<PAGE>   1
                                                                   Exhibit 10.2
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Obligator File Name           Obligor#      Obligation Number           Officer#                Amount
<S>                           <C>           <C>                         <C>                     <C>
                                                                                                $
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                Chicago, Illinois
                                                                                    Dated as of December 30, 1996
                                                                                                -----------
</TABLE>


                                 MASTER NOTE
                 (CORPORATION, PARTNERSHIP, OR JOINT VENTURE)

This Note has been executed by THE ARNOLD PALMER GOLF COMPANY, a corporation
formed under the laws of the State of Tennessee ("Borrower"); if more than one
entity executes this Note, the term "Borrower" refers to each of them
individually and some or all of them collectively, and their obligations
hereunder shall be joint and several.*  If a land trustee executes this Note,
"Borrower" as used in sections 6 and 7 below also includes any beneficiary(ies)
of the land trust.**

     FOR VALUE RECEIVED, on or before December 29, 1997, the scheduled maturity
date hereof, Borrower promises to pay to the order of THE NORTHERN TRUST
COMPANY, an Illinois banking corporation (hereafter, together with any
subsequent holder hereof, called "Lender"), at its main banking office at 50
South LaSalle Street, Chicago, Illinois 60675, or at such other place as Lender
may direct, the aggregate unpaid principal balance of each advance (a "Loan"
and collectively the "Loans") made by Lender to Borrower hereunder.  The total
principal amount of Loans outstanding at any one time hereunder shall not exceed
TWELVE MILLION AND NO/100 UNITED STATES DOLLARS ($12,000,000).

     Lender is hereby authorized by Borrower at any time and from time to time
at Lender's sole option to attach a schedule (grid) to this Note and to endorse
thereon notations with respect to each Loan specifying the date and principal
amount thereof, the Interim Maturity Date (as defined below) (if applicable),
the applicable interest rate and rate option, and the date and amount of each
payment of principal and interest made by Borrower with respect to each such
Loan.  Lender's endorsements as well as its records relating to Loans shall be
rebuttably presumptive evidence of the outstanding principal and interest on
the Loans, and, in the event of inconsistency, shall prevail over any records
of Borrower and any written confirmations of Loans given by Borrower.

     If Borrower wishes to obtain a Loan under this Note, Borrower shall notify
Lender orally or in writing on a banking day.  Any such notice shall be
irrevocable; if the notice is received after 10:00 AM Chicago time the Loan may
not be available until the next banking day.  Additional procedures for "Bank
Offered Rate" Loans, if available, are set forth below.

     Each request for a Loan shall be deemed to be a representation and
warranty by Borrower to Lender that: (i) no Event of Default or Unmatured Event
of Default (in each case as defined below) has occurred and is continuing as of
the date of such request or would result from the making of the Loan; and (ii)
Borrower's representations and warranties herein are true and correct as of
such date as though made on such date.  Upon receipt of each Loan request
Lender in its sole discretion shall have the right to request that Borrower
provide to Lender, prior to Lender's funding of the Loan, a certificate
executed by Borrower's President, Treasurer, or Chief Financial Officer (if
Borrower is a corporation), to such effect.

1. INTEREST.*

* See Rider attached hereto and incorporated herein.

<PAGE>   2
2.      PREPAYMENTS.**

3.      REFERENCES TO PREVIOUS NOTES, FACILITY TYPE, COLLATERAL, GUARANTIES,
LOAN & OTHER AGREEMENTS. (CHECK AS APPLICABLE)

LINE OF CREDIT: This Note has been executed pursuant to a line of credit. At
the present time Lender intends to make available to Borrower credit as outlined
herein or in any related letter until the maturity day indicated above unless
in Lender's sole judgment there has occurred an adverse change in the assets,
condition or prospects of Borrower or any guarantor. THE LINE OF CREDIT MAY BE
CANCELLED OR REDUCED BY LENDER AT LENDER'S SOLE OPTION WITHOUT PRIOR NOTICE TO
BORROWER OR ANY OTHER PERSON OR ENTITY. THE LINE OF CREDIT IS REVOCABLE
NOTWITHSTANDING PAYMENT OF ANY FEES OR MAINTENANCE OF ANY ACCOUNT BALANCES. AS
AND IF PROVIDED IN ANY ACCOMPANYING LETTER OR OTHER DOCUMENT PERTAINING TO SUCH
FEES AND/OR BALANCES. Any such fees and/or balances shall be deemed
compensation to Lender for being prepared to respond to Borrower's requests for
credit under this Note.

