<PAGE>

                                                                Exhibit 10(x)(5)

PREPARED BY AND UPON
RECORDATION RETURN TO:
Dechert LLP
30 Rockefeller Plaza
New York, NY 10112-2200
Attention:  Joseph Philip Forte, Esq.

                                                                LOAN NO.:  58036
                                                         SERVICING NO.:  3180114

================================================================================

THIS DEED OF TRUST COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES AND IS TO BE
            RECORDED IN THE REAL ESTATE RECORDS AS A FIXTURE FILING.

                          ASHWORTH EDC, LLC, as grantor

                                                            (Borrower)

                                       To

                             PRLAP, INC., as trustee

                                                            (Trustee)

                               for the benefit of

                      BANK OF AMERICA, N.A., as beneficiary

                                                            (Lender)

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

             DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
                          AGREEMENT AND FIXTURE FILING

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

                            Dated:      As of April 2, 2004

                         Location:      4010 Ocean Ranch Boulevard
                                        Oceanside, California
                           County:      San Diego

                         File No.:      345677

================================================================================

<PAGE>

      THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING (this "SECURITY INSTRUMENT") is made as of this 2nd day of April,
2004, by ASHWORTH EDC, LLC, a Delaware limited liability company, having its
principal place of business at 2765 Loker Avenue West, Carlsbad, California
92008, as grantor ("BORROWER") to PRLAP, INC., a North Carolina corporation,
having an address at c/o Capital Markets Servicing Group, 555 South Flower
Street, 6th Floor, CA9-706-06-42, Los Angeles, California 90071 as trustee
("TRUSTEE") for the benefit of BANK OF AMERICA, N.A., a national banking
association, having an address at, 214 North Tryon Street, Charlotte, North
Carolina 28255, as mortgagee ("LENDER"). All capitalized terms not defined
herein shall have the respective meanings set forth in the Loan Agreement
(defined below).

                                    RECITALS:

      This Security Instrument is given to secure a loan (the "LOAN") in the
principal sum of Eleven Million Six Hundred Fifty Thousand and 00/100 Dollars
($11,650,000) advanced pursuant to that certain Loan Agreement, dated as of the
date hereof, between Borrower and Lender (as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time, the "LOAN
AGREEMENT") and evidenced by that certain Promissory Note, dated the date
hereof, made by Borrower in favor of Lender (such Promissory Note, together with
all extensions, renewals, replacements, restatements or modifications thereof
being hereinafter referred to as the "NOTE");

      Borrower desires to secure the payment of the Debt (as defined in the Loan
Agreement) and the performance of all of its obligations under the Note, the
Loan Agreement and the other Loan Documents (as defined in the Loan Agreement);
and

      This Security Instrument is given pursuant to the Loan Agreement, and
payment, fulfillment, and performance by Borrower of its obligations thereunder
and under the other Loan Documents are secured hereby.

                         ARTICLE 1 - GRANTS OF SECURITY

      SECTION 1.1 PROPERTY MORTGAGED. Borrower does hereby irrevocably mortgage,
grant, bargain, sell, pledge, assign, warrant, transfer, convey and grant a
security interest to Trustee, its successors and assigns, for the benefit of
Lender and its successors and assigns the following property, rights, interests
and estates to the extent now owned, or hereafter acquired by Borrower
(collectively, the "Property"):

      (a) Land. The real property described in Exhibit A attached hereto and
made a part hereof (the "LAND");

      (b) Additional Land. All additional lands, estates and development rights
hereafter acquired by Borrower for use in connection with the Land and the
development of the Land and all additional lands and estates therein which may,
from time to time, by supplemental mortgage or otherwise be expressly made
subject to the lien of this Security Instrument;

<PAGE>

      (c) Improvements. The buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter erected or located on the Land (collectively, the
"IMPROVEMENTS");

      (d) Easements. All easements, rights-of-way or use, rights, strips and
gores of land, streets, ways, alleys, passages, sewer rights, water, water
courses, water rights and powers, air rights and development rights, and all
estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Land and the
Improvements and the reversions and remainders, and all land lying in the bed of
any street, road or avenue, opened or proposed, in front of or adjoining the
Land, to the center line thereof and all the estates, rights, titles, interests,
rights of dower, rights of curtesy, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the Land and
the Improvements and every part and parcel thereof, with the appurtenances
thereto;

      (e) Fixtures and Personal Property. All machinery, equipment, fixtures
(including, but not limited to, all heating, air conditioning, plumbing,
lighting, communications and elevator fixtures), furniture and other property of
every kind and nature whatsoever owned by Borrower, or in which Borrower has or
shall have an interest, now or hereafter located upon the Land and the
Improvements, or appurtenant thereto, and usable in connection with the present
or future operation and occupancy of the Land and the Improvements and all
building equipment, materials and supplies of any nature whatsoever owned by
Borrower, or in which Borrower has or shall have an interest, now or hereafter
located upon the Land and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation and occupancy of the Land and
the Improvements, but expressly excluding any of the foregoing expressly owned
by Ashworth Inc., as tenant (collectively, the "PERSONAL PROPERTY"), and the
right, title and interest of Borrower in and to any of the Personal Property
which may be subject to any security interests, as defined in the Uniform
Commercial Code, as adopted and enacted by the state or states where any of the
Property is located (the "UNIFORM COMMERCIAL CODE"), and all proceeds and
products of the above;

      (f) Leases and Rents. All leases, subleases, lettings, licenses,
concessions or other agreements (whether written or oral) pursuant to which any
Person is granted a possessory interest in, or right to use or occupy all or any
portion of the Land and the Improvements, and every modification, amendment or
other agreement relating to such leases, subleases, or other agreements entered
into in connection with such leases, subleases, or other agreements and every
guarantee of the performance and observance of the covenants, conditions and
agreements to be performed and observed by the other party thereto, heretofore
or hereafter entered into, whether before or after the filing by or against
Borrower of any petition for relief under any Creditors Rights Laws
(collectively, the "LEASES") and all right, title and interest of Borrower, its
successors and assigns therein and thereunder, including, without limitation,
cash or securities deposited thereunder to secure the performance by the lessees
of their obligations thereunder and all rents, additional rents, revenues,
issues and profits (including all oil and gas or other mineral royalties and
bonuses) from the Land and the Improvements whether paid or accruing before or
after the filing by or against Borrower of any petition for relief under any
Creditors Rights Laws

                                      -2-

<PAGE>

(collectively, the "RENTS") and all proceeds from the sale or other disposition
of the Leases and the right to receive and apply the Rents to the payment of the
Debt;

      (g) Insurance Proceeds. All Insurance Proceeds in respect of the Property
under any Policies covering the Property, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Property;

      (h) Condemnation Awards. All Awards, including interest thereon, which may
heretofore and hereafter be made with respect to the Property by reason of
Condemnation, whether from the exercise of the right of eminent domain
(including, but not limited to, any transfer made in lieu of or in anticipation
of the exercise of the right), or for a change of grade, or for any other injury
to or decrease in the value of the Property;

      (i) Tax Certiorari. All refunds, rebates or credits in connection with
reduction in real estate taxes and assessments charged against the Property as a
result of tax certiorari or any applications or proceedings for reduction;

