<PAGE>   1
                                                                    Exhibit 10.2

                                  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, 1998, 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), or a general partner or joint venturer of Borrower (if Borrower
is a partnership or joint venture) to such effect.

<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.

[X] This Note amends, restates, renews and replaces in its entirety the note
dated December 30, 1996 in the amount of $12,000,000.00, 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.

[X] 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:

    [X] Security Agreement dated as of May 15, 1997.

    [ ] Mortgage dated as of ___________________on property all or part of
which is commonly known as _______________________________________________.

    [X] Pledge Agreement dated as of date hereof.

    [ ] Other (describe) __________________________________________________.

[X] Payment of this Note has been unconditionally guaranteed by John T. Lupton
(each individually and all collectively referred to as "guarantor") as provided
in separately executed guaranties.

[X] This Note has been executed pursuant to a Note Purchase by the
John T. Lupton Trust U/W Thomas Cartter Lupton 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 a 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 ($100,000.00) 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.


<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) 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 such 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 of 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. SETOFF.

     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 TRAIL, 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 Notices:

                                              6201 Mountain View Road
                                              ---------------------------------
The Arnold Palmer Golf Company                Ooltewah, Tennessee 37363
---------------------------------             ---------------------------------
By: /s/ John T. Lupton
    -----------------------------             ---------------------------------
Title: Chairman of the Board                  Attention:
       --------------------------                       -----------------------
<PAGE>   4
                                    Rider To
                             Master Note (Form 9601)

                                (Prime or LIBOR)
        (At Lender Option LIBOR Periods May Extend Beyond Note Maturity)

DATED AS OF DECEMBER 29, 1997, 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 remainder of the Note and not otherwise defined in this Rider shall have
the same meaning in this Rider as in the remainder of the Note. Wherever
possible this Rider and the remainder of 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 remainder of the Note, the terms of
this Rider shall prevail. Except as modified by this Rider, the terms of the
remainder of the Note shall apply.

     2. Sections 1 ("INTEREST") and 2 ("PREPAYMENTS") of the Note are deleted
and the following is substituted in lieu thereof.

     "SECTION 1. INTEREST.

     1.1 INTEREST RATES. The unpaid principal amount from time to time
outstanding hereunder shall bear interest at 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%). 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 at 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 (to be determined)
               month(s)(which maturity period Borrower shall select subject to
               the terms stated herein) in United States dollars offered to
               Lender in or 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





                                       1
<PAGE>   5

               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 (2.0)%.

          (b) after the maturity of any Loan, until paid, at a rate equal to 2%
          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 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.



                                        2



<PAGE>   6



     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 _______ day of each
     month/quarterly on the ____________________________ day of each
     ________________________ [STRIKE INAPPLICABLE TERMS] 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

     (b) LIBOR applies, monthly on the _____ day of each month/quarterly on the
     _______________________ day of each _____________________ [STRIKE
     INAPPLICABLE TERMS OR INSERT "N/A"], at the end of each respective maturity
     period (unless interest is payable monthly or quarterly as provided above),
     every three months (unless interest is payable monthly or quarterly as
     provided above), 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 of 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



                                        3



<PAGE>   7


     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 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);

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

               (A) As the 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



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<PAGE>   8

               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 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."


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Type Name 
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Type Name 
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The Arnold Palmer Golf Company
By  /s/ John T. Lupton 
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Title Chairman of the Board
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