/ /     This Note amends, restates, renews and replaces in its entirety the
note dated ___________________________________ in the amount of $ ____________, 
and any previously renewed note(s).  Borrower hereby expressly confirms that all
collateral and guaranties given for such prior note(s) shall secure or
guarantee this Note. All amounts outstanding under such previous note(s) shall
be deemed automatically outstanding hereunder.

/ /     This Note is secured without limitation as provided in the following
and all related documents, in each case as amended, modified, renewed, restated
or replaced from time to time:

        / /     Security Agreement dated as of ________________________________.

        / /     Mortgage dated as of __________________________________________
                on property all or part of which is commonly know as___________
                _______________________________________________________________
                _______________________________________________________________.

        / /     Pledge Agreement dated as of __________________________________.

        / /     Other (describe) ______________________________________________
                _______________________________________________________________.


/X/     Payment of this Note has been unconditionally guaranteed by  See Rider
attached hereto and Incorporated herein. (each individually and all
collectively referred to as "guarantor") as provided in separately executed
guaranties.

/ /     This Note has been executed pursuant to a __________________ Agreement, 
dated as of the date hereof, as amended, modified, restated, renewed, or
replaced from time to time, containing covenants and other terms, to which
reference is hereby made.

4.      USE OF PROCEEDS, CHECK ONE:

/X/     Borrower represents and warrants that the proceeds of this Note will be
used solely for business purposes, and not for personal, family or household
use, within the meaning of Federal Truth-in-Lending and similar state laws and
regulations.

/ /     ****Borrower represents that the proceeds of this Note will be used for
personal, family or household use. IF THIS OPTION IS CHECKED, THE FIRST LOAN
MUST BE IN THE AMOUNT OF $25,001 OR MORE.

If Loan proceeds will be used to purchase or refinance the purchase of any
property describe:  N/A _______________________________________________________
_______________________________________________________________________________.

Notwithstanding any other provision hereof, if this Note is covered by
Regulation Z of the Federal Reserve Board (Truth in Lending) or any like
disclosure requirement. this Note shall be secured by collateral referenced
herein or in any other document only if disclosed in a related disclosure
statement.

5.      REPRESENTATIONS.
Borrower hereby represents and warrants to Lender that:
        (a)     Borrower and any "Subsidiary" (as defined below) are existing
        and in good standing under the laws of their state of formation, are
        duly qualified, in good standing and authorized to do business in each
        jurisdiction where failure to do so might have a material adverse 
        impact on the consolidated assets, condition or prospects of Borrower; 
        the execution, delivery and performance of this Note and all related 
        documents and instruments are within Borrower's powers and have been 
        authorized by all necessary corporate, action;

        (b)     the execution, delivery and performance of this Note and all
        related documents and instruments have received any and all     
        necessary governmental approval, and do not and will not contravene or
        conflict with any provision of law or of the charter or by-laws of
        Borrower or any agreement affecting Borrower or its property; and

        (c)     there has been no material adverse change in the business,
        condition, properties, assets, operations or prospects of Borrower or 
        any guarantor since the date of the latest financial statements 
        provided on behalf of Borrower or any guarantor to Lender prior to the 
        execution of this Note.

"Subsidiary" means any corporation, partnership, joint venture, trust, or other
legal entity of which Borrower owns directly or indirectly fifty percent (50%)
or more of the outstanding voting stock or interest, or of which Borrower has
effective control by contract or otherwise.