      (j) Conversion. All proceeds of the conversion, voluntary or involuntary,
of any of the foregoing including, without limitation, Insurance Proceeds and
Awards, into cash or liquidation claims;

      (k) Rights. The right, in the name and on behalf of Borrower, to appear in
and defend any action or proceeding brought with respect to the Property and to
commence any action or proceeding to protect the interest of Lender in the
Property;

      (l) Agreements. All agreements, contracts, certificates, instruments,
franchises, permits, licenses, plans, specifications and other documents, now or
hereafter entered into, and all rights therein and thereto, respecting or
pertaining to the use, occupation, construction, management or operation of the
Land and any part thereof and any Improvements or any business or activity
conducted on the Land and any part thereof and all right, title and interest of
Borrower therein and thereunder, including, without limitation, the right, upon
the happening of any default hereunder, to receive and collect any sums payable
to Borrower thereunder;

      (m) Intangibles. All tradenames, trademarks, servicemarks, logos,
copyrights, goodwill, books and records and all other general intangibles
relating to or used in connection with the operation of the Property;

      (n) Accounts. All reserves, escrows and deposit accounts maintained by
Borrower with respect to the Property; and

      (o) Other Rights. Any and all other rights of Borrower in and to the items
set forth in subsections (a) through (n) above.

      SECTION 1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely and
unconditionally assigns to Lender and Trustee all of Borrower's right, title and
interest in and to all current and future Leases and Rents; it being intended by
Borrower that this assignment constitutes a present,

                                      -3-

<PAGE>

absolute assignment and not an assignment for additional security only.
Nevertheless, subject to the terms of the Loan Agreement and Section 8.1(h) of
this Security Instrument, Lender grants to Borrower a revocable license to
collect, receive, use and enjoy the Rents and Borrower shall hold the Rents, or
a portion thereof sufficient to discharge all current sums due on the Debt, for
use in the payment of such sums.

      SECTION 1.3 SECURITY AGREEMENT. This Security Instrument is both a real
property mortgage and a "security agreement" within the meaning of the Uniform
Commercial Code. The Property includes both real and personal property and all
other rights and interests, whether tangible or intangible in nature, of
Borrower in the Property. By executing and delivering this Security Instrument,
Borrower hereby grants to Lender and Trustee, as security for the Obligations
(hereinafter defined), a security interest in the Personal Property to the full
extent that the Personal Property may be subject to the Uniform Commercial Code.

      SECTION 1.4 FIXTURE FILING. Certain of the Property is or will become
"fixtures" (as that term is defined in the Uniform Commercial Code) on the Land,
and this Security Instrument, upon being filed for record in the real estate
records of the city or county wherein such fixtures are situated, shall operate
also as a financing statement filed as a fixture filing in accordance with the
applicable provisions of said Uniform Commercial Code upon such of the Property
that is or may become fixtures.

      SECTION 1.5 CONDITIONS TO GRANT. TO HAVE AND TO HOLD the above granted and
described Property unto Trustee for and on behalf of Lender and to the use and
benefit of Lender and Trustee and their successors and assigns, forever; IN
TRUST, WITH POWER OF SALE, to secure payment to Lender of the Debt at the time
and in the manner provided for its payment in the Note and in this Security
Instrument. PROVIDED, HOWEVER, these presents are upon the express condition
that, if Borrower shall well and truly pay to Lender the Debt at the time and in
the manner provided in the Note, the Loan Agreement and this Security
Instrument, shall well and truly perform the Other Obligations as set forth in
this Security Instrument and shall well and truly abide by and comply with each
and every covenant and condition set forth herein and in the Note, the Loan
Agreement and the other Loan Documents, these presents and the estate hereby
granted shall cease, terminate and be void; provided, however, that Borrower's
obligation to indemnify and hold harmless Lender pursuant to the provisions
hereof shall survive any such payment or release.

                    ARTICLE 2 - DEBT AND OBLIGATIONS SECURED

      SECTION 2.1 DEBT. This Security Instrument and the grants, assignments and
transfers made in Article 1 are given for the purpose of securing the Debt.

      SECTION 2.2 OTHER OBLIGATIONS. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the performance of the following (the "OTHER OBLIGATIONS"): (a) all
other obligations of Borrower contained herein; (b) each obligation of Borrower
contained in the Loan Agreement and any other Loan Document; and (c) each
obligation of Borrower contained in any renewal, extension, amendment,
modification, consolidation, change of, or substitution or replacement for, all
or any part of the Note, the Loan Agreement or any other Loan Document.

                                      -4-

<PAGE>

      SECTION 2.3 DEBT AND OTHER OBLIGATIONS. Borrower's obligations for the
payment of the Debt and the performance of the Other Obligations shall be
referred to collectively herein as the "OBLIGATIONS."

      SECTION 2.4 PAYMENT OF DEBT. Borrower will pay the Debt at the time and in
the manner provided in the Loan Agreement, the Note and this Security
Instrument.

      SECTION 2.5 INCORPORATION BY REFERENCE. All the covenants, conditions and
agreements contained in (a) the Loan Agreement, (b) the Note and (c) all and any
of the other Loan Documents, are hereby made a part of this Security Instrument
to the same extent and with the same force as if fully set forth herein.

                         ARTICLE 3 - PROPERTY COVENANTS

      Borrower covenants and agrees that:

      SECTION 3.1 INSURANCE. Borrower shall obtain and maintain, or cause to be
maintained, in full force and effect at all times insurance with respect to
Borrower and the Property as required pursuant to the Loan Agreement.

      SECTION 3.2 TAXES. Borrower shall pay all Taxes and Other Charges assessed
or imposed against the Property or any part thereof in accordance with the Loan
Agreement.

      SECTION 3.3 LEASES. Borrower shall not enter in any Leases for all or any
portion of the Property unless in accordance with the provisions of the Loan
Agreement.

      SECTION 3.4 WARRANTY OF TITLE. Borrower has or will be acquiring with the
Loan Proceeds good, marketable and insurable fee simple title to the real
property comprising part of the Property and good title to the balance of such
Property, free and clear all Liens whatsoever except the Permitted Encumbrances,
such other Liens as are permitted pursuant to the Loan Documents and the Liens
created by the Loan Documents. This Security Instrument, when properly recorded
in the appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (a) a
valid, perfected first priority Lien on the Property, and (b) perfected security
interests in and to, and perfected collateral assignments of, all personalty
(including the Leases), all in accordance with the terms thereof, in each case
subject only to any applicable Permitted Encumbrances, such other Liens as are
permitted pursuant to the Loan Documents and the Liens created by the Loan
Documents. Borrower shall forever warrant, defend and preserve the title and the
validity and priority of the Lien of this Security Instrument and shall forever
warrant and defend the same to Lender and/or Trustee against the claims of all
Persons whomsoever.

      SECTION 3.5 PAYMENT FOR LABOR AND MATERIALS. Except as provided in the
Loan Agreement, Borrower will promptly pay when due all bills and costs for
labor, materials, and specifically fabricated materials incurred in connection
with the Property and never permit to exist beyond the due date thereof in
respect of the Property or any part thereof any Lien or security interest, even
though inferior to the Liens and the security interests hereof, and in any event
never permit to be created or exist in respect of the Property or any part
thereof any other

                                      -5-

<PAGE>

or additional Lien or security interest other than the Liens or security
interests hereof except for the Permitted Encumbrances.

