exercise Price to be paid in cash, by the tender to the Company of Shares
owned by the Holder, or by a combination thereof. If the Committee does not make
such determination, the Exercise Price shall be paid in cash.

                  (d) If any portion of the Exercise Price of an Option is
payable in cash, it may be paid by (i) delivery of a certified or cashier's
check payable to the order of the Company in such amount, (ii) wire transfer of
immediately available funds to a bank account designated by the Company or (iii)
reduction of a debt of the Company to the Holder.

                  (e) If any portion of the Exercise Price of an Option is
payable in Shares, it may be paid by delivery of certificates representing a
number of Shares having a total fair market value on the date of exercise equal
to or greater than the required amount, duly endorsed for transfer with all
signatures guaranteed by a medallion signature guarantee. If more Shares than
are necessary to pay such Exercise Price based on their fair market value on the
date of exercise are delivered to the Company, it shall return to the Holder a
certificate for the balance of the whole number of Shares and a check payable to
the order of the Holder for any fraction of a Share. Shares may not be delivered
to the Company as payment for the exercise of an Option if such Shares have been
owned by the Holder (together with his decedent or testator) for less than six
months or if the disposition of such Shares would require the giving of a notice
under Section 5.4(f) above.

                  (f) Promptly after an Option is properly exercised, the
Company shall issue to the Holder a certificate representing the Shares
purchased thereunder.

         Section 7.6. Option Agreement. Promptly after the Date of Grant, the
Company shall duly execute and deliver to the Grantee an Option Agreement
setting forth the terms of the Option. Option Agreements are neither negotiable
instruments nor securities (as such term is defined in Article 8 of the Uniform
Commercial Code). Lost and destroyed Option Agreements may be replaced without
bond.

ARTICLE 8. PROVISIONS APPLICABLE TO ALL TYPES OF OPTIONS.

         Section 8.1. Maximum Shares. Notwithstanding any other provision of
this Plan, the maximum number of Shares with respect to which Options may be
granted during any fiscal year of the Company to any Employee shall be 250,000
Shares.

         Section 8.2. Corporate Mergers and Acquisitions. The Committee may
grant Options having terms and conditions which vary from those specified in the
Plan if such Options are granted in substitution for, or in connection with the
assumption of, existing options granted by another business entity and assumed
or otherwise agreed to be provided for by the Company pursuant to or by reason
of a transaction involving a merger or consolidation of or acquisition of
substantially all of the assets or stock of another business entity that is 


<PAGE>   10
not a Subsidiary of the Company prior to such acquisition, with or by the
Company or its Subsidiaries.

        Section 8.3. Withholding. The Company shall have the right to withhold
from any payments due under any Option or due to any Holder from the Company as
compensation or otherwise the amounts of any federal, state or local withholding
taxes not paid by the Holder at the time of the exercise or vesting of any
Option or upon a disposition of Shares received upon the exercise of an
Incentive Stock Option. If cash payments sufficient to allow for withholding of
taxes are not made at the time of exercise or vesting of an Option, the Holder
exercising such Option shall pay to the Company an amount equal to the
withholding required to be made less the withholding otherwise made in cash or,
if allowed by the Committee in its discretion and pursuant to rules adopted by
the Committee consistent with Section 5.5 above, Shares previously owned by the
Holder. The Company may make such other provisions as it deems appropriate to
withhold any taxes the Company determines are required to be withheld in
connection with the exercise of any Option or upon a disqualifying disposition
of Shares received upon the exercise of an Incentive Stock Option, including,
but not limited to, the withholding of Shares from an Option upon such terms and
conditions as the Committee may provide. The Company may require the Holder to
satisfy any relevant withholding requirements before issuing Shares or
delivering any Option to the Holder.

         Section 8.4. Disability. If a Grantee who is an Employee or a
Consultant is absent from work because of a physical or mental disability, for
purposes of the Plan such Grantee will not be considered to have ended his
employment or consulting relationship with the Company while such Grantee has
that disability, unless he resigns or terminates such relationship or the
Committee decides otherwise. If a Grantee who is a Director is absent from
meetings of the Board of Directors because of a physical or mental disability,
for purposes of the Plan such Grantee will not be considered to have ended his
service with the Board of Directors while such Grantee has that disability,
unless he resigns or is not re-elected by the stockholders.