6.      EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default";

        (a)     failure to pay, when and as due, any principal, interest or
other amounts payable hereunder; failure to comply with or perform any
agreement or covenant of Borrower contained herein; or failure to furnish (or
caused to be furnished to) Lender when and as requested by Lender (but not more
often than once every twelve months) fully completed financial statement(s) of 
any guarantor on Lender's then-standard form together with such supporting 
information as Lender may reasonably request; or

        (b)     any default, event of default or similar event shall occur or
continue under any other instrument, document, note, agreement, or guaranty
delivered to Lender in connection with this Note, or any such instrument,
document, note, agreement, or guaranty shall not be, or shall cease to be,
enforceable in accordance with its terms; or

        (c)     there shall occur any default or event of default, or any event
or condition that might become such with notice or the passage of time or both,
or any similar event, or any event that requires the prepayment of borrowed
money or the acceleration of the maturity thereof, under the terms of any
evidence of indebtedness or other agreement issued or assumed or entered into
by Borrower, any Subsidiary, or any guarantor, or under the terms of any
indenture, agreement, or instrument under which any such evidence of
indebtedness or other agreement is issued, assumed, secured, or guaranteed, and
such event shall continue beyond any applicable period of grace; or

        (d)     any representation, warranty, schedule, certificate, financial
statement, report, notice, or other writing furnished by or on behalf of
Borrower, any Subsidiary, or any guarantor to Lender is false or misleading in
any material respect on the date as of which the facts therein set forth are
stated or certified; or

        (e)     any guaranty of or pledge of collateral security for this Note
shall be repudiated or become unenforceable or incapable of performance; or

        (f)     Borrower or any Subsidiary shall fail to maintain their
existence in good standing in their state of formation or shall fail to be duly
qualified, in good standing and authorized to do business in each jurisdiction
where failure to do so might have a material adverse impact on the consolidated
assets, condition or prospects of Borrower; or

        (g)     Borrower, any Subsidiary, or any guarantor shall die, become
incompetent, dissolve, liquidate, merge, consolidate, or cease to be in
existence for any reason; or

        (h)     any person or entity presently not in control of Borrower, or
any guarantor, shall obtain control directly or indirectly of Borrower, or any
guarantor, whether by purchase or gift of stock or assets, by contract, or
otherwise; or

        (i)     any proceeding (judicial or administrative) shall be commenced
against Borrower, any Subsidiary, or any guarantor, or with respect to any
assets of Borrower, any Subsidiary, or any guarantor which shall threaten to
have a material and adverse effect on the assets, condition or prospects of
Borrower, any Subsidiary, or any guarantor; or final judgment(s) and/or
settlement(s) in an aggregate amount in excess of One Hundred Thousand and
no/100 UNITED STATES DOLLARS ($100,000) in excess of insurance for which the
insurer has confirmed coverage in writing, a copy of which writing has been
furnished to Lender, shall be entered or agreed to in any suit or action
commenced against Borrower, any Subsidiary, or any guarantor; or

        (j)     Borrower shall grant or any person (other than Lender) shall
obtain a security interest in any collateral for this Note; Borrower or any
other person shall perfect (or attempt to perfect) such a security interest; a
court shall determine that Lender does not have a first-priority security
interest in any of the collateral for this Note enforceable in accordance with
the terms of the related documents; or any notice of a federal tax lien
against Borrower shall be filed with any public recorder; or

      ****If this box is checked and a land trustee is signing the Note,
                    do not take real estate as collateral.

            ** See Rider attached hereto and incorporated herein.



                                    Page 2
<PAGE>   3
        (k) there shall be any material loss or depreciation in the value of any
collateral for this Note for any reason, or Lender shall otherwise reasonably
deem itself insecure; or, unless expressly permitted by the related documents,
all or any part of any collateral for this Note or any direct, indirect, legal,
equitable or beneficial interest therein is assigned transferred or sold
without Lender's prior written consent; or

        (l) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, liquidation, dissolution, or similar proceeding, domestic or
foreign, is instituted by or against Borrower, any Subsidiary, or any
guarantor; or Borrower, any Subsidiary, or any guarantor shall take any steps
toward, or to authorize, such a proceeding; or

        (m) Borrower, any Subsidiary, or any guarantor shall become insolvent,
generally shall fail or be unable to pay its debts as they mature, shall admit
in writing its inability to pay its debts as they mature, shall make a general 
assignment for the benefit of its creditors, shall enter into any composition
or similar agreement, or shall suspend the transaction of all or a substantial
portion of its usual business.