                         ARTICLE 4 - FURTHER ASSURANCES

      SECTION 4.1 COMPLIANCE WITH LOAN AGREEMENT. Borrower shall comply with the
covenants set forth in Article 17 of the Loan Agreement in order to protect and
perfect the Lien or security interest hereof upon, and in the interest of Lender
in, the Property.

      SECTION 4.2 AUTHORIZATION TO FILE FINANCING STATEMENTS; POWER OF ATTORNEY.
Borrower hereby authorizes Lender at any time and from time to time to file any
initial financing statements, amendments thereto and continuation statements
with or without signature of Borrower as authorized by applicable law, as
applicable to all or part of the Personal Property. For purposes of such
filings, Borrower agrees to furnish any information reasonably requested by
Lender promptly upon request by Lender. Borrower also ratifies its authorization
for Lender to have filed any like initial financing statements, amendments
thereto or continuation statements, if filed prior to the date of this Security
Instrument. Borrower hereby irrevocably constitutes and appoints Lender and any
officer or agent of Lender, with full power of substitution, as its true and
lawful attorneys-in-fact with full irrevocable power and authority in the place
and stead of Borrower or in Borrower's own name to execute in Borrower's name
any such documents and otherwise to carry out the purposes of this Section 4.2,
to the extent that Borrower's authorization above is not sufficient. To the
extent permitted by law, Borrower hereby ratifies all acts said
attorneys-in-fact have lawfully done in the past or shall lawfully do or cause
to be done in the future by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.

                       ARTICLE 5 - DUE ON SALE/ENCUMBRANCE

      SECTION 5.1 NO SALE/ENCUMBRANCE. Borrower shall not cause or permit a
sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment,
grant of any options with respect to, or any other transfer or disposition
(directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) of a legal or
beneficial interest in the Property or any part thereof, Borrower or any
Restricted Party, other than in accordance with the provisions of Article 7 of
the Loan Agreement, without the prior written consent of Lender.

                   ARTICLE 6 - PREPAYMENT; RELEASE OF PROPERTY

      SECTION 6.1 PREPAYMENT. The Debt may not be prepaid in whole or in part
except in strict accordance with the express terms and conditions of the Note
and the Loan Agreement.

      SECTION 6.2 PREPAYMENT ON CASUALTY/CONDEMNATION AND CHANGE IN TAX AND
DEBIT CREDIT LAWS. Provided no Event of Default exists under any of the Loan
Documents, in the event of any prepayment of the Debt pursuant to the terms of
Article 8 or Section 17.4 of the Loan Agreement, no prepayment premium shall be
due in connection therewith, but Borrower shall be responsible for all other
amounts due under any of the Loan Documents.

                                      -6-

<PAGE>

      SECTION 6.3 INVOLUNTARY PREPAYMENT. If there is an involuntary prepayment
during the Lockout Period (as defined in the Note), then Borrower shall, in
addition to any portion of the Loan prepaid (together with all interest accrued
and unpaid thereon), pay to Lender a prepayment premium in an amount calculated
in accordance with Section 5(c) of the Note.

      SECTION 6.4 RELEASE OF PROPERTY. Borrower shall not be entitled to a
release of any portion of the Property from the lien of this Security Instrument
except in accordance with terms and conditions of the Loan Agreement.

                               ARTICLE 7 - DEFAULT

      SECTION 7.1 EVENT OF DEFAULT. The term "EVENT OF DEFAULT" as used in this
Security Instrument shall have the meaning assigned to such term in the Loan
Agreement.

                  ARTICLE 8 - RIGHTS AND REMEDIES UPON DEFAULT

      SECTION 8.1 REMEDIES. Upon the occurrence and during the continuance of
any Event of Default, Borrower agrees that Lender may or acting by or through
Trustee may take such action, without notice or demand, as it deems advisable to
protect and enforce its rights against Borrower and in and to the Property,
including, but not limited to, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such order as Lender or
Trustee may determine, in their sole discretion, without impairing or otherwise
affecting the other rights and remedies of Lender or Trustee:

      (a) declare the entire unpaid Debt to be immediately due and payable;

      (b) institute proceedings, judicial or otherwise, for the complete
foreclosure of this Security Instrument under any applicable provision of law,
in which case the Property or any interest therein may be sold for cash or upon
credit in one or more parcels or in several interests or portions and in any
order or manner;

      (c) with or without entry, to the extent permitted and pursuant to the
procedures provided by applicable law, institute proceedings for the partial
foreclosure of this Security Instrument for the portion of the Debt then due and
payable, subject to the continuing lien and security interest of this Security
Instrument for the balance of the Debt not then due, unimpaired and without loss
of priority;

      (d) sell for cash or upon credit the Property or any part thereof and all
estate, claim, demand, right, title and interest of Borrower therein and rights
of redemption thereof, pursuant to power of sale or otherwise, at one or more
sales, as an entirety or in parcels, at such time and place, upon such terms and
after such notice thereof as may be required or permitted by law;

      (e) institute an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained herein, in the
Note, the Loan Agreement or in the other Loan Documents;

      (f) recover judgment on the Note either before, during or after any
proceedings for the enforcement of this Security Instrument or the other Loan
Documents;

                                      -7-

<PAGE>

      (g) apply for the appointment of a receiver, trustee, liquidator or
conservator of the Property, without notice and without regard for the adequacy
of the security for the Debt and without regard for the solvency of Borrower,
Borrower Principal or any other Person liable for the payment of the Debt;

      (h) the license granted to Borrower under Section 1.2 hereof shall
automatically be revoked and Lender may enter into or upon the Property, either
personally or by its agents, nominees or attorneys and dispossess Borrower and
its agents and servants therefrom, without liability for trespass, damages or
otherwise and exclude Borrower and its agents or servants wholly therefrom, and
take possession of all books, records and accounts relating thereto and Borrower
agrees to surrender possession of the Property and of such books, records and
accounts to Lender upon demand, and thereupon Lender may (i) use, operate,
manage, control, insure, maintain, repair, restore and otherwise deal with all
and every part of the Property and conduct the business thereat; (ii) complete
any construction on the Property in such manner and form as Lender deems
advisable; (iii) make alterations, additions, renewals, replacements and
improvements to or on the Property; (iv) exercise all rights and powers of
Borrower with respect to the Property, whether in the name of Borrower or
otherwise, including, without limitation, the right to make, cancel, enforce or
modify Leases, obtain and evict tenants, and demand, sue for, collect and
receive all Rents of the Property and every part thereof; (v) require Borrower
to pay monthly in advance to Lender, or any receiver appointed to collect the
Rents, the fair and reasonable rental value for the use and occupation of such
part of the Property as may be occupied by Borrower; (vi) require Borrower to
vacate and surrender possession of the Property to Lender or to such receiver
and, in default thereof, Borrower may be evicted by summary proceedings or
otherwise; and (vii) apply the receipts from the Property to the payment of the
Debt, in such order, priority and proportions as Lender shall deem appropriate
in its sole discretion after deducting therefrom all reasonable out-of pocket
expenses (including reasonable attorneys' fees) incurred in connection with the
aforesaid operations and all amounts necessary to pay the Taxes, Other Charges,
insurance and other expenses in connection with the Property, as well as just
and reasonable compensation for the services of Lender, its outside counsel and
outside agents;