         Section 8.5. Merger of the Company. If the Company merges or
consolidates with or sells substantially all of its assets to a person that was
not one of its affiliates before such transaction, or any such unaffiliated
person or corporation has publicly announced a tender offer to purchase more
than 20% of the outstanding voting securities of the Company, the Committee, in
its discretion, may provide that, for a period of time, not extending beyond the
ten year period referred to in Sections 5.3, 6.3, and 7.3 above and the five
year period referred to in Section 5.4(e) above, after the execution of the
acquisition agreement in final definitive form, the announcement of such offer
or the mailing of a proxy statement or prospectus concerning such transaction,
notwithstanding the provisions of any Option, any Option may be exercised in
whole or in part during such time period or that upon the termination of such
time period any such Option shall expire and be null and void. The Committee may
provide that any such action shall be conditioned on the completion of the
transaction that occasioned it, and that if such transaction is not timely
completed, any exercise or vesting of any Option shall be unwound.

         Section 8.6. Surrender and Exchange. The Committee may permit the
voluntary surrender of all or a portion of any Option to be conditioned upon the
granting to the Holder of a new Option for the same or a different number of
Shares as the Option surrendered, or may require such voluntary surrender as a
condition precedent to a grant of a new Option to such Holder. Subject to the
provisions of the Plan, such new Option shall be exercisable at the price,
during the period and on such other terms and conditions as are specified by the
Committee at the time the new Option is granted. Upon surrender, the Option
surrendered shall be canceled and the Shares previously subject to it shall be
available for the grant of other Options.

         Section 8.7. Acceleration. Notwithstanding anything else in the Plan,
the Committee may, in its sole discretion, at any time or from time to time,
accelerate the time at which any Options mature or vest or waive any provisions
of the Plan relating to the manner of payment or procedures for the exercise or
maturity of any Option. Any such acceleration may be made effective (a) with
respect to one or more or all Holders, (b) with respect to some or all of


<PAGE>   11

the Shares subject to or forming the basis for any Option to any Holder or (c)
for a period of time ending at or before the expiration date of any Option.

         Section 8.8. Actions by Committee After Grant. The Committee shall
have, subject to the written consent of the Holder where the action impairs or
adversely alters the rights of the Holder, the right, at any time and from time
to time after the Date of Grant of any Option, to modify the terms of any
Option.

ARTICLE 9. GENERAL PROVISIONS.

         Section 9.1. No Right to Employment. Nothing in the Plan or any Option
or any instrument executed pursuant to the Plan will confer upon any Grantee any
right to continue to be employed by or provide services to the Company or affect
the right of the Company to terminate the employment of any Grantee or its other
relationship with any Grantee. Nothing in the Plan or any Option or any
instrument executed pursuant to the Plan will confer upon any Grantee any right
to continue to be a Director of the Company or affect the right of the
stockholders to terminate the directorship of any Grantee.

         Section 9.2. Limited Liability. The liability of the Company under this
Plan or in connection with any exercise of any Option is limited to the
obligations expressly set forth in the Plan and in the grant of any Option, and
no term or provision of this Plan nor of any Option shall be construed to impose
any duty, obligation or liability on the Company not expressly set forth in the
Plan or any grant of any Option.

         Section 9.3. Assumption of Options. Upon the dissolution or liquidation
of the Company, or upon a reorganization, merger or consolidation of the Company
with one or more other entities as a result of which the Company is not the
surviving entity, or upon a sale of substantially all the assets of the Company
to another entity, any Options outstanding theretofore granted or sold hereunder
must be assumed by the surviving or purchasing entity, with appropriate
adjustments as to the number and kind of shares and price.

         Section 9.4. No Transfer. No Option or other benefit under the Plan may
be sold, pledged or otherwise transferred other than by will or the laws of
descent and distribution; and no Option may be exercised during the life of the
Grantee to whom it was granted except by such Grantee.