7.      DEFAULT REMEDIES.

        (a)  Upon the occurrence and during the continuance of any Event of
Default specified in Section 6(a)-(k), Lender at its option may declare this
Note (principal, interest and other amounts) be immediately due and payable
without notice or demand of any kind. Upon the occurrence of any Event of
Default specified in Section 6(l)-(m), this Note (principal, interest and other
amounts) shall be immediately and automatically due and payable without action
of any kind on the part of Lender.  Upon the occurrence and during the
continuance of any Event of Default, Lender may exercise any rights and
remedies under this Note, any related document or instrument (including without
limitation any pertaining to collateral), and at law or in equity.

        (b)  Lender may, by written notice to Borrower, at any time and from
time to time, waive any Event of Default or "Unmatured Event of Default" (as
defined below), which shall be for such period and subject to such conditions
as shall be specified in any notice.  In the case of any such waiver, Lender
and Borrower shall be restored to their former position and rights hereunder,
and any Event of Default or Unmatured Event of Default so waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to or
impair any subsequent or other Event of Default or Unmatured Event or Default. 
No failure to exercise, and no delay in exercising, on the part of Lender of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.  
The rights and remedies of Lender herein provided are cumulative and not 
exclusive of any rights or remedies provided by law.  "Unmatured Event of 
Default" means any event or condition which would become an Event of Default 
with notice or the passage of time or both.

8.      NO INTEREST OVER LEGAL RATE.
        
        Borrower does not intend or expect to pay, nor does Lender intend or
expect to charge, accept or collect any interest which, when added to any fee
or other charge upon the principal which may legally be treated as interest,
shall be in excess of the highest lawful rate.  If acceleration, prepayment or
any other charges upon the principal or any portion thereof, or any other
circumstance, result in the computation or earning of interest in excess of the
highest lawful rate, then any and all such excess is hereby waived and shall be
applied against the remaining principal balance.  Without limiting the
generality of the foregoing, and notwithstanding anything to the contrary
contained herein or otherwise, no deposit of funds shall be required in
connection herewith which will, when deducted from the principal amount
outstanding hereunder, cause the rate of interest hereunder to exceed the
highest lawful rate.

9.      PAYMENTS, ETC.
        
        All payments hereunder shall be made in immediately available funds,
and shall be applied first to accrued interest and then to principal; however,
if an Event of Default occurs, Lender may, in its sole discretion, and in such
order as it may choose, apply any payment to interest, principal and/or lawful
charges and expenses then accrued.  Borrower shall receive immediate credit on
payments received during Lender's normal banking hours if made in cash,
immediately available funds, or by debit to available balances in an account at
Lender; otherwise payments shall be credited after clearance through normal
banking channels.  Borrower authorizes Lender to charge any account of Borrower
maintained with Lender for any amounts of principal, interest, taxes, duties,
or other charges or amounts due or payable hereunder, with the amount of such
payment subject to availability of collected balances in Lender's discretion;
unless Borrower instructs otherwise, all Loans shall be credited to an
account(s) of Borrower with Lender. LENDER AT ITS OPTION MAY MAKE LOANS
HEREUNDER UPON TELEPHONIC INSTRUCTIONS AND IN SO DOING SHALL BE FULLY ENTITLED
TO RELY SOLELY UPON INSTRUCTIONS, INCLUDING WITHOUT LIMITATION INSTRUCTIONS TO
MAKE TRANSFERS TO THIRD PARTIES, REASONABLY BELIEVED BY LENDER TO HAVE BEEN
GIVEN BY AN AUTHORIZED PERSON, WITHOUT INDEPENDENT INQUIRY OF ANY TYPE. All
payments shall be made without deduction for or on account of any present or
future taxes, duties or other charges levied or imposed on this Note or the
proceeds, Lender or Borrower by any government or political subdivision
thereof.  Borrower shall upon request of Lender pay all such taxes, duties or
other charges in addition to principal and interest, including, without
limitation all documentary stamp and intangible taxes, but excluding income
taxes based solely on Lender's income.