      (i) exercise any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing: (i) the right to take possession of the Personal
Property or any part thereof, and to take such other measures as Lender or
Trustee may deem necessary for the care, protection and preservation of the
Personal Property, and (ii) request Borrower at its expense to assemble the
Personal Property and make it available to Lender at a convenient place
acceptable to Lender. Any notice of sale, disposition or other intended action
by Lender or Trustee with respect to the Personal Property sent to Borrower in
accordance with the provisions hereof at least five (5) days prior to such
action shall constitute commercially reasonable notice to Borrower;

      (j) apply any sums then deposited or held in escrow or otherwise by or on
behalf of Lender in accordance with the terms of the Loan Agreement, this
Security Instrument or any other Loan Document to the payment of the following
items in any order in its uncontrolled discretion: (i) Taxes and Other Charges;
(ii) Insurance Premiums; (iii) interest on the unpaid principal balance of the
Note; (iv) amortization of the unpaid principal balance of the Note; (v)

                                      -8-

<PAGE>

all other sums payable pursuant to the Note, the Loan Agreement, this Security
Instrument and the other Loan Documents, including without limitation advances
made by Lender pursuant to the terms of this Security Instrument;

      (k) to the extent applicable to the Property, surrender the Policies
maintained pursuant to the Loan Agreement, collect the unearned insurance
premiums for the Policies and apply such sums as a credit on the Debt in such
priority and proportion as Lender in its discretion shall deem proper, and in
connection therewith, Borrower hereby appoints Lender as agent and
attorney-in-fact (which is coupled with an interest and is therefore
irrevocable) for Borrower to collect such insurance premiums;

      (l) apply the undisbursed balance of any Net Proceeds Deficiency deposit,
together with interest thereon, to the payment of the Debt in such order,
priority and proportions as Lender shall deem to be appropriate in its
discretion; or

      (m) pursue such other remedies as Lender may have under applicable law.

In the event of a sale, by foreclosure, power of sale or otherwise, of less than
all of Property, this Security Instrument shall continue as a lien and security
interest on the remaining portion of the Property unimpaired and without loss of
priority. Notwithstanding the provisions of this Section to the contrary, if any
Event of Default as described in Section 11.1(f) of the Loan Agreement shall
occur, the entire unpaid Debt shall be automatically due and payable, without
any further notice, demand or other action by Lender.

      SECTION 8.2 APPLICATION OF PROCEEDS. The purchase money, proceeds and
avails of any disposition of the Property, and or any part thereof, or any other
sums collected by Lender pursuant to the Note, this Security Instrument or the
other Loan Documents, may be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper.

      SECTION 8.3 RIGHT TO CURE DEFAULTS. Upon the occurrence and during the
continuance of any Event of Default, Lender may, but without any obligation to
do so and without notice to or demand on Borrower and without releasing Borrower
from any obligation hereunder, make any payment or do any act required of
Borrower hereunder in such manner and to such extent as Lender may reasonably
deem necessary to protect the security hereof. Lender or Trustee is authorized
to enter upon the Property for such purposes, or appear in, defend, or bring any
action or proceeding to protect its interest in the Property or to foreclose
this Security Instrument or collect the Debt, and the cost and expense thereof
(including reasonable attorneys' fees to the extent permitted by law), with
interest as provided in this Section 8.3, shall constitute a portion of the Debt
and shall be due and payable to Lender upon demand. All such costs and expenses
incurred by Lender or Trustee in remedying such Event of Default or such failed
payment or act or in appearing in, defending, or bringing any such action or
proceeding shall bear interest at the Default Rate, for the period after notice
from Lender that such cost or expense was incurred to the date of payment to
Lender. All such costs and expenses incurred by Lender together with interest
thereon calculated at the Default Rate shall be deemed to constitute a portion
of the Debt and be secured by this Security Instrument and the other Loan
Documents and shall be immediately due and payable upon demand by Lender
therefor.

                                      -9-

<PAGE>

      SECTION 8.4 ACTIONS AND PROCEEDINGS. Lender or Trustee has the right to
appear in and defend any action or proceeding brought with respect to the
Property and to bring any action or proceeding, in the name and on behalf of
Borrower, which Lender, in its reasonable discretion, decides should be brought
to protect its interest in the Property.

      SECTION 8.5 RECOVERY OF SUMS REQUIRED TO BE PAID. Subject to Article 15 of
the Loan Agreement, Lender shall have the right from time to time to take action
to recover any sum or sums which constitute a part of the Debt as the same
become due, without regard to whether or not the balance of the Debt shall be
due, and without prejudice to the right of Lender thereafter to bring an action
of foreclosure, or any other action, for a default or defaults by Borrower
existing at the time such earlier action was commenced.

      SECTION 8.6 OTHER RIGHTS, ETC. (a) The failure of Lender or Trustee to
insist upon strict performance of any term hereof shall not be deemed to be a
waiver of any term of this Security Instrument. Borrower shall not be relieved
of Borrower's obligations hereunder by reason of (i) the failure of Lender or
Trustee to comply with any request of Borrower or any guarantor or indemnitor
with respect to the Loan to take any action to foreclose this Security
Instrument or otherwise enforce any of the provisions hereof or of the Note or
the other Loan Documents, (ii) the release, regardless of consideration, of the
whole or any part of the Property, or of any person liable for the Debt or any
portion thereof, or (iii) any agreement or stipulation by Lender extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Security Instrument or the other Loan Documents.

      (a) It is agreed that the risk of loss or damage to the Property is on
Borrower, and Lender shall have no liability whatsoever for decline in the value
of the Property, for failure to maintain the Policies, or for failure to
determine whether insurance in force is adequate as to the amount of risks
insured. Possession by Lender shall not be deemed an election of judicial relief
if any such possession is requested or obtained with respect to any Property or
collateral not in Lender's possession.

      (b) Lender may resort for the payment of the Debt to any other security
held by Lender in such order and manner as Lender, in its discretion, may elect.
Lender or Trustee may take action to recover the Debt, or any portion thereof,
or to enforce any covenant hereof without prejudice to the right of Lender or
Trustee thereafter to foreclose this Security Instrument. The rights of Lender
or Trustee under this Security Instrument shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the others. No act
of Lender or Trustee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Neither Lender nor
Trustee shall be limited exclusively to the rights and remedies herein stated
but shall be entitled to every right and remedy now or hereafter afforded at law
or in equity.

      SECTION 8.7 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may
release any portion of the Property for such consideration as Lender may require
without, as to the remainder of the Property, in any way impairing or affecting
the lien or priority of this Security Instrument, or improving the position of
any subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge

                                      -10-

<PAGE>

or otherwise any other property in place thereof as Lender may require without
being accountable for so doing to any other lienholder. This Security Instrument
shall continue as a lien and security interest in the remaining portion of the
Property.

      SECTION 8.8 RIGHT OF ENTRY. Upon reasonable notice to Borrower, Lender and
its agents shall have the right to enter and inspect the Property at all
reasonable times.

      SECTION 8.9 BANKRUPTCY. (a) Upon or at any time after the occurrence of an
Event of Default, Lender shall have the right to proceed in its own name or in
the name of Borrower in respect of any claim, suit, action or proceeding
relating to the rejection of any Lease, including, without limitation, the right
to file and prosecute, to the exclusion of Borrower, any proofs of claim,
complaints, motions, applications, notices and other documents, in any case in
respect of the lessee under such Lease under the Bankruptcy Code.

      (a) If there shall be filed by or against Borrower a petition under 11
U.S.C. Section 101 et seq., as the same may be amended from time to time (the
"BANKRUPTCY CODE"), and Borrower, as lessor under any Lease, shall determine to
reject such Lease pursuant to Section 365(a) of the Bankruptcy Code, then
Borrower shall give Lender not less than ten (10) days' prior notice of the date
on which Borrower shall apply to the bankruptcy court for authority to reject
the Lease. Lender shall have the right, but not the obligation, to serve upon
Borrower within such ten-day period a notice stating that (i) Lender demands
that Borrower assume and assign the Lease to Lender pursuant to Section 365 of
the Bankruptcy Code and (ii) Lender covenants to cure or provide adequate
assurance of future performance under the Lease. If Lender serves upon Borrower
the notice described in the preceding sentence, Borrower shall not seek to
reject the Lease and shall comply with the demand provided for in clause (i) of
the preceding sentence within thirty (30) days after the notice shall have been
given, subject to the performance by Lender of the covenant provided for in
clause (ii) of the preceding sentence.

      SECTION 8.10 SUBROGATION. If any or all of the proceeds of the Note have
been used to extinguish, extend or renew any indebtedness heretofore existing
against the Property, then, to the extent of the funds so used, Lender shall be
subrogated to all of the rights, claims, liens, titles, and interests existing
against the Property heretofore held by, or in favor of, the holder of such
indebtedness and such former rights, claims, liens, titles, and interests, if
any, are not waived but rather are continued in full force and effect in favor
of Lender and are merged with the lien and security interest created herein as
cumulative security for the repayment of the Debt, the performance and discharge
of Borrower's obligations hereunder, under the Loan Agreement, the Note and the
other Loan Documents and the performance and discharge of the Other Obligations.

                        ARTICLE 9 - ENVIRONMENTAL HAZARDS

      SECTION 9.1 ENVIRONMENTAL COVENANTS. Borrower has provided representations
and warranties regarding environmental matters set forth in Section 12.1 of the
Loan Agreement and shall comply with the covenants regarding environmental
matters set forth in Section 12.2 of the Loan Agreement.

                                      -11-

<PAGE>

      SECTION 9.2 LENDER'S RIGHTS. Lender and any other person or entity
designated by Lender, including but not limited to any representative of a
Governmental Authority, and any environmental consultant, and any receiver
appointed by any court of competent jurisdiction, shall have the right, but not
the obligation, to enter upon the Property at all reasonable times upon
reasonably notice to assess any and all aspects of the environmental condition
of the Property and its use, including but not limited to conducting any
environmental assessment or audit (the scope of which shall be determined in
Lender's sole discretion) and taking samples of soil, groundwater or other
water, air, or building materials, and conducting other invasive testing.
Borrower shall cooperate with and provide access to Lender and any such person
or entity designated by Lender.

                              ARTICLE 10 - WAIVERS

      SECTION 10.1 MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to the
extent permitted by law, the benefit of all Legal Requirements now or hereafter
in force regarding appraisement, valuation, stay, extension, reinstatement and
redemption and all rights of marshalling in the event of any sale hereunder of
the Property or any part thereof or any interest therein. Further, Borrower
hereby expressly waives any and all rights of redemption from sale under any
order or decree of foreclosure of this Security Instrument on behalf of
Borrower, and on behalf of each and every person acquiring any interest in or
title to the Property subsequent to the date of this Security Instrument and on
behalf of all persons to the extent permitted by Legal Requirements.

      SECTION 10.2 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender or Trustee except with respect to
matters for which this Security Instrument, the Loan Agreement, or the other
Loan Documents specifically and expressly provides for the giving of notice by
Lender or Trustee to Borrower and except with respect to matters for which
Borrower is not permitted by Legal Requirements to waive its right to receive
notice, and Borrower hereby expressly waives the right to receive any notice
from Lender with respect to any matter for which this Security Instrument does
not specifically and expressly provide for the giving of notice by Lender or
Trustee to Borrower.

      SECTION 10.3 WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby expressly
waives and releases to the fullest extent permitted by law, the pleading of any
statute of limitations as a defense to payment of the Debt or performance of its
Other Obligations.

      SECTION 10.4 SOLE DISCRETION OF LENDER. Whenever pursuant to this Security
Instrument, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.

      SECTION 10.5 WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH HEREBY
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND
WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL
NOW OR HEREAFTER EXIST WITH

                                      -12-

<PAGE>

REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING
IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. EACH OF LENDER AND BORROWER IS HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY BORROWER AND LENDER.

      SECTION 10.6 WAIVER OF FORECLOSURE DEFENSE. Borrower hereby waives any
defense Borrower might assert or have by reason of Lender's failure to make any
tenant or lessee of the Property a party defendant in any foreclosure proceeding
or action instituted by Lender.

                            ARTICLE 11 - EXCULPATION

      The provisions of Article 15 of the Loan Agreement are hereby incorporated
by reference into this Security Instrument to the same extent and with the same
force as if fully set forth herein.

                              ARTICLE 12 - NOTICES

      All notices or other written communications hereunder shall be delivered
in accordance with Article 16 of the Loan Agreement.

      All notices to Trustee shall be sent to:

            PRLAP, Inc.
            555 South Flower Street, 6th Floor
            CA9-706-06-42
            Los Angeles, CA 90071

                           ARTICLE 13 - APPLICABLE LAW

      SECTION 13.1 GOVERNING LAW. This Security Instrument shall be governed,
construed, applied and enforced in accordance with the laws of the state in
which the Property is located and applicable laws of the United States of
America.

      SECTION 13.2 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and
remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
term of this Security Instrument or any application thereof shall be invalid or
unenforceable, the remainder of this Security Instrument and any other
application of the term shall not be affected thereby.

                                      -13-

<PAGE>

                            ARTICLE 14 - DEFINITIONS

      Unless the context clearly indicates a contrary intent or unless otherwise
specifically provided herein, words used in this Security Instrument may be used
interchangeably in singular or plural form and the word "Borrower" shall mean
"each Borrower and any subsequent owner or owners of the Property or any part
thereof or any interest therein," the word "Lender" shall mean "Lender and any
subsequent holder of the Note," the word "Trustee" shall mean "Trustee and any
substitute Trustee of the estates, properties, powers, trusts and rights
conferred upon Trustee pursuant to this Security Instrument, the word "Note"
shall mean "the Note and any other evidence of indebtedness secured by this
Security Instrument," the word "Property" shall include any portion of the
Property and any interest therein, and the phrases "attorneys' fees", "legal
fees" and "counsel fees" shall include any and all attorneys', paralegal and law
clerk fees and disbursements, including, but not limited to, fees and
disbursements at the pre-trial, trial and appellate levels incurred or paid by
Lender in protecting its interest in the Property, the Leases and the Rents and
enforcing its rights hereunder.

                      ARTICLE 15 - MISCELLANEOUS PROVISIONS

      SECTION 15.1 NO ORAL CHANGE. This Security Instrument, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.

      SECTION 15.2 SUCCESSORS AND ASSIGNS. This Security Instrument shall be
binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns forever.

      SECTION 15.3 INAPPLICABLE PROVISIONS. If any term, covenant or condition
of the Loan Agreement, the Note or this Security Instrument is held to be
invalid, illegal or unenforceable in any respect, the Loan Agreement, the Note
and this Security Instrument shall be construed without such provision.

      SECTION 15.4 HEADINGS, ETC. The headings and captions of various Sections
of this Security Instrument are for convenience of reference only and are not to
be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.

      SECTION 15.5 NUMBER AND GENDER. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.

      SECTION 15.6 ENTIRE AGREEMENT. This Security Instrument and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or written between
Borrower and Lender are superseded by the terms of this Security Instrument and
the other Loan Documents.

                                      -14-

<PAGE>

      SECTION 15.7 LIMITATION ON LENDER'S RESPONSIBILITY. No provision of this
Security Instrument shall operate to place any obligation or liability for the
control, care, management or repair of the Property upon Lender, nor shall it
operate to make Lender responsible or liable for any waste committed on the
Property by the tenants or any other Person, or for any dangerous or defective
condition of the Property, or for any negligence in the management, upkeep,
repair or control of the Property resulting in loss or injury or death to any
tenant, licensee, employee or stranger. Nothing herein contained shall be
construed as constituting Lender a "mortgagee in possession."

                      ARTICLE 16 - DEED OF TRUST PROVISIONS

      SECTION 16.1 CONCERNING THE TRUSTEE. Trustee shall be under no duty to
take any action hereunder except as expressly required hereunder or by law, or
to perform any act which would involve Trustee in any expense or liability or to
institute or defend any suit in respect hereof, unless properly indemnified to
Trustee's reasonable satisfaction. Trustee, by acceptance of this Security
Instrument, covenants to perform and fulfill the trusts herein created, being
liable, however, only for gross negligence or willful misconduct, and hereby
waives any statutory fee and agrees to accept reasonable compensation, in lieu
thereof, for any services rendered by Trustee in accordance with the terms
hereof. Trustee may resign at any time upon giving thirty (30) days' notice to
Borrower and to Lender. Lender may remove Trustee at any time or from time to
time and select a successor trustee. In the event of the death, removal,
resignation, refusal to act, or inability to act of Trustee, or in its sole
discretion for any reason whatsoever Lender may, without notice and without
specifying any reason therefor and without applying to any court, select and
appoint a successor trustee, by an instrument recorded wherever this Security
Instrument is recorded and all powers, rights, duties and authority of Trustee,
as aforesaid, shall thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful performance of the
duties of Trustee hereunder unless required by Lender. The procedure provided
for in this paragraph for substitution of Trustee shall be in addition to and
not in exclusion of any other provisions for substitution, by law or otherwise.

      SECTION 16.2 TRUSTEE'S FEES. Borrower shall pay all reasonable costs, fees
and expenses incurred by Trustee and Trustee's agents and counsel in connection
with the performance by Trustee of Trustee's duties hereunder and all such
costs, fees and expenses shall be secured by this Security Instrument.

      SECTION 16.3 CERTAIN RIGHTS. With the approval of Lender, Trustee shall
have the right to take any and all of the following actions: (i) to select,
employ, and advise with counsel (who may be, but need not be, counsel for
Lender) upon any matters arising hereunder, including the preparation,
execution, and interpretation of the Note, this Security Instrument or the Other
Security Documents, and shall be fully protected in relying as to legal matters
on the advice of counsel, (ii) to execute any of the trusts and powers hereof
and to perform any duty hereunder either directly or through his/her agents or
attorneys, (iii) to select and employ, in and about the execution of his/her
duties hereunder, suitable accountants, engineers and other experts, agents and
attorneys-in-fact, either corporate or individual, not regularly in the employ
of Trustee, and Trustee shall not be answerable for any act, default,
negligence, or misconduct of any such accountant, engineer or other expert,
agent or attorney-in-fact, if selected with reasonable care,

                                      -15-

<PAGE>

or for any error of judgment or act done by Trustee in good faith, or be
otherwise responsible or accountable under any circumstances whatsoever, except
for Trustee's gross negligence or bad faith, and (iv) any and all other lawful
action as Lender may instruct Trustee to take to protect or enforce Lender's
rights hereunder. Trustee shall not be personally liable in case of entry by
Trustee, or anyone entering by virtue of the powers herein granted to Trustee,
upon the Property for debts contracted for or liability or damages incurred in
the management or operation of the Property. Trustee shall have the right to
rely on any instrument, document, or signature authorizing or supporting an
action taken or proposed to be taken by Trustee hereunder, believed by Trustee
in good faith to be genuine. Trustee shall be entitled to reimbursement for
actual, reasonable expenses incurred by Trustee in the performance of Trustee's
duties hereunder and to reasonable compensation for such of Trustee's services
hereunder as shall be rendered.

      SECTION 16.4 RETENTION OF MONEY. All moneys received by Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by applicable law) and Trustee shall
be under no liability for interest on any moneys received by Trustee hereunder.

      SECTION 16.5 PERFECTION OF APPOINTMENT. Should any deed, conveyance, or
instrument of any nature be required from Borrower by any Trustee or substitute
trustee to more fully and certainly vest in and confirm to Trustee or substitute
trustee such estates rights, powers, and duties, then, upon request by Trustee
or substitute trustee, any and all such deeds, conveyances and instruments shall
be made, executed, acknowledged, and delivered and shall be caused to be
recorded and/or filed by Borrower.

      SECTION 16.6 SUCCESSION INSTRUMENTS. Any substitute trustee appointed
pursuant to any of the provisions hereof shall, without any further act, deed,
or conveyance, become vested with all the estates, properties, rights, powers,
and trusts of its or his/her predecessor in the rights hereunder with like
effect as if originally named as Trustee herein; but nevertheless, upon the
written request of Lender or of the substitute trustee, Trustee ceasing to act
shall execute and deliver any instrument transferring to such substitute
trustee, upon the trusts herein expressed, all the estates, properties, rights,
powers, and trusts of Trustee so ceasing to act, and shall duly assign, transfer
and deliver any of the property and moneys held by such Trustee to the
substitute trustee so appointed in Trustee's place.

                       ARTICLE 17 - CALIFORNIA PROVISIONS

      SECTION 17.1 PRINCIPLES OF CONSTRUCTION. In the event of any
inconsistencies between the terms and conditions of this Article 17 and the
terms and conditions of this Security Instrument, the terms and conditions of
this Article 17 shall control and be binding.

      SECTION 17.2 TRUSTOR. The word "grantor" is hereby deleted wherever it
appears in this Security Instrument and the word "Trustor" is substituted
therefor.

      SECTION 17.3 MORTGAGED PROPERTY. The word "deed," is hereby added
immediately prior to the word "mortgage" in Section 1.1 of this Security
Instrument entitled "Property Mortgaged".

                                      -16-

<PAGE>

      SECTION 17.4 ASSIGNMENT OF LEASES AND RENTS. Section 1.2 of this Security
Instrument entitled "Assignment of Leases and Rents" is hereby deleted in its
entirety and the following is substituted therefor:

                  This Security Instrument constitutes a present, absolute
            assignment of the Leases and Rents from Borrower to Lender. The
            Leases and Rents are hereby absolutely and irrevocably assigned by
            Borrower to Lender. Lender is hereby granted and assigned by
            Borrower the right to enter the Property for the purpose of
            enforcing its right in the Leases and Rents. Nevertheless, subject
            to the terms of this Section 1.2, Lender grants to Borrower a
            revocable license to operate and manage the Property and to collect
            Rents. After the occurrence and during the continuance of an Event
            of Default, the license granted to Borrower herein may be revoked by
            Lender, and Lender may enter upon the Property, and collect, retain
            and apply the Rents toward payment of the Debt in accordance with
            the Note. The foregoing assignment shall be fully operative without
            any further action on the part of either party and Lender shall be
            entitled to the Leases and Rents whether or not Lender takes
            possession of the Property or any part thereof.

      SECTION 17.5 SECURITY AGREEMENT. The first two sentences of Section 1.3 of
this Security Instrument entitled "Security Agreement" are hereby deleted and
the following is substituted therefor:

                  This Security Instrument is both a real property deed of trust
            and a "security agreement" within the meaning of the Uniform
            Commercial Code and is being recorded as a fixture filing. With
            respect to said fixture filing, (i) the debtor is Borrower, and
            Borrower's name and address appear in the first paragraph of this
            Security Instrument, and (ii) the secured party is Lender, and
            Lender's name and address appear in the first paragraph of the
            Security Instrument. The Property includes both real and personal
            property and all other rights and interests, whether tangible or
            intangible in nature, of Borrower in the Property, including, but
            not limited to, the Leases and Rents and all proceeds thereof and
            all fixtures.

      SECTION 17.6 CONDITIONS TO GRANT. The portion of the paragraph beginning
"PROVIDED, HOWEVER" appearing in Section 1.5 of this Security Instrument
entitled "Conditions to Grant" is hereby deleted in its entirety and the
following language is substituted therefor:

                  PROVIDED, HOWEVER, upon written request of Lender stating that
            all sums secured hereby have been paid, that Borrower has well and
            truly abided by and complied with each and every covenant and
            condition set forth herein and in the Note, and upon the
            surrendering of this Security Instrument and the Note to Trustee for
            cancellation and retention and upon payment by Borrower of Trustee's
            fees, Trustee shall reconvey to Borrower, or to the person or
            persons legally entitled thereto, without warranty, any portion of
            the estate hereby granted and then held hereunder. The recitals in
            such reconveyance of any matters or facts

                                      -17-

<PAGE>

            shall be conclusive proof of the truthfulness thereof. The grantee
            in any reconveyance may be described as "the person or persons
            legally entitled thereto".

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -18-

<PAGE>

      SECTION 17.7 DUE ON SALE/INCUMBRANCE. BORROWER EXPRESSLY AGREES THAT UPON
A VIOLATION OF ARTICLE 5 OF THIS SECURITY INSTRUMENT BY BORROWER AND
ACCELERATION OF THE PRINCIPAL BALANCE OF THE NOTE BECAUSE OF SUCH VIOLATION,
BORROWER WILL PAY ALL SUMS REQUIRED TO BE PAID IN CONNECTION WITH A PREPAYMENT,
IF ANY, AS DESCRIBED IN THE NOTE, HEREIN IMPOSED ON PREPAYMENT AFTER AN EVENT OF
DEFAULT AND ACCELERATION OF THE PRINCIPAL BALANCE. BORROWER EXPRESSLY
ACKNOWLEDGES THAT BORROWER HAS RECEIVED ADEQUATE CONSIDERATION FOR THE FOREGOING
AGREEMENT.

                                       ASHWORTH EDC, LLC, a Delaware limited
                                       liability company

                                       By: ASHWORTH INC., a Delaware corporation

                                           By:     /s/ Terence Tsang
                                              ----------------------------------
                                                   Name: Terence Tsang
                                                   Title: EVP, COO & CFO

                          [NO FURTHER TEXT ON THIS PAGE

                        DOCUMENT CONTINUES ON NEXT PAGE]

                                      -19-

<PAGE>

      SECTION 17.8 POWER OF SALE. Lender, its successors and assigns, may elect
to cause the Property or any part thereof to be sold as follows

      (a) Lender may proceed as if all of the Property were real property, in
accordance with subparagraph (d) below, or Lender may elect to treat any of the
Property which consists of a right in action or which is property that can be
severed from the Land without causing structural damage thereto as if the same
were personal property, and dispose of the same in accordance with subparagraph
(c) below, separate and apart from the sale of real property, the remainder of
the Property being treated as real property.

      (b) Lender may cause any such sale or other disposition to be conducted
immediately following the expiration of any grace period, if any, herein
provided (or immediately upon the expiration of any redemption period required
by law) or Lender may delay any such sale or other disposition for such period
of time as Lender deems to be in its best interest. Should Lender desire that
more than one such sale or other disposition be conducted, Lender may at its
option, cause the same to be conducted simultaneously, or successively on the
same day, or at such different days or times and in such order as Lender may
deem to be in its best interest.

      (c) Should Lender elect to cause any of the Property to be disposed of as
personal property as permitted by subparagraph (a) above, it may dispose of any
part hereof in any manner now or hereafter permitted by Article 9 of the Uniform
Commercial Code or in accordance with any other remedy provided by law. Both
Borrower and Lender shall be eligible to purchase any part or all of such
property at any such disposition. Any such disposition may be either public or
private as Lender may so elect, subject to the provisions of the Uniform
Commercial Code. Lender shall give Borrower at least five (5) days' prior
written notice of the time and place of any public sale or other disposition of
such property or of the time at or after which any private sale or any other
intended disposition is to be made, and if such notice is sent to Borrower as
provided in subparagraph (k) hereof, it shall constitute reasonable notice to
Borrower.

      (d) Lender elect to sell the Property which is real property or which
Lender has elected to treat as real property, upon such election Lender or
Trustee shall give such Notice of Default and Election to Sell as may then be
required by law. Thereafter, upon the expiration of such time and the giving of
such Notice of Sale as may then be required by law, Trustee, at the time and
place specified in the Notice of Sale, shall sell such Property, or any portion
thereof specified by Lender, at public auction to the highest bidder for cash in
lawful money of the United States, subject, however, to the provisions of
subparagraph (i) hereof. Trustee for good cause may, and upon request of Lender
shall, from time to time, postpone the sale by public announcement thereof at
the time and place noticed therefor. If the Property consists of several lots or
parcels, Lender may designate the order in which such lots or parcels shall be
offered for sale or sold. Any person, including Borrower, Trustee or Lender, may
purchase at the sale. Upon any sale Trustee shall execute and deliver to the
purchaser or purchasers a deed or deeds conveying the property so sold, but
without any covenant or warranty whatsoever, express or implied, whereupon such
purchaser or purchasers shall be let into immediate possession.

                                      -20-

<PAGE>

      (e) In the event of a sale or other disposition of any such property, or
any part thereof, and the execution of a deed or other conveyance, pursuant
thereto, the recitals therein of facts, such as a default, the giving of notice
of default and notice of sale, demand that such sale should be made,
postponement of sale, terms of sale, sale, purchaser, payment of purchase money,
and any other fact affecting the regularity or validity of such sale or
disposition, shall be conclusive proof of the truth of such facts; and any such
deed of conveyance shall be conclusive against all persons as to such facts
recited therein.

      (f) Lender and/or Trustee shall apply the proceeds of any sale or
disposition hereunder to payment of the following: (1) the expenses of such sale
or disposition together with Trustee's fees and reasonable attorneys' fees, and
the actual cost of publishing, recording, mailing and posting notice; (2) the
cost of any search and/or other evidence of title procured in connection
therewith and transfer tax on any deed or conveyance; (3) all sums expended
under the terms hereof, not then repaid, with accrued interest in the amount
provided herein; (4) all other sums secured hereby; and (5) the remainder if any
to the person or persons legally entitled thereto.

      (g) The acknowledgment of the receipt of the purchase money, contained in
any deed or conveyance executed as aforesaid, shall be sufficient discharge from
all obligations to see to the proper application of the consideration therefor.

      (h) Borrower hereby expressly waives any right which it may have to direct
the order in which any of the Property shall be sold in the event of any sale or
sales pursuant hereto.

      (i) Upon any sale of the Property, whether made under a power of sale
herein granted or pursuant to judicial proceedings, if the holder of the Note is
a purchaser at such sale, it shall be entitled to use and apply all or any
portion of the indebtedness then secured hereby for or in settlement or payment
of all or any portion of the purchase price of the property purchased, and, in
such case, this Security Instrument, the Note and documents evidencing
expenditures secured hereby shall be presented to the person conducting the sale
in order that the amount of said indebtedness so used or applied may be credited
thereon as having been paid.

      (j) No remedy herein conferred upon or reserved to Trustee or Lender is
intended to be exclusive of any other remedy herein or by law provided, but each
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by this instrument to Trustee or Lender, or to which
either of them may be otherwise entitled, may be exercised from time to time and
as often as may be deemed expedient by Trustee or Lender, and either of them may
pursue inconsistent remedies. If there exists additional security for the
performance of the obligations secured hereby, the holder of the Note, at its
sole option and without limiting or affecting any rights or remedies hereunder,
may exercise any of the rights and remedies to which it may be entitled
hereunder either concurrently with whatever other rights it may have in
connection with such other security or in such order as it may determine.

      (k) Borrower hereby requests that every notice of default and every notice
of sale be given in accordance with the provisions of Section 16.1 of the Loan
Agreement except as otherwise required by statute. Borrower may, from time to
time, change the address to which

                                      -21-

<PAGE>

notice of default and sale hereunder shall be sent by both filing a request
therefor, in the manner provided by the California Civil Code, Section 2924b,
and sending a copy of such request to Lender, its successors or assigns in
accordance with the provisions of Section 16.1 of the Loan Agreement.

      SECTION 17.9 CONCERNING THE TRUSTEE:

      (a) Trustee accepts the trust created by this Security Instrument when
this Security Instrument, duly executed and acknowledged, is made a public
record as provided by law.

      (b) Trustee is not obligated to notify any party hereto of pending sale
under any other deed of trust or of any action or proceeding in which Borrower,
Lender or Trustee shall be a party, unless brought by Trustee.

      (c) Trustee shall be under no duty to take any action hereunder except as
expressly required hereunder or by law, or to perform any act which would
involve Trustee in any expense or liability or to institute or defend any suit
in respect hereof, unless properly indemnified to Trustee's reasonable
satisfaction. Trustee, by acceptance of this Security Instrument, covenants to
perform and fulfill the trusts herein created, being liable, however, only for
willful negligence or misconduct, and hereby waives any statutory fee and agrees
to accept reasonable compensation, in lieu thereof, for any services rendered by
Trustee in accordance with the terms hereof. Trustee may resign at any time upon
giving thirty (30) days' notice to Borrower and to Lender. Lender may remove
Trustee at any time or from time to time and select a successor trustee. In the
event of the death, removal, resignation, refusal to act, or inability to act of
Trustee, or in its sole discretion for any reason whatsoever Lender may, without
notice and without specifying any reason therefor and without applying to any
court, select and appoint a successor trustee, by an instrument recorded
wherever this Security Instrument is recorded and all powers, rights, duties and
authority of Trustee, as aforesaid, shall thereupon become vested in such
successor without conveyance from the predecessor Trustee. Such instrument must
contain the name of the original Borrower, Trustee and Lender hereunder, the
book and page where this Security Instrument is recorded, and the name and
address of the new Trustee. Such substitute trustee shall not be required to
give bond for the faithful performance of the duties of Trustee hereunder unless
required by Lender. The procedure provided for in this paragraph for
substitution of Trustee shall be in addition to and not in exclusion of any
other provisions for substitution, by law or otherwise.

      (d) Trustee shall be entitled to reasonable compensation for all services
rendered or expenses incurred in the administration or execution of the trusts
hereby created and Borrower hereby agrees to pay same. Trustee and Lender shall
be indemnified, held harmless and reimbursed by Borrower for any liability,
damage or expense, including attorneys' fees and amounts paid in settlement,
which they or either of them may incur or sustain in the execution of this trust
or in the doing of any act which they, or either of them, are required or
permitted to do by the terms hereof or by law.

      SECTION 17.10 FIXTURE FILING. This Security Instrument constitutes a
financing statement filed as a fixture filing pursuant to the provisions of
Division 9 of the Uniform

                                      -22-

<PAGE>

Commercial Code with respect to those portions of the Property consisting of
goods which are or are to become fixtures relating to the Property.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -23-

<PAGE>

            IN WITNESS WHEREOF, this Security Instrument has been executed by
Borrower as of the day and year first above written.

                                       ASHWORTH EDC, LLC, a Delaware limited
                                       liability company

                                       By: ASHWORTH INC., a Delaware corporation

                                           By: /s/ Terence Tsang
                                               ---------------------------------
                                               Name: Terence Tsang
                                               Title: EVP, COO & CFO

<PAGE>

                                 ACKNOWLEDGEMENT

STATE OF CALIFORNIA         )
                            )
COUNTY OF San Diego   )

            On March 25, 2004, before me Marlena Rodriguez personally appeared
Terence Tsang, Executive Vice-President of Ashworth, Inc., personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that
he/she executed the same in his/her authorized capacity, and that by his/her
signature on the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.

                                           /s/ Marlena Rodriguez
                                           -------------------------------------
                                           Notary

<PAGE>

                                    EXHIBIT A

                        LEGAL DESCRIPTION OF THE PROPERTY

      Real property in the city of Oceanside, County of San Diego, State of
California, described as follows:

All that portion of Lot 18 of Ocean Ranch Phase-1B, in the City of Oceanside,
County of San Diego, State of California, as per the Map thereof No. 14329,
filed in the Office of the County Recorder of San Diego on December 28, 2001,
lying easterly of the following described line:

Commencing at the most southerly corner of said Lot 18, said corner also being
on the northwesterly right-of-way line of Ocean Ranch Boulevard, 84.00 feet
wide, as shown on said map; thence along said right-of-way line North 60 degrees
56'00 East 75.60 feet to a line parallel with and 75.60 feet northeasterly of
the southwesterly line of said Lot 18 and the True Point of Beginning; thence
along said parallel line North 29 degrees 04'00" West 739.98 feet to the
northerly line of said Lot 18.

Said parcel is shown as Parcel 2 of a Certificate of Compliance recorded at the
request of the City of Oceanside on March 12, 2003 as Instrument No.
2003-0280480 of Official Records.

APN: 160-571-19-000