SETTLEMENT AGREEMENT


      This Agreement is being entered into on March 31, 1998 by and among TA
Liquidation Corp., a Delaware corporation formerly known as Tommy Armour Golf
Company, Tommy Armour Golf (Scotland) Ltd., a company incorporated with limited
liability under the laws of Scotland, and USI Canada Inc., an Ontario
corporation ("Sellers"); USI American Holdings, Inc., a Delaware corporation
("Shareholder"); and Tommy Armour Golf Company, a Delaware corporation formerly
known as TearDrop Acquisition Corp. and TearDrop Golf Company, a Delaware
corporation ("Parent").

      The parties recited above are the parties to an Asset Purchase Agreement
dated October 31, 1997 (the "Purchase Agreement"). All capitalized terms not
defined herein shall have the meanings assigned to them in the Purchase
Agreement.

      The Closing was consummated on November 10, 1997. Sellers and Buyer have
had disagreements regarding the Final Net Worth and related adjustment of the
Purchase Price pursuant to Section 2.2 of the Purchase Agreement, and the
parties to the Purchase Agreement now desire to resolve said disagreements, to
determine the final Purchase Price adjustment and to provide for certain other
matters as set forth herein.

      Therefore, the parties, intending to be legally bound, and in
consideration of the mutual agreements set forth herein, hereby agree as
follows:

      1.    Amendment of Purchase Price. The parties hereby agree that, in lieu
            of the provisions of Section 2.2 of the Purchase Agreement
            (Adjustment of Purchase Price) and the related provisions of Section
            2.3 of the Purchase Agreement (Payment of Purchase Price), the
            Purchase Price as set forth in Section 2.1 of the Purchase Agreement
            is hereby amended as follows:

            a.    The Cash Purchase Price shall be increased from Ten Million
                  Dollars ($10,000,000) to Eleven Million, Six Hundred Thousand
                  Dollars ($11,600,000).

            b.    The amount of Common Stock shall be decreased from One Million
                  (1,000,000) shares to One Hundred, Seventy-Five Thousand
                  (175,000) shares.

            c.    The amount of Preferred Stock shall remain unchanged.
<PAGE>

      2.    Final Purchase Price Determination. The parties agree that the
            determination of the Purchase Price set forth in Section 1 of this
            Agreement shall be final and binding on the parties, with the same
            effect as if an Acceptance Notice had been delivered pursuant to
            Section 2.2(d) and payment had been made in accordance with Sections
            2.2 and 2.3 of the Purchase Agreement. The procedures set forth in
            Section 2.2 of the Purchase Agreement shall be of no further force
            or effect. Buyer and Parent hereby absolutely, unconditionally and
            irrevocably release Sellers, Shareholder and the affiliates thereof
            from and against any and all liabilities or claims of any kind in
            connection with or related to the Final Balance Sheet, whether
            asserted or unasserted prior hereto, whether known or unknown, or
            whether arising prior to or subsequent to this Settlement Agreement.
            For the avoidance of doubt, the release set forth herein shall be
            understood to include (without limitation) the obligations of
            Sellers under the purported agreements with Dr. Gary Wiren and Mr.
            Lee Elder and any other agreements of the Business for which an
            accrual could or should have been made on the Final Balance Sheet,
            which obligations shall be borne by Buyer. The preceding sentence
            shall not prejudice the rights of Buyer under any provisions of the
            Purchase Agreement other than Sections 1.5, 2.2 and 2.3 thereof.

      3.    Common Stock. The decrease in the amount of Common Stock pursuant to
            Section 1 shall be accomplished as set forth in this Section. Upon
            receipt of the payment specified in Section 4 below, Seller shall
            transmit its share certificate number TG0053, evidencing ownership
            of 1 million shares of the Parent's common stock, together with an
            appropriate instrument of assignment to the Parent in respect of the
            825,000 shares surrendered hereby, to Continental Stock Transfer &
            Trust Co., 2 Broadway, New York, New York 10004, as transfer agent.
            Parent shall cause said transfer agent to issue a replacement
            certificate in respect of the balance of 175,000 shares of common
            stock forthwith and deliver said certificate to Seller c/o Steven C.
            Barre, Associate General Counsel, U.S. Industries, Inc., 101 Wood
            Avenue South, Iselin, New Jersey 08830. Seller acknowledges that the
            certificate issued to it will bear the same restrictive legend as is
            set forth on certificate number TG0053.