         Section 9.5. Expenses. All costs and expenses incurred in connection
with the administration of the Plan including any excise tax imposed upon the
transfer of Shares pursuant to the exercise of an Option shall be borne by the
Company.

         Section 9.6. Notices. Notices and other communications required or
permitted to be made under the Plan shall be in writing and shall be deemed to
have been duly given only if personally delivered or if sent by first class mail
addressed (a) if to a Holder, at his residence address set forth in the records
of the Company or (b) if to the Company, to its President at its principal
executive office.

         Section 9.7. Third Parties. Nothing herein expressed or implied is
intended or shall be construed to give any person other than the Holders any
rights or remedies under this Plan.

         Section 9.8. Saturdays, Sundays and Holidays. Where this Plan
authorizes or requires a payment or performance on a Saturday, Sunday or public
holiday, such payment or performance shall be deemed to be timely if made on the
next succeeding business day; provided, however, that this Section 9.8 shall not
be construed to extend the ten year period referred to in Sections 5.3, 6.3, and
7.3 above or the five year period referred to in Section 5.4(e) above.

         Section 9.9. Rules of Construction. The captions and section numbers
appearing in this Plan are inserted only as a matter of convenience. They do not
define, limit or describe the scope or intent of the provisions of this Plan. In
this Plan words in the singular number include the plural, and in the plural
include the singular; and words of the masculine gender include the feminine and
the neuter and, when the sense so indicates, words of the neuter gender may
refer to any gender.



<PAGE>   12

         Section 9.10. Governing Law. The validity, terms, performance and
enforcement of this Plan shall be governed by laws of the State of Delaware that
are applicable to agreements negotiated, executed, delivered and performed
solely in the State of Delaware.

         Section 9.11. Effective Date of the Plan. The Plan shall become
effective upon its approval by the affirmative vote of the holders of a majority
of the outstanding Shares present or represented and entitled to vote at a
meeting of the stockholders of the Company. Options may be granted by the
Committee before such approval, but all Options so granted shall be conditioned
on such approval and shall be void if such approval is not given within 12
months after the Effective Date.

         Section 9.12. Amendment and Termination. No Option shall be granted
under the Plan more than ten years after the Effective Date. The Board of
Directors may at any time terminate the Plan or make such amendment of the Plan
as it may deem advisable; provided, however, that no amendment shall be
effective without the approval of the stockholders of the Company by the
affirmative vote of the holders of a majority of the outstanding Shares present
or represented and entitled to vote at a meeting of stockholders duly held, if
it were to:

                  (a) authorize the grant of Options that may be exercised more
than ten years after the Date of Grant or that have an Exercise Price which is
less than the Fair Market Value of a Share on the Date of Grant; or

                  (b) materially increase the number of Shares which may be
issued under the Plan;

and, further, provided, however, that no amendment or termination of the Plan
shall be effective to materially impair the rights of a Holder under any Option
granted before the adoption of such amendment or termination by the Board of
Directors, without the written consent of such Holder. No termination or
amendment of this Plan or any Option nor waiver of any right or requirement
under this Plan or any Option shall be binding on the Company unless it is in a
writing duly entered into its records and executed by a duly authorized Officer.




<PAGE>   13

                                                                       EXHIBIT A
                                                     EMPLOYEES' OPTION AGREEMENT

                              ROYAL PRECISION, INC.
                              3490 CLUBHOUSE DRIVE
                           JACKSON HOLE, WYOMING 83001

                                <<Date of Grant>>

<<Name of Grantee>>
<<Street>>
<<City, State, Zip>>


         Congratulations. You have been granted a Stock Option under the
Company's Stock Option Plan dated October 5, 1997 (the "Plan") on the following
terms:

1.   NUMBER OF SHARES. The number of Shares of Common Stock of the Company that
     you may purchase under this Option is:<<Number>>

2.   EXERCISE PRICE. The Exercise Price to purchase Shares under this Option is:
     $<<Price>> per Share.

3.   VESTING. [25%] of the Shares originally subject to this Option will vest
     and become exercisable on the first [four] anniversaries of the date of
     this Agreement if you have been an Employee of the Company continuously
     from the date of this Agreement through the date when such portion of the
     Option vests[ subject to the special rule referred to in paragraph 5
     below]. No portion of this Option shall vest and become exercisable after
     your employment with your Employer has terminated, regardless of the reason
     for such termination.