10.     SET OFF.

        At any time and without notice of any kind, any account, deposit or
other indebtedness owing by Lender to Borrower, and any securities or other
property of Borrower delivered to or left in the possession of Lender or its
nominee or bailee, may be set off against and applied in payment of any
obligation hereunder, whether due or not.

11.     NOTICES.
        
        All notices, requests and demands to or upon the respective parties
hereto shall be deemed to have been given or made when deposited in the mail,
postage prepaid, addressed if to Lender to its main banking office indicated
above (Attention:  Division Head, ***__________________ Division), and if to
Borrower to its address set forth below, or to such other address as may be
hereafter designated in writing by the respective parties hereto or, as to
Borrower, may appear in Lender's Records. 
*** Wealth Management

12.     MISCELLANEOUS

        This Note and any document or instrument executed in connection
herewith shall be governed by and construed in accordance with the internal law
of the State of Illinois, and shall be deemed to have been executed in the
State of Illinois.  Unless the context requires otherwise, wherever used herein
the singular shall include the plural and vice versa, and the use of one gender
shall also denote the other.  Captions herein are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof;
references herein to Sections or provisions without reference to the document
in which they are contained are references to this Note.  This Note shall bind
Borrower, its heirs, trustees (including without limitation successor and
replacement trustees), executors, personal representatives, successors and
assigns, and shall inure to the benefit of Lender, its successors and assigns,
except that Borrower may not transfer or assign any of its rights or interest
hereunder without the prior written consent of Lender.  Borrower agrees to pay
upon demand all expenses (including without limitation attorneys' fees, legal
costs and expenses, and time charges of attorneys who may be employees of
Lender, in each case whether in or out of court, in original or appellate
proceedings or in bankruptcy) incurred or paid by Lender or any holder hereof
in connection with the enforcement or preservation of its rights hereunder or
under any document or instrument executed in connection herewith.  Borrower
expressly and irrevocably waives notice of dishonor or default as well as
presentment, protest, demand and notice of any kind in connection herewith.  If
there shall be more than one person or entity constituting Borrower, each of
them shall be primarily, jointly and severally liable for all obligations
hereunder.

13.     WAIVER OF JURY TRIAL, ETC.

        BORROWER HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S SOLE AND
ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH RESPECT TO,
ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY DOCUMENT OR INSTRUMENT
EXECUTED IN CONNECTION HEREWITH SHALL BE SUBJECT TO LITIGATION IN COURTS HAVING
SITUS WITHIN OR JURISDICTION OVER COOK COUNTY, ILLINOIS.  BORROWER HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT
LOCATED IN OR HAVING JURISDICTION OVER SUCH COUNTY, AND HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO REQUEST OR DEMAND TRIAL BY JURY, TO TRANSFER OR
CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT BY  LENDER IN
ACCORDANCE WITH THIS PARAGRAPH, OR TO CLAIM THAT ANY SUCH PROCEEDING HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

/X/     See Rider attached hereto and incorporated herein by reference.

        Lender is hereby authorized by Borrower without notice to Borrower to
fill in any blank spaces and dates and strike inapplicable terms herein or in
any related document to conform to the terms upon which the Loan(s) evidenced
hereby are or may be made, for which purpose Lender shall be deemed to have 
been granted an irrevocable power of attorney coupled with an interest.

                                       Address for Notice:                
                                                                          
                                       6201 Mountain View Road            
                                       ---------------------------------

THE ARNOLD PALMER GOLF COMPANY         Ooltewah, TN 37363                 
--------------------------------       ---------------------------------  

By:  /s/ George H. Nichols             Attention: David Kirby             
   -----------------------------       ---------------------------------  
                                                                          
Title: President                       Attention:                         
      --------------------------                 -----------------------  



                                    Page 3
<PAGE>   4
                             Rider to Master Note

DATED AS OF DECEMBER 30, 1996, EXECUTED BY THE ARNOLD PALMER GOLF COMPANY (the
"Borrower") IN FAVOR OF THE NORTHERN TRUST COMPANY (the "Lender").