      4.    Payment . Payment of the One Million, Six Hundred Thousand Dollars
            ($1,600,000) due to Buyer pursuant to Section 1 of this Agreement
            shall be made to Sellers on the date hereof by wire transfer of
            immediately available funds as follows:

                        Chase Manhattan Bank
                        New York, New York
                        ABA #021000021
                        USI American Holdings, Inc.
                        A/C #323-073670


                                   -2-
<PAGE>

      5.    Board Seat. Clause (a) of Section 6.18 of the Purchase Agreement is
            hereby amended to read as follows:

                  shares of Preferred Stock having a redemption value of the
                  aggregate amount of $5 million or more, Parent will cause a
                  nominee of Sellers ("Nominee") to be elected to the Parent's
                  Board, and

      6.    Certificate of Designation - Mandatory Redemption. This paragraph
            shall apply in the event that, pursuant to the last sentence of
            Article VI(B) of the Certificate of Designation with respect to the
            Preferred Stock, 60% of certain net cash proceeds are to be applied
            to the redemption of Preferred Stock. In each such event, Parent
            shall purchase from Sellers, and Sellers shall sell to Parent,
            additional shares of Preferred Stock having an aggregate Redemption
            Price (as defined in the Certificate of Designation) equal to 10% of
            the applicable net cash proceeds (but in no event more than the
            remaining shares of Preferred Stock then owned by Sellers), so as to
            have as nearly as possible the same economic effect as if the two
            references to "60%" in Article VI(B) were replaced with references
            to "70%."

      7.    Registration Statement. The registration statement contemplated by
            the Registration Agreement shall be filed with the Securities and
            Exchange Commission on or before April 20, 1998.

      8.    Publicity. The parties shall consult, as contemplated by Section 6.8
            of the Purchase Agreement, before issuing any press release or
            making other disclosure of the terms of this Agreement.

      9.    Representations and Warranties. Each of Sellers, USI, Buyer and
            Parent represents and warrants to the other that:

            a.    The execution and delivery of this Agreement and the other
                  documents to be delivered by such party pursuant hereto, and
                  the consummation of the transactions contemplated hereby and
                  thereby, are within the corporate power of such party and have
                  been duly authorized by all necessary corporate proceedings on
                  the part of such party.

            b.    Such party is a corporation duly organized and in good
                  standing under the laws of the jurisdiction of its
                  incorporation identified in the first paragraph hereof.

            c.    This Agreement and the other documents to be executed by such
                  party pursuant hereto have been duly executed and delivered by
                  such party and 


                                      -3-
<PAGE>

                  constitute its valid and binding obligations and acts,
                  enforceable against such party in accordance with such terms.

            d.    The execution and delivery of this Agreement and the other
                  documents to be executed by such party pursuant hereto, and
                  the consummation of the transactions contemplated hereby and
                  thereby, do not (and will not, with the giving of notice or
                  the passage of time or both) contravene any of the terms of,
                  constitute an event of default under, or permit the exercise
                  or imposition of any lien pursuant to, such parties
                  constitutive documents or any agreement, security document,
                  license, franchise or other right or undertaking to which such
                  party is a party or by which it is bound.

      10.   Miscellaneous.

            a.    This Settlement Agreement shall be binding upon and inure to
                  the benefit of each party hereto and its successors and
                  assigns. This Settlement Agreement is intended to be a
                  complete statement of all the terms of the arrangement between
                  the parties with respect to the matters provided for herein,
                  supercedes any discussions and other communications between
                  the parties with respect to those matters and cannot be
                  changed or terminated orally. Except as amended or modified by
                  this Settlement Agreement, the terms of the Purchase Agreement
                  shall remain in full force and effect.

            b.    The Section headings contained herein are for purposes of
                  convenience only and are not intended to define or limit the
                  contents of said paragraphs.

            c.    This Agreement may be executed in counterparts, each of which
                  shall be an original, but which together shall constitute one
                  and the same Agreement.

      IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first set forth above.


                                    TA LIQUIDATION CORP.

                                    /s/ 
                                    --------------------------------------
                                    Name:
                                    Title:


                                      -4-
<PAGE>

                                    TOMMY ARMOUR GOLF (SCOTLAND) LTD.

                                    /s/ 
                                    --------------------------------------
                                    Name:
                                    Title:


                                    USI CANADA INC.

                                    /s/ 
                                    --------------------------------------
                                    Name:
                                    Title:


                                    USI AMERICAN HOLDINGS, INC.

                                    /s/ 
                                    --------------------------------------
                                    Name:
                                    Title:


                                    TOMMY ARMOUR GOLF COMPANY

                                    /s/ 
                                    --------------------------------------
                                    Name:
                                    Title:


                                    TEARDROP GOLF COMPANY

                                    /s/ 
                                    --------------------------------------
                                    Name:
                                    Title:


                                      -5-