ASHWORTH INC
EXHIBIT 10(W)(5)
<DOCUMENT>
<TYPE>EX-10.W.5
<SEQUENCE>7
<FILENAME>a97072exv10www5.txt
<DESCRIPTION>EXHIBIT 10(W)(5)
<TEXT>
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                                                                Exhibit 10(w)(5)

                               EXCHANGE AGREEMENT
                      AND SUPPLEMENTAL CLOSING INSTRUCTIONS

         This Exchange Agreement and Supplemental Closing Instructions dated
DECEMBER 3, 2003, is entered into by and between ASHWORTH, INC., A DELAWARE
CORPORATION (hereinafter "EXCHANGER") and ASSET PRESERVATION, INC., a California
corporation, (hereinafter "API"). Exchanger and API are collectively known as
the parties to this Exchange Agreement.

                                    RECITALS

         A. Exchanger is the present owner of that certain real property located
in the County of SAN DIEGO, State of CALIFORNIA, commonly known as 2791 & 2793
LOKER AVENUE, CARLSBAD, CALIFORNIA 92008, hereinafter "RELINQUISHED PROPERTY".

         B. Exchanger and LBA INC., A CALIFORNIA CORPORATION, Purchaser, have
entered into a Real Property Sale Agreement wherein Purchaser has agreed to
acquire the Relinquished Property.

         C. Exchanger desires to exchange the Relinquished Property for other
real property of like kind to effectuate a Tax Deferred Exchange pursuant to the
provisions of Section 1031 of the Internal Revenue Code of 1986, as amended.

         D. Exchanger desires to transfer all of its right, title and/or
ownership interest in the Relinquished Property to API in consideration of, and
in exchange for, the transfer by API to Exchanger of title and/or ownership
interest in one or more properties of like kind to be located and identified by
Exchanger and acquired by API pursuant to Section III below (hereinafter
"REPLACEMENT PROPERTY"). In consideration for the fee to be paid by Exchanger,
as set forth in Section V.M. of this Agreement, API desires to accept the
Relinquished Property transferred and to acquire and transfer to Exchanger
Replacement Property under the terms and conditions stated below.

         E. API is a corporation in good standing, doing business under the laws
of the State of California and acts as a "Qualified Intermediary" pursuant to
Internal Revenue Code Section 1031 and is solely in the business of facilitating
tax deferred exchanges.

                                    AGREEMENT

I.       RELINQUISHED PROPERTY

         A. Assignment. Exchanger and API have by an assignment agreement,
attached hereto as ADDENDUM "A", assigned the Real Property Sale Agreement,
including any deposits provided for therein, to API, thereby substituting API in
place of Exchanger as Seller. API assumes the rights of the Seller except as
limited by the terms and conditions of this Exchange Agreement and Supplemental
Closing Instructions. Exchanger and API will execute the assignment agreement,
and API agrees that it will give notice of the assignment to all parties to the
Real Property Sale Agreement prior to the transactions described herein.

                                      -1-

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         B. Sale of Relinquished Property. API agrees to acquire ownership
interest in and/or title to the Relinquished Property immediately prior to API's
transfer of such property to the Purchaser, unless the parties elect to direct
deed, pursuant to Section I.D. below. API, pursuant to Section I.C., is formally
substituted as the Seller in the closing.

         API will transfer ownership interest and/or title of the Relinquished
Property to the Purchaser under the exact terms and conditions of the Real
Property Sale Agreement.

         C. Substitution of Seller - Assignment of Closing Instructions.
Exchanger and API shall execute ADDENDUM "B" to this Agreement (Amendment to
Closing Instructions-Assignment and Substitution of Seller-Direct Deed), which
formally substitutes API as Seller with the Closing Agent. API shall instruct
Closing Agent to (1.) Retain a copy of said Addendum "B" as its authorization to
accept API as the Seller in said closing transaction, and (2.) Obtain
Exchanger's approval and API's signature as the Qualified Intermediary for
Exchanger on all seller statements and/or closing documents prior to the
closing.