1.   This Rider is attached to and forms an integral part of the
     above-referenced Master Note (as amended, the "Note").  Capitalized terms
     defined in the Note and not otherwise defined in this Rider shall have the 
     same meaning in this Rider as in the Note.  Wherever possible this Rider 
     and the Note shall be construed so as to be consistent with each other; 
     however, if and to the extent that the terms of the Rider conflict or are 
     inconsistent with the Note, the terms of the Rider shall prevail.  Except
     as modified by this Rider, the terms of the Note shall apply.

2.       Section 3 of the printed form dealing with guarantees is deleted and
the following is substituted therefor:

         "Payment of this Note has been unconditionally guaranteed by (i) John
T. Lupton pursuant to a Guaranty dated as of December 30, 1996 (as amended, the
"Guaranty") which Guaranty is secured by (a) that certain Security Agreement
dated as of August 22, 1995 (as amended) between John T. Lupton and Lender and
(ii) the John T. Lupton Trust pursuant to that certain Note Purchase Agreement
dated as of December 30, 1996 (as amended) between the Trust and the Lender
(each individually and collectively referred to as "guarantor") as provided in
separately executed documentation."

THE ARNOLD PALMER GOLF COMPANY

By: /s/ George H. Nichols
    ------------------------------------------
         Type Name:
                    --------------------------
Title: President
       ---------------------------------------
<PAGE>   5
                                   RIDER TO
                           MASTER NOTE (FORM 9601)
                               (PRIME OR LIBOR)
       (AT LENDER OPTION LIBOR PERIODS MAY EXTEND BEYOND NOTE MATURITY)


DATED AS OF DECEMBER 30, 1996, EXECUTED BY THE ARNOLD PALMER GOLF COMPANY (the
"Borrower") IN FAVOR OF THE NORTHERN TRUST COMPANY (the "Lender").

         1.      This Rider is attached to and forms an integral part of the
above-referenced Master Note (as amended, the "Note").  Capitalized terms
defined in the Note and not otherwise defined in this Rider shall have the same
meaning in this Rider as in the Note.  Wherever possible this Rider and the
Note shall be construed so as to be consistent with each other; however, if and
to the extent that the terms of this Rider conflict or are inconsistent with
the Note, the terms of this Rider shall prevail.  Except as modified by this
Rider, the terms of the Note shall apply.

         2.      Sections 1 ("INTEREST") and 2 ("PREPAYMENTS") of the printed
form are deleted and the following is substituted therefor.

         SECTION 1.  INTEREST.

         1.1.    INTEREST RATES.  The unpaid principal amount from time to time
outstanding hereunder shall bear interest as the following rates per year:

         (a)     before maturity of any Loan, whether by acceleration or
         otherwise, at the option of Borrower, subject to the terms hereof at a 
         rate equal to:

                 (i)      the "Prime-Based Rate," which shall mean the Prime
                 Rate (as defined below), less 1/2 percent (.50%) per annum.
                 Changes in the rate of interest on the Loans resulting from a
                 change in the Prime Rate shall take effect on the date set 
                 forth in each announcement for a change in the Prime Rate.  
                 "Prime Rate" means the rate announced from time to time by the
                 Lender called its prime rate, which may not as any time be
                 the lowest rate charged by the Lender; or

                 (ii)     "LIBOR," which shall mean that fixed rate of interest
                 per year for deposits with maturity periods of one, two or 
                 three months (which maturity period Borrower shall select
                 subject to the terms stated herein) in United States dollars
                 offered to Lender in and through the London or another 
                 offshore interbank market, as determined by the Lender in its
                 sole discretion for or as of the borrowing date requested by
                 the Borrower, divided by one minus any applicable reserve 
                 requirement (expressed as a decimal) on Eurodollar deposits of
                 the same amount and maturity as determined by Lender in its
                 sole discretion, plus two percent (2%) per annum.
<PAGE>   6
        (b)     after the maturity of any Loan, until paid, at a rate equal to
        2% per annum in addition to the Prime Rate (but not less than the Prime
        Rate in effect at maturity).

        1.2     RATE SELECTION. Borrower shall select and change its selection
of the interest rate as between the Prime-Based Rate and LIBOR to apply to at
least $100,000 and in integral multiples of $100,000 thereafter (or the
remaining amount available hereunder) of any advance (Loan), subject to the
requirements herein stated:

        (a)     At the time any advance is made;

        (b)     At the expiration of the particular LIBOR maturity period
        selected for the outstanding principal balance of any advance currently
        bearing interest at the LIBOR Rate; and 

        (c)     At any time for the outstanding principal balance of any
        advance currently bearing interest at the Prime-Based Rate.

        1.3     RATE CHANGES AND NOTIFICATIONS.

        (a)     LIBOR.  If the Borrower wishes to borrow funds at LIBOR or if
        Borrower wishes to change the rate of interest on any advance, within
        the limits described above, from the Prime-Based Rate to LIBOR, it
        shall, not less than three banking days of the Lender prior to the
        banking day of the Lender on which such rate is to take effect give
        Lender written or telephonic notice thereof, which shall be 
        irrevocable.  Such notice shall specify the advance to which LIBOR is
        to apply, and, in addition, the desired LIBOR maturity period (but not
        to exceed the maturity date of this Note unless the Lender consents     
        otherwise).

        (b)     Failure to Notify.  If Borrower does not notify Lender at the
        expiration of a selected maturity period with respect to any principal
        outstanding at LIBOR, then in the absence of such notice Borrower
        shall be deemed to have elected to have such principal accrue interest
        after the respective LIBOR maturity period at the Prime-Based Rate.  If
        Borrower wishes to borrow money at the Prime-Based Rate, it shall
        notify Lender on the date of borrowing or conversion; if any such
        notification is not received before 10:00 AM Chicago time on a banking
        day of the Lender, at Lender's option the borrowing or conversion may
        not be effected until the next banking day.  If Borrower does not
        notify Lender as to its selection of the interest rate option with
        respect to any new advance of principal, then in the absence of such
        notice Borrower shall be deemed to have elected to have such advance
        accrue interest at the Prime-Based Rate.

        1.4     INTEREST PAYMENT DATES.  Accrued interest shall be paid in
respect of: each portion of principal to which:

        (a)     the Prime-Based Rate applies, monthly on the last day of each
        month of each year, beginning with the first of such dates to occur 
        after the date of the first advance, at maturity of this Note, and upon
        payment in full, whichever is earlier or more frequent; and


                                      2

<PAGE>   7
        (b)     LIBOR applies, monthly on the last day of each month, at
        maturity of this Note, and upon payment in full, whichever is earlier
        or more frequent.

After maturity, interest shall be payable upon demand.

        1.5     ADDITIONAL PROVISIONS WITH RESPECT TO LIBOR LOANS.

        The selection by Borrower of LIBOR, and the maintenance of advances at
such rate shall be subject to the following additional terms and conditions:

        (a)     Availability of Deposits at a Determinable Rate.  If after
        Borrower has elected to borrow or maintain any advance at LIBOR, Lender 
        notifies Borrower that:

                (i)     United States dollar deposits in the amount and for the 
                maturity requested are not available to Lender in the London 
                interbank market, or

                (ii)    Reasonable means do not exist for Lender to determine 
                LIBOR for the amount and maturity requested, all as determined
                by the Lender in its sole discretion, then the principal
                subject or to be subject to LIBOR shall accrue or shall
                continue to accrue interest at the Prime-Based Rate.

        (b)     Prohibition of Making, Maintaining or Repayment or Principal at
        LIBOR.  If any treaty, statute, regulation, interpretation thereof, or
        any directive, guideline, or otherwise by a central bank or fiscal
        authority (whether or not having the force of law) shall either
        prohibit or extend the time at which any principal subject to LIBOR may
        be purchased, maintained, or repaid, then on and as of the date the
        prohibition becomes effective, the principal subject to that 
        prohibition shall continue at the Prime-Based Rate.

        (c)     Payments of Principal and Interest to be Net of Any Taxes or
        Costs.  All payments of principal and interest shall be made net of any
        taxes and costs incurred by Lender resulting from having principal
        outstanding hereunder at LIBOR.  Without limiting the generality of the
        preceding obligation, illustrations of such taxes and costs are:

                (i)     Taxes (or the withholding of amounts for taxes) of any 
                nature whatsoever including income, excise, and interest 
                equalization taxes (other than income taxes imposed by the 
                United States or any state thereof on the income of Lender), as
                well as all levies, imposts, duties, or fees whether now in
                existence or resulting from a change in, or promulgation of, any
                treaty, statute, regulation, interpretation thereof, or any 
                directive, guideline, or otherwise, by a central bank or fiscal
                authority (whether or not having the force of law) or a change 
                in the basis of, or time of payment of, such taxes and other
                amounts resulting therefrom;
        
                (ii)    Any reserve or special deposit requirements against
                assets or liabilities of, or deposits with or for the account
                of, Lender with respect to principal outstanding at LIBOR
                (including those imposed under Regulation D of the Federal
                Reserve Board) or resulting from a change in, or the 
                promulgation of, such requirements by
                


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<PAGE>   8
        
        treaty, statute, regulation, interpretation thereof, or any
        directive, guideline, or otherwise by a central bank or fiscal
        authority (whether or not having the force of law);

        (iii)   Any other costs resulting from compliance with treaties, 
        statutes, regulations, interpretations, or any directives or
        guidelines, or otherwise by a central bank or fiscal authority (whether
        or not having the force of law); or

        (iv)    Any loss (including loss of anticipated profits) or
        expense incurred by reason of the liquidation of re-employment of
        deposits acquired by Lender to make advances or maintain principal
        outstanding at LIBOR:

                 (A)     As a result of a voluntary prepayment at a date
                 other than the maturity date selected for principal
                 outstanding at LIBOR; or

                 (B)     As the result of a mandatory repayment at a
                 date other than the maturity date selected for principal
                 outstanding at LIBOR as a result of (i) Borrower exceeding any
                 applicable borrowing base, (ii) the occurrence of an Event of
                 Default and the acceleration of any portion of the
                 indebtedness hereunder, or (iii) the scheduled maturity date
                 of this Note occurring prior to the LIBOR maturity date
                 due to Borrower's selection of a LIBOR maturity period which
                 extends beyond the scheduled maturity date of this Note; or

                 (C)     As the result of a prohibition on making,
                 maintaining, or repaying principal outstanding at LIBOR.

If Lender incurs any such taxes or costs, Borrower, upon demand in writing
specifying such taxes and costs, shall promptly pay them; save for manifest
error Lender's specification shall be presumptively deemed correct.  All
advances made at LIBOR shall be conclusively deemed to have been funded by or
on behalf of Lender in the London interbank market by the purchase of deposits
corresponding in amount and maturity to the amount and interest periods
selected (or deemed to have been selected) by Borrower under this Note.

        SECTION 2. PAYMENT

        2.1     PAYMENT AND PREPAYMENT.  Borrower may from time to time, upon
at least three days' prior written notice to Lender, prepay any principal
bearing interest at the Prime-Based Rate in whole or in part at any time and
may prepay any principal bearing interest at LIBOR at the end of the maturity
period chosen or agreed to by Borrower applicable to the advance or portion of
the advance being prepaid, without premium or penalty, provided that any
partial prepayment shall be in an aggregate principal amount of at least
$10,000.  Any prepayment of an amount bearing interest at LIBOR at a date
other than the maturity date applicable to the advance or the portion of the
advance being prepaid shall be subject to the provisions of Section 1.5.  All
prepayments shall include interest accrued to the date of the prepayment on
the principal amount being prepaid.



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<PAGE>   9
provisions of Section 1.5.  All prepayments of principal shall include interest
accrued to the date of prepayment on the principal amount being prepaid.

        2.2     BASIS OF COMPUTATION.  Interest shall be computed for the actual
number of days elapsed on the basis of a year consisting of 360 days, including
the date a Loan is made and excluding the date a Loan or any portion thereof is
paid or prepaid.


THE ARNOLD PALMER GOLF COMPANY

By /s/ George H. Nichols
  ----------------------------

      Type Name:
                --------------

Title  President
     -------------------------




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