4.   LAPSE. This Option will lapse and cease to be exercisable upon the earliest
     of:

          (i)  the expiration of 10 years from the date of this Agreement,

          (ii) nine [six] months after you cease to be an Employee because of
               your death or disability,

          (iii) three months after a termination without cause of your
               employment with your Employer, or

          (iv) immediately upon termination of your employment with your
               Employer by such Employer for cause or by your resignation.

5.   TAXATION. This Option is [an Incentive Stock Option][a Nonqualified
     Option].[ Because this Option is an Incentive Stock Option vesting of a
     portion of this Option or of other Incentive Stock Options held by you may
     be deferred under a special rule set forth in Section 5.4 (c) of the Plan.
     If you exercise this Option and dispose of any of the Shares received by
     you as a result of such exercise within two years from the date above or
     within one year after the issuance of such Shares to you upon such
     exercise, you must notify the Company of such disposition and the amount
     received as a result thereof and pay or provide for the withholding taxes
     on such disposition.] [You will have taxable income upon the exercise of
     this Option. At that time, you must pay to the Company an amount equal to
     the required federal, state, and local tax withholding less any withholding
     otherwise made from your salary or bonus. You must satisfy any relevant
     withholding requirements before the Company issues Shares to you.]




<PAGE>   14

6.   EXERCISE. This Option may be exercised by the delivery of this Agreement,
     with the notice of exercise attached hereto properly completed and signed
     by you, to the Treasurer of the Company, together with the aggregate
     Exercise Price for the number of Shares as to which the Option is being
     exercised, after the Option has become exercisable and before it has ceased
     to be exercisable. The Exercise Price must be paid in cash by (a) delivery
     of a certified or cashier's check payable to the order of the Company in
     such amount, (b) wire transfer of immediately available funds to a bank
     account designated by the Company, or (c) reduction of a debt of the
     Company to you. This Option may be exercised as to less than all of the
     Shares purchasable hereunder, but not for a fractional share, nor may it be
     exercised as to less than 100 Shares unless it is exercised as to all of
     the Shares then available hereunder.

7.   NO TRANSFER. This Option may not be sold, pledged nor otherwise transferred
     other than by will or the laws of descent and distribution; and it may be
     exercised during your lifetime only by you. This Agreement is neither a
     negotiable instrument nor a security (as such term is defined in Article 8
     of the Uniform Commercial Code).

8.   NOT AN EMPLOYMENT AGREEMENT. This Agreement is not an employment agreement
     and nothing contained herein gives you any right to continue to be employed
     by or provide services to the Company or affects the right of the Company
     to terminate your employment or other relationship with you.

9.   PLAN CONTROLS. This Agreement is an Option Agreement (as such term is
     defined in the Plan) under Article 5 of the Plan. The terms of this
     Agreement are subject to, and controlled by, the terms of the Plan, as it
     is now in effect or may be amended from time to time hereafter, which are
     incorporated herein as if they were set forth in full. Any words or phrases
     defined in the Plan have the same meanings in this Agreement. The Company
     will provide you with a copy of the Plan promptly upon your written or oral
     request made to its Treasurer.

10.  MISCELLANEOUS. This Agreement sets forth the entire agreement of the
     parties with respect to the subject matter hereof and it supersedes and
     discharges all prior agreements (written or oral) and negotiations and all
     contemporaneous oral agreements concerning such subject matter. This
     Agreement may not be amended or terminated except by a writing signed by
     the party against whom any such amendment or termination is sought. If any
     one or more provisions of this Agreement shall be found to be illegal or
     unenforceable in any respect, the validity and enforceability of the
     remaining provisions hereof shall not in any way be affected or impaired
     thereby. This Agreement shall be governed by the laws of the State of
     Delaware.

         Please acknowledge your acceptance of this Agreement by signing the
enclosed copy in the space provided below and returning it promptly to the
Company.

                                    ROYAL PRECISION, INC.


                                    By:  ______________________________________
                                             <<Name of Officer>>, <<Title>>

Accepted and Agreed to as of 
the date first set forth above:


__________________________________
      <<Name of Grantee>>




<PAGE>   15

                              OPTION EXERCISE FORM

         The undersigned hereby exercises the right to purchase ________________
shares of Common Stock of the Company pursuant to the Option Agreement dated
<<Date of Grant>> under the Company's Stock Option Plan dated October 5, 1997.
The undersigned hereby represents and warrants to the Company that he is not
exercising such rights or planning to transfer such shares while in the
possession of material inside information relating to the Company.


Date:  ________________________

                                              __________________________________
                                                      <<Name of Holder>>


_______________________________      



Sign and complete this Option Exercise Form and deliver it to:

                              ROYAL PRECISION, INC.
                                Attn.: Treasurer
                                 P.O. Box 25182
                           Jackson Hole, Wyoming 83001

together with the Exercise Price in cash by (a) delivery of a certified or
cashier's check payable to the order of the Company in such amount, (b) wire
transfer of immediately available funds to a bank account designated by the
Company, or (c) reduction of a debt of the Company to you.



<PAGE>   16

                                                                       EXHIBIT B
                                                   CONSULTANTS' OPTION AGREEMENT

                              ROYAL PRECISION, INC.
                              3490 CLUBHOUSE DRIVE
                           JACKSON HOLE, WYOMING 83001

                                <<Date of Grant>>

<<Name of Grantee>>
<<Street>>
<<City, State, Zip>>


         Congratulations. You have been granted a Stock Option under the
Company's Stock Option Plan dated October 5, 1997 (the "Plan") on the following
terms:

1.   NUMBER OF SHARES. The number of Shares of Common Stock of the Company that
     you may purchase under this Option is:<<Number>>

2.   EXERCISE PRICE. The exercise price to purchase Shares under this Option is:
     $<<Price>> per Share.

3.   VESTING. [25%] of the Shares originally subject to this Option will vest
     and become exercisable on the first [four] anniversaries of the date of
     this Agreement if you have been a Consultant to the Company continuously
     from the date of this Agreement through the date when such portion of the
     Option vests. No portion of this Option shall vest and become exercisable
     after the termination of the your consulting relation with your Employer,
     regardless of the reason for such termination.

4. LAPSE. This Option will lapse and cease to be exercisable upon the earliest
of:

     (i)  the expiration of 10 years from the date of this Agreement,

     (ii) nine months after you cease to be a Consultant because of your death
          or disability,

     (iii)three months after a termination without cause of your consulting
          relationship with your Employer; or

     (iv) immediately upon termination of your consulting relationship with your
          Employer for cause or by your resignation.

5.   TAXATION. This Option is a Nonqualified Option. You will have taxable
     income upon the exercise of this Option. At that time, you must pay to the
     Company an amount equal to the required federal, state, and local tax
     withholding less any withholding otherwise made from compensation payable
     to you. You must satisfy any relevant withholding requirements before the
     Company issues Shares to you.

6.   EXERCISE. This Option may be exercised by the delivery of this Agreement,
     with the notice of exercise attached hereto properly completed and signed
     by you, to the Treasurer of the Company, together with the aggregate
     Exercise Price for the number of Shares as to which the Option is being
     exercised, after the Option has become exercisable and before it has ceased
     to be exercisable. The Exercise Price must be paid in cash by (a) delivery
     of a certified or cashier's check payable to the order of the Company in
     such amount, (b) wire transfer of immediately available funds to a bank
     account designated by the Company, or (c) reduction of a debt of the


<PAGE>   17

     Company to you. This Option may be exercised as to less than all of the
     Shares purchasable hereunder, but not for a fractional share, nor may it be
     exercised as to less than 100 Shares unless it is exercised as to all of
     the Shares then available hereunder.

7.   NO TRANSFER. This Option may not be sold, pledged nor otherwise transferred
     other than by will or the laws of descent and distribution; and it may be
     exercised during your lifetime only by you. This Agreement is neither a
     negotiable instrument nor a security (as such term is defined in Article 8
     of the Uniform Commercial Code).

8.   NOT A CONSULTING AGREEMENT. This Agreement is not a consulting agreement
     and nothing contained herein gives you any right to continue to provide
     services to the Company or affect the right of the Company to terminate the
     consulting relationship with you.

9.   PLAN CONTROLS. This Agreement is an Option Agreement (as such term is
     defined in the Plan) under Article 6 of the Plan. The terms of this
     Agreement are subject to, and controlled by, the terms of the Plan, as it
     is now in effect or may be amended from time to time hereafter, which are
     incorporated herein as if they were set forth in full. Any words or phrases
     defined in the Plan have the same meanings in this Agreement. The Company
     will provide you with a copy of the Plan promptly upon your written or oral
     request made to its Treasurer.

10.  MISCELLANEOUS. This Agreement sets forth the entire agreement of the
     parties with respect to the subject matter hereof and it supersedes and
     discharges all prior agreements (written or oral) and negotiations and all
     contemporaneous oral agreements concerning such subject matter. This
     Agreement may not be amended or terminated except by a writing signed by
     the party against whom any such amendment or termination is sought. If any
     one or more provisions of this Agreement shall be found to be illegal or
     unenforceable in any respect, the validity and enforceability of the
     remaining provisions hereof shall not in any way be affected or impaired
     thereby. This Agreement shall be governed by the laws of the State of
     Delaware.

         Please acknowledge your acceptance of this Agreement by signing the
enclosed copy in the space provided below and returning it promptly to the
Company.

                                    ROYAL PRECISION, INC.


                                    By:  ______________________________________
                                             <<Name of Officer>>, <<Title>>

Accepted and Agreed to as of 
the date first set forth above:


__________________________________
      <<Name of Grantee>>




<PAGE>   18

                              OPTION EXERCISE FORM

         The undersigned hereby exercises the right to purchase ________________
shares of Common Stock of the Company pursuant to the Option Agreement dated
<<Date of Grant>> under the Company's Stock Option Plan dated October 5, 1997.


Date:  ________________________

                                              __________________________________
                                                      <<Name of Holder>>


_______________________________      




Sign and complete this Option Exercise Form and deliver it to:

                              ROYAL PRECISION, INC.
                                Attn.: Treasurer
                                 P.O. Box 25182
                           Jackson Hole, Wyoming 83001

together with the Exercise Price in cash by (a) delivery of a certified or
cashier's check payable to the order of the Company in such amount, (b) wire
transfer of immediately available funds to a bank account designated by the
Company, or (c) reduction of a debt of the Company to you.




<PAGE>   19

                                                                       EXHIBIT C
                                                     DIRECTORS' OPTION AGREEMENT

                              ROYAL PRECISION, INC.
                              3490 CLUBHOUSE DRIVE
                           JACKSON HOLE, WYOMING 83001

                                <<Date of Grant>>

<<Name of Grantee>>
<<Street>>
<<City, State, Zip>>


         Congratulations. You have been granted a Stock Option under the
Company's Stock Option Plan dated October 5, 1997 (the "Plan") on the following
terms:

 .    NUMBER OF SHARES. The number of Shares of Common Stock of the Company that
     you may purchase under this Option is:<<Number>>

2.   EXERCISE PRICE. The exercise price to purchase Shares under this Option is:
     $<<Price>> per Share.

3.   VESTING. [25%] of the Shares originally subject to this Option will vest
     and become exercisable on each Meeting Date which occurs more than six
     months after the date of this Agreement if you are a Director at the time
     of the adjournment of the meeting of stockholders held on such Meeting
     Date.

4.   LAPSE. This Option will lapse and cease to be exercisable upon the earliest
     of:

          (i)  the expiration of 10 years from the date of this Agreement,

          (ii) nine months after you cease to be a Director because of your
               death or Disability,

          (iii)immediately upon your resignation as a Director, or

          (iv) three months after you cease to be a Director for any reason
               other than your death, disability or resignation.

5.   TAXATION. This Option is a Nonqualified Option. You will have taxable
     income upon the exercise of this Option.

6.   EXERCISE. This Option may be exercised by the delivery of this Agreement,
     with the notice of exercise attached hereto properly completed and signed
     by you, to the Treasurer of the Company, together with the aggregate
     Exercise Price for the number of Shares as to which the Option is being
     exercised, after the Option has become exercisable and before it has ceased
     to be exercisable. The Exercise Price must be paid in cash by (a) delivery
     of a certified or cashier's check payable to the order of the Company in
     such amount, (b) wire transfer of immediately available funds to a bank
     account designated by the Company, or (c) reduction of a debt of the
     Company to you. This Option may be exercised as to less than all of the
     Shares purchasable hereunder, but not for a fractional share, nor may it be
     exercised as to less than 100 Shares unless it is exercised as to all of
     the Shares then available hereunder.



<PAGE>   20

7.   NO TRANSFER. This Option may not be sold, pledged nor otherwise transferred
     other than by will or the laws of descent and distribution; and it may be
     exercised during your lifetime only by you. This Agreement is neither a
     negotiable instrument nor a security (as such term is defined in Article 8
     of the Uniform Commercial Code).

8.   NOT AN EMPLOYMENT AGREEMENT. This Agreement is not an employment agreement
     and nothing contained herein gives you any right to continue to be a
     Director of the Company or affect the right of the stockholders to
     terminate your directorship.

9.   PLAN CONTROLS. This Agreement is an Option Agreement (as such term is
     defined in the Plan) under Article 7 of the Plan. The terms of this
     Agreement are subject to, and controlled by, the terms of the Plan, as it
     is now in effect or may be amended from time to time hereafter, which are
     incorporated herein as if they were set forth in full. Any words or phrases
     defined in the Plan have the same meanings in this Agreement. The Company
     will provide you with a copy of the Plan promptly upon your written or oral
     request made to its Treasurer.

10.  MISCELLANEOUS. This Agreement sets forth the entire agreement of the
     parties with respect to the subject matter hereof and it supersedes and
     discharges all prior agreements (written or oral) and negotiations and all
     contemporaneous oral agreements concerning such subject matter. This
     Agreement may not be amended or terminated except by a writing signed by
     the party against whom any such amendment or termination is sought. If any
     one or more provisions of this Agreement shall be found to be illegal or
     unenforceable in any respect, the validity and enforceability of the
     remaining provisions hereof shall not in any way be affected or impaired
     thereby. This Agreement shall be governed by the laws of the State of
     Delaware.

         Please acknowledge your acceptance of this Agreement by signing the
enclosed copy in the space provided below and returning it promptly to the
Company.

                                    ROYAL PRECISION, INC.


                                    By:  ______________________________________
                                             <<Name of Officer>>, <<Title>>

Accepted and Agreed to as of 
the date first set forth above:


__________________________________
      <<Name of Grantee>>




<PAGE>   21

                              OPTION EXERCISE FORM

         The undersigned hereby exercises the right to purchase ________________
shares of Common Stock of the Company pursuant to the Option Agreement dated
<<Date of Grant>> under the Company's Stock Option Plan, dated October 5, 1997.


Date:  ________________________

                                              __________________________________
                                                      <<Name of Holder>>


_______________________________      




Sign and complete this Option Exercise Form and deliver it to:

                              ROYAL PRECISION, INC.
                                Attn.: Treasurer
                                 P.O. Box 25182
                           Jackson Hole, Wyoming 83001

together with the Exercise Price in cash by (a) delivery of a certified or
cashier's check payable to the order of the Company in such amount, (b) wire
transfer of immediately available funds to a bank account designated by the
Company, or (c) reduction of a debt of the Company to you.