         D. Deeding. Exchanger and API shall instruct Closing Agent to prepare
an instrument transferring legal title directly from Exchanger to Purchaser
pursuant to and consistent with and pursuant to Treasury Regulations Section
1.1031 (k)-1(g)(4)(iv), to avoid the duplication of transfer taxes and recording
fees. Closing Agent shall also be instructed not to record such an instrument in
the name of API unless directed to do so in writing by Exchanger and API.

         E. Survival of Terms. All representations, covenants and warranties,
expressed or implied, with respect to the Relinquished Property and the
transactions contemplated by the Real Property Sale Agreement and this Exchange
Agreement and Supplemental Closing Instructions shall survive the transfers of
the Relinquished Property by Exchanger to API and by API to the Purchaser.
Except for the right to receive, pledge, borrow or otherwise obtain the benefits
of the money or other property received by API in connection with its sale of
the Relinquished Property prior to the time specified in II.B. hereof, all
rights, remedies, liabilities and obligations arising therefrom are hereby
assigned and delegated by API to Exchanger and hereby assumed by Exchanger
effective immediately after the closing of the sale of the Relinquished Property
to the Purchaser.

         F. Failure to Close. In the event that the closing for the transfer of
the Relinquished Property from API to Purchaser does not close on or before the
agreed upon date, and the parties do not mutually agree to extend the closing
date, this Exchange Agreement shall be rescinded.

         G. Concurrent Transfer of Replacement Property. In the event Exchanger
locates suitable Replacement Property prior to close of closing and transfer of
the Relinquished Property, wherein the close of closing for the purchase of the
Replacement Property will occur concurrent with the close of closing for the
sale of the Relinquished Property, API shall acquire the designated Replacement
Property with funds received from the Purchaser for the sale of the Relinquished
Property, and thereafter convey the Replacement Property to Exchanger, or a
limited liability company of which Exchanger is the sole member and which is
disregarded as an entity separate from Exchanger as provided in Treasury
Regulation Section 301.7701-3(b), for a concurrent transfer and conveyance by
Exchanger of the Relinquished Property to API. The parties agree to execute such
closing instructions as required to effect this concurrent exchange of
properties. In the event of a concurrent closing of both the Relinquished
Property and the Replacement Property, Sections II and III. below will not
apply.

                                      -2-

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II. APPLICATION OF EXCHANGE PROCEEDS

    A. Application of Exchange Proceeds. Upon the Relinquished Property closing,
API shall hold the exchange proceeds for the benefit of Exchanger, to be applied
to one or more items of the Replacement Property. Except as otherwise provided
in this Agreement, including but not limited to the provisions of Section II.C..
below, Exchanger shall be entitled to receive only the Replacement Property and
not cash or other property.

    B. Cash. All net cash exchange proceeds resulting from the closing of the
Relinquished Property shall immediately upon closing be wire transferred
directly to the Qualified Exchange Account, as follows:

       1.       Cash. All net cash exchange proceeds resulting from
                the closing of the Relinquished Property shall immediately upon
                closing be wire transferred directly to the Qualified Exchange
                Account, as follows:

                  A.       Qualified Exchange Account. Exchanger and API hereby
                           agree that a "QUALIFIED EXCHANGE ACCOUNT" ("Account")
                           shall be established in the name of API for the
                           benefit of Exchanger. The Account shall be
                           established with Comerica Bank-California
                           ("COMERICA"), in an interest bearing account. The
                           Account will be established for the purpose of
                           holding cash proceeds from the sale of the
                           Relinquished Property, and as such, the Account shall
                           conform to the Restrictions on Use of Sales Proceeds
                           During Exchange, set forth in this Section II. In
                           order to open the Account, Exchanger shall execute
                           the document entitled "NEW ACCOUNT FORM" ("NEW
                           ACCOUNT FORM"), attached as Exhibit 1.1 hereto and
                           incorporated herein by reference as though set forth
                           herein verbatim.

                  B.       Withdrawal of Funds. Exchanger and API agree that
                           funds deposited in the Account may be disbursed only
                           when API has received API's form entitled "REQUEST
                           FOR FUNDS" ("WITHDRAWAL FORM") which has been signed
                           by Exchanger. This requirement is in addition to all
                           other provisions of this Agreement concerning
                           disbursement of exchange proceeds, except that
                           Exchanger understands and agrees that if funds remain
                           in the Account after the end of the Exchange Period
                           (defined in Section III.A. hereof), the Account will
                           be closed and a check will automatically be issued to
                           Exchanger in the full amount of any remaining funds,
                           including accrued interest. (The Withdrawal Form is
                           Exhibit 2.1 hereto and is incorporated herein by
                           reference as though set forth herein verbatim.)

                  C.       SIGNATURES REQUIRED FOR WITHDRAWAL. EXCHANGER MAY
                           SPECIFY THE NUMBER OF SIGNATURES THAT SHALL BE
                           REQUIRED ON THE WITHDRAWAL FORM IN ORDER TO AUTHORIZE
                           DISBURSEMENT OF FUNDS FROM THE ACCOUNT. IF EXCHANGER
                           WISHES TO SO SPECIFY, EXCHANGER MUST NOTIFY API OF
                           THE NUMBER SIGNATURES THAT SHALL BE REQUIRED, IN A
                           WRITING SIGNED BY ALL SIGNATORIES FOR EXCHANGER. IF
                           EXCHANGER DOES NOT SPECIFY THE NUMBER OF SIGNATURES
                           REQUIRED, API WILL REQUIRE THE SIGNATURES OF ALL
                           PERSONS WHO HAVE SIGNED THIS AGREEMENT BEFORE API
                           WILL AUTHORIZE DISBURSEMENT OF FUNDS FROM THE
                           ACCOUNT.

                                      -3-

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                  D.       NOTARIZED SIGNATURES UPON WITHDRAWAL. API RESERVES
                           THE RIGHT TO REQUIRE THAT THE SIGNATURE(S) OF
                           EXCHANGER ON THE WITHDRAWAL FORM BE ACKNOWLEDGED
                           BEFORE A NOTARY PUBLIC BEFORE API CAUSES ANY FUNDS TO
                           BE RELEASED FROM THE ACCOUNT. EXCHANGER ALSO HAS THE
                           RIGHT, UPON PRIOR WRITTEN NOTICE TO API, TO REQUIRE
                           THAT API NOT RELEASE ANY FUNDS HELD BY API UNLESS API
                           HAS RECEIVED THE WITHDRAWAL FORM SIGNED AND
                           ACKNOWLEDGED BEFORE A NOTARY PUBLIC. IF EXCHANGER
                           DOES NOT SPECIFY WHETHER API SHALL REQUIRE
                           NOTARIZATION OF EXCHANGER'S SIGNATURE(S) ON THE
                           WITHDRAWAL FORM, NOTARIZATION SHALL NOT BE REQUIRED.

                  E.       Transfer of Funds. Exchanger agrees that API shall
                           have the right, upon prior written notice to
                           Exchanger, to transfer any or all funds held by API
                           from Comerica into a Qualified Exchange Account with
                           another financial institution which, in the
                           discretion of API, is of similar credit quality to
                           Comerica. API anticipates that such a transfer will
                           be made only if, in the judgment of API, Comerica is
                           unable to provide adequate service, or an adequate
                           money market rate of return, with regard to the
                           Account.

                  F.       Miscellaneous. Exchanger agrees that, at API's
                           option, API's fees for this transaction, as set forth
                           in Section V.M. hereof, may be deducted from the
                           funds held in the Account. Upon the completion of the
                           number of days set forth in Section V.M.(5) of this
                           Agreement, the Account will be registered with
                           Exchanger's federal Taxpayer I.D. Number(s).
                           Thereupon, all interest and tax reporting will be
                           directed to Exchanger. The Account and the
                           arrangements made in this paragraph are subject to
                           Federal and California Banking laws and regulations.
                           Any changes made in these laws or regulations may
                           affect this Account and Comerica's ability to provide
                           these services.

       2.       Promissory Notes and Other Property. Closing Agent for the
                Relinquished Property shall be instructed to notify API
                immediately if there is consideration other than cash, including
                but not limited to a promissory note, unless instructions
                regarding such consideration have been previously issued. Unless
                otherwise instructed in writing by Exchanger and API, promissory
                notes and other property which are proceeds from the
                Relinquished Property shall be distributed to API at the closing
                of the transfer of the Relinquished Property, and shall be
                exchange proceeds, intended to be reinvested in Replacement
                Property as part of the exchange under this Exchange Agreement.

    C Restrictions on Use of Sale Proceeds During Exchange. API shall hold
the net sale proceeds (including cash, promissory notes and other property) from
the sale of the Relinquished Property solely for the purpose of acquiring the
Replacement Property and such proceeds shall not be deemed a part of API's
general assets nor subject to claims by API's creditors. API shall hold the net
proceeds until such time as Exchanger has located suitable property with which
to exchange, at which time Exchanger shall instruct API to acquire the ownership
interest in the Replacement Property. Notwithstanding anything to the contrary
contained in this Agreement, Exchanger shall not have any right to receive,
pledge, borrow, or otherwise obtain the benefits of any money or other property
constituting the net sale proceeds from the sale of the Relinquished Property or
any portion of said net sale proceeds, before the end of the applicable

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time period set forth in U.S. Treasury Regulations, Section 1.1031(k)-1(g)(6).
Exchanger and API further agree that Exchanger has only the rights to receive,
pledge borrow or otherwise obtain the benefits of the net sales proceeds from
the sale of the Relinquished Property which are specifically allowed in
subparagraphs (ii) and (iii) of U.S. Treasury Regulations, Section
1.1031(k)-1(g)(6), which subparagraphs are herein quoted as follows:

                      "(ii) The agreement may provide that if the taxpayer
                  has not identified Replacement Property by the end of the
                  identification period, the taxpayer may have rights to
                  receive, pledge, borrow, or otherwise obtain the benefits of
                  money or other property at any time after the end of the
                  identification period.

                      (iii) The agreement may provide that if the taxpayer
                  has identified replacement property, the taxpayer may have
                  rights to receive, pledge, borrow, or otherwise obtain the
                  benefits of money or other property upon or after--

                           (a) The receipt by the taxpayer of all of the
                           Replacement Property to which the Taxpayer is
                           entitled under the exchange agreement, or

                           (b) The occurrence after the end of the
                           identification period of a material and substantial
                           contingency that--

                               (1) Relates to the deferred exchange,

                               (2) Is provided for in writing, and

                               (3) Is beyond the control of the Taxpayer and of
                                   any disqualified person (as defined in
                                   paragraph (K) of this Section), other than
                                   the person obligated transfer the
                                   replacement property to the taxpayer."

NOTE: IF THE EXCEPTIONS IN PARAGRAPHS (ii) AND (iii) DO NOT APPLY, THE SALE
PROCEEDS MUST REMAIN IN THE QUALIFIED EXCHANGE ACCOUNT UNTIL THE 181ST DAY AFTER
THE TRANSFER OF THE RELINQUISHED PROPERTY. IT IS INTENDED THAT THE FOREGOING
CONDITIONS BE INTERPRETED AND IMPOSED IN A MANNER CONSISTENT WITH THE
LIMITATIONS CONTAINED IN U.S. TREASURY REGULATION 1.1031(k)-1(g)(6).

         D Interest. The Exchanger may be entitled to receive interest earned on
the net proceeds, subject to API's fees described in Section V.M. below.
Exchanger's rights to receive such interest are limited to the same
circumstances described in Section II.C above. Exchanger understands that, for
income tax purposes, any interest paid to Exchanger will be treated as interest
income regardless of whether it is paid to Exchanger in cash or in property and
must be reported as Exchanger's income.

III.     DELAYED PROVISIONS

         A. Replacement Property Identification Period and Exchange Period
Defined. Exchanger must identify like-kind Replacement Property on or before
midnight of the date that is forty-five (45) calendar days after the date of
closing of the transfer of the Relinquished Property to Purchaser (the
"Identification Period"), pursuant to the provisions set forth in Section
III.B., below. Exchanger must receive the

                                      -5-

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Replacement Property on or before midnight of the day which is one hundred and
eighty (180) calendar days after the date of transfer of closing of the
Relinquished Property to API, or the due date, including extensions, of
Exchanger's tax return for the year in which the transfer of the Relinquished
Property takes place, whichever comes first (the "Exchange Period"). Exchanger
acknowledges that compliance with these dates is necessary to qualify for tax
deferral under I.R.C. Section 1031. API hereby expressly disclaims any
responsibility for any failure to comply with the time limitations for
identification of replacement property, or for any failure to comply with the
time limitations for receipt of replacement property, which provisions are
contained in I.R.C. Section 1031(a)(3) and in Treasury Regulations section
1.1031(k)-1(b), (c), (d) and (e). Rather, it is the sole responsibility of the
Exchanger to make such identification in a timely manner, and to fully inform
API of Exchanger's desire to acquire such Replacement Property.

         B. Identification of Replacement Property. On or before the date which
is forty-five calendar days following the transfer of the Relinquished Property,
Exchanger shall, in accordance with the requirements set forth in I.R.C. Section
1031(a)(3) and in Treasury Regulations section 1.1031(k)-1(b), (c), (d) and (e)
and summarized below, identify one or more Replacement Properties to be acquired
by API and conveyed to Exchanger in exchange for the Relinquished Property.
IDENTIFICATION SHALL BE IN WRITING and shall be delivered to API, or to any
other person involved in this exchange other than Exchanger or a disqualified
person as defined in Treasury Regulations Section 1.1031(k)-1(k), either by U.S.
mail, facsimile or personal delivery prior to midnight on the 45th day following
the close of the transfer of the Relinquished Property.

            1. Description of Properties - Identified Replacement Property
         must be "unambiguously" identified by Exchanger by street address,
         legal description or "distinguishable name". (Note: In the event that
         the Replacement Property consists of improved real property where the
         improvements are to be produced during the Exchange Period, then, in
         addition to the street address, legal description, or "distinguishable
         name", the identification must include as much detail regarding the
         construction of the improvements as is practicable at the time the
         identification is made. Further, in the event Exchanger intends to
         acquire Replacement Property which includes improvements which are to
         be produced during the Exchange Period, Exchanger shall promptly
         contact API to make arrangements concerning acquisition of this
         property.)

            2. Limitations on Identified Properties - Exchanger shall
identify only that number of Replacement Properties which meet one of the
"identification rules" set forth in Treasury Regulations Section 1.1031
(k)-1(c)(4) as follows:

            A. THREE PROPERTY RULE: The Exchanger may identify a maximum
         of three (3) Replacement Properties without regard to the fair market
         value of the properties.

            B. TWO HUNDRED PERCENT RULE: The Exchanger may identify any
         number of properties, so long as the aggregate fair market value of the
         identified properties does not exceed two hundred percent (200%) of the
         aggregate fair market value of the Relinquished Properties.

            C. NINETY-FIVE PERCENT RULE: The Exchanger may identify any
         number of properties without regard to the aggregate fair market value,
         so long as Exchanger receives ninety-

                                      -6-

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         five percent (95%) of the aggregate fair market value of all identified
         Replacement Properties prior to the end of the one hundred and eighty
         day period.

         3. Revocation of Identified Properties - Exchanger may, in writing sent
to API within the Identification Period, revoke any identified property at any
time prior to the end of the forty-five day Identification Period. Exchanger may
then, after revocation of previously identified properties and within said
forty-five day identification period, identify other Replacement Properties,
pursuant to the limitations as stated in Sections III.B.1 and III.B.2, above.

         4. Exchanger acknowledges that compliance with the requirements for the
manner of identification of replacement property is necessary to qualify for tax
deferral under I.R.C. Section 1031. API hereby expressly disclaims any
responsibility for any failure to comply with the U.S. Treasury Regulations
which govern the manner of identification of replacement property, which are
contained in Treasury Regulations section 1.1031(k)-1(b), (c), (d) and (e).
Rather, it is the sole responsibility of the Exchanger to make such
identification in the proper manner.

IV. REPLACEMENT PROPERTY

         A. Assignment. Exchanger and API will, by an assignment agreement,
attached (or which will be attached) hereto as ADDENDUM "C", assign the Real
Property Purchase Agreement for the Replacement Property to API, thereby
substituting API in place of Exchanger as Purchaser. API will then assume the
rights of the Purchaser except to the extent limited by the terms and conditions
of this Exchange Agreement and Supplemental Closing Instructions. Exchanger and
API will execute the assignment agreement and API agrees that it will give
notice of the assignment to all parties to the Real Property Purchase Agreement
prior to the transfer of the Replacement Property.

         B. Purchase of Replacement Property. API agrees to acquire ownership
interest and/or title to the Replacement Property immediately prior to API's
transfer of such property to Exchanger or a limited liability company of which
Exchanger is the sole member and which is disregarded as an entity separate from
Exchanger as provided in Treasury Regulation Section 301.7701-3(b), unless
parties elect to direct deed, pursuant to Section IV.E. below. API, pursuant to
Section IV.C. below, is formally substituted as the Purchaser in the closing.

         C. Substitution of Purchaser - Assignment of Closing Instructions.
Exchanger and API shall execute ADDENDUM "D" to this Agreement (Amendment to
Closing Instructions - Assignment and Substitution of Purchaser - Direct Deed)
attached (or which will be attached) hereto, which formally substitutes API as
Purchaser with the Closing Agent. API shall instruct Closing Agent to (1.)
Retain a copy of said Addendum "D" as its authorization to accept API as the
Purchaser in said closing transaction, and (2.) Obtain Exchanger's approval and
API's signature as the Qualified Intermediary for Exchanger on all purchaser
statements and/or closing documents prior to the closing.

         D. Costs of Purchase. API is not to incur any costs for its role as
Qualified Intermediary in this exchange transaction. All costs of acquiring the
Replacement Property, including cash payments toward the purchase price,
acquisition costs, prorations and all other acquisition fees incident thereto
shall be borne by Exchanger.

                                      -7-

<PAGE>

         E. Deeding. API and Exchanger shall instruct Closing Agent to prepare
an instrument transferring legal title directly from the Seller of the
Replacement Property to Exchanger or a limited liability company of which
Exchanger is the sole member and which is disregarded as an entity separate from
Exchanger as provided in Treasury Regulation Section 301.7701-3(b), pursuant to
Treasury Regulations Section 1.1031 (k)-1(g)(4)(iv), to avoid the duplication of
transfer taxes and recording fees. Closing Agent shall be instructed not to
record such an instrument in the name of API unless directed to do so, in
writing, by API and Exchanger.

V. MISCELLANEOUS PROVISIONS

         A. Exchanger's Assumption of Risk. API assumes no responsibility for
Exchanger's compliance with the 45 day Identification Period and the Exchange
Period requirements of I.R.C. Section 1031 (a)(3). API shall in no event be held
liable for Exchanger's failure to receive the tax benefits of Section 1031 or
for any costs incurred as a result of defending the exchange if audited or
litigated, except to the extent that such failure or costs arise or result from
API's negligence, gross negligence, willful misconduct or default or breach of
API's obligation under this Agreement. Exchanger represents and agrees that it
assumes for itself any and all tax risks and costs associated with the exchange
transaction.

Exchanger hereby acknowledges that API is not acting as Exchanger's tax advisor
and that API does not warrant or represent that the Exchange Arrangement under
this Agreement will qualify for tax deferral under Section 1031 of the Internal
Revenue Code or otherwise. Exchanger acknowledges that Exchanger has been
advised to obtain separate, independent advice concerning the requirements for a
qualified like-kind exchange under Section 1031.

         B. Risk of Loss. Exchanger hereby assumes all risk of loss or damage
adversely affecting the value of the Relinquished Property, the Replacement
Property and any other property conveyed to or by API in connection with this
Exchange Agreement, whether resulting from fire or other casualty, natural
disaster, condemnation or any other physical, legal or economic circumstances,
provided however, Exchanger shall not assume any or all such loss or damage
which arises or results from API's negligence, gross negligence, willful
misconduct or default or breach of the terms and/or conditions of this
Agreement. In this event, API shall be responsible for all losses and damages
which result therefrom.

         C. Time of Essence. Time is of the essence hereof.

         D. Assignment. Neither this Agreement nor any interest herein shall be
assignable by either party without the prior written consent of the others, as
applicable.

         E. Reporting Requirements. Exchanger agrees that to the extent
required, Exchanger shall satisfy any and all reporting requirements of any
federal, state, municipal or other governing authority for recipients of funds
paid to or by API on behalf of and at the direction of Exchanger. API in no way
performs tax-reporting services.

         F. Governing Law. All questions with respect to the construction of
this Agreement and the rights and liabilities of the parties hereto shall be
governed by the laws of the State of California.

                                       -8-

<PAGE>

         G. Attorney's Fees. In the event of any controversy, claim or dispute
between the parties hereto, arising out of or relating to this Agreement or to
the breach thereof, the prevailing party shall be entitled to recover from the
other party, or parties, reasonable attorney's fees and costs.

         H. Entire Agreement. This Agreement contains the entire agreement of
the parties hereto, and supersedes any prior written or oral agreement between
them concerning the subject matter contained herein. There are no
representations, agreements, arrangements or understandings, oral or written,
between the parties hereto, relating to the subject matter contained in this
Agreement, which are not fully expressed herein.

         I. Counterparts. This Agreement may be executed in several counterparts
and all counterparts so executed shall constitute one agreement which shall be
binding on all of the parties hereto, notwithstanding that all of the parties
are not signatory to the original or the same counterpart.

         J. Notices. Any notice to be given hereunder shall be given by personal
delivery, by facsimile or by depositing such notice in the United States mail,
duly registered or certified, with postage prepaid, addressed as follows:

EXCHANGER:                                   ASSET PRESERVATION, INC.
ASHWORTH, INC., A DELAWARE CORPORATION       4208 DOUGLAS BLVD.
2765 LOKER AVE., WEST                        SUITE 300
CARLSBAD, CA 92008                           GRANITE BAY, CA  95746
FAX #                                        FAX # 916-791-6003

         K. Inurement. Subject to the restrictions against assignment as herein
contained, this Agreement shall inure to the benefit of, and shall be binding
upon, the assigns, successors in interest, personal representatives, estates,
heirs, and legatees of each of the parties hereto, as applicable.

         L. Authorization. The persons signing below warrant and represent that
they have authority to enter into this Exchange Agreement and Supplemental
Closing Instructions for themselves and for any other person for whom they
purport to sign.

         M. API Fees. Exchanger agrees to compensate API for the performance of
         the services of API as described herein for the disposition of the
         Relinquished Property and the acquisition of the Replacement Property.
         This fee shall be as follows:

            (1) The sum of $700.00 for the first Relinquished Property closing,
                and $200.00 for each additional Relinquished Property closing.
                In the event Exchanger request that API hold a seller-carry-back
                promissory note, a note- processing fee of $200.00 will be
                collected. In the event of a delayed exchange, API will deduct
                API's fee from the net cash exchange proceeds received by API.
                In the event of a simultaneous exchange, API's fees will be
                collected at closing; AND

            (2) There will be no fee for the first Replacement Property closing.
                The sum of $200.00 will be charged for each additional
                Replacement Property closing. In the event of a delayed
                exchange, API will deduct API's fee from the net cash exchange
                proceeds received by

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                API. In the event of a simultaneous exchange, API's fees will be
                collected at closing; AND

            (3) API will retain all interest earned on all exchange proceeds,
                including cash, and other property held by API as described in
                Section II.B... above, for the first 30 days commencing upon the
                date of receipt of the proceeds by API; AND

            (4) In the event that API holds exchange proceeds for less than 30
                days, API will only retain the interest earned up to the date
                the funds are released; AND

            (5) In the event API holds exchange proceeds for more than 30 days,
                then thereafter Exchanger will earn interest at the prevailing
                Comerica Bank Money Market Rate ("Exchanger's Rate").
                Exchanger's Rate may fluctuate. Interest earned on the exchange
                proceeds in excess of the Exchanger's Rate will be retained by
                API as part of API's fee.

            (6) The interest earned and due Exchanger, pursuant to Section II.D.
                above, will automatically be added to the exchange proceeds and
                applied to the Replacement Property closing, unless a written
                notice from Exchanger requesting interest disbursement separate
                from exchange proceeds is received by API prior to the release
                of exchange proceeds for the Replacement Property closing.
                Interest is subject to the aforementioned restrictions as
                described in Section II.C., above.

         N. Exchanger's Indemnification of Intermediary. Exchanger shall
indemnify, defend and hold API and each of its shareholders, directors,
officers, employees, agents, subsidiaries, affiliates and representatives
harmless from and against all claims, demands, suits, liability, costs or causes
of action of third parties, or which arise out of any challenge by any duly
constituted legal authority as to the tax ramifications of the exchange
transaction, ("Claim"), as well as from and against all losses and expenses
(including reasonable attorney fees and costs), arising out of or in any way
connected with the Relinquished Property or the Replacement Property, or which
results from API's participation in the exchange of real property as described
herein, including those which arise out of API's holding of ownership interest
to said property or any other property involved in the exchange, and including
but not limited to any Claim related to hazardous materials on or about the
property ("the Indemnity"). The Indemnity shall be immediately enforceable
without regard to whether a Claim is well founded. However, the Indemnity shall
not apply if a Claim results in a finding by a court or other governmental
authority of fraud, willful misconduct or gross negligence of API or any of its
officers, directors or employees. This indemnity shall survive the closing of
all transactions described in this Agreement and any termination of this
Agreement. Exchanger acknowledges that API has made no representations nor given
advice as to the tax consequences of the exchange transaction, that Exchanger
has participated in this transaction solely for independent business reasons,
and that it would be unreasonable to ever guarantee the actions or inactions of
any government agency.

         O. Disclaimer of Liability for Wrongful Conduct of Others. Exchanger
hereby agrees that API and each of its shareholders, directors, officers,
employees, agents, subsidiaries, affiliates and representatives shall not be
held responsible or liable by Exchanger, under the law of contract, of tort, or
otherwise, for any damages or loss suffered by Exchanger in the event that API
is wholly or partially unable to perform any of API's obligations under this
Agreement as a result of any wrongful conduct (negligence, gross negligence or
willful misconduct) by any person or entity other than API, which

                                      -10-

<PAGE>

prevents API from performing API's obligations under this Agreement. The
situations covered by this disclaimer of liability include, but are not limited
to, the theft, embezzlement, loss or misapplication of Exchanger's funds by any
title company, attorney or law firm, escrow company, real estate broker, or any
other person or entity other than API, its officers, employees or directors.

         P. Related Party Exchanges. Exchanger acknowledges awareness of the
following information: Exchanges made between Exchanger and a "Related Person"
as defined by I.R.C. Sections 267(b) and 707(b)(1) (for example only: spouse,
ancestors, descendants, brothers and sisters of Exchanger, and corporations and
partnerships which are owned more than 50% by the Exchanger) are subject to
special legal restrictions, as follows:

         (1) The I.R.S. has ruled (in Rev. Ruling 2002-83) that a taxpayer who
transfers relinquished property to a qualified intermediary in exchange for
replacement property owned by a Related Person is not entitled to
non-recognition treatment under section 1031(a) of the Internal Revenue Code if,
as part of the transaction, the related party receives cash or other
non-like-kind property for the replacement property; and

         (2) Internal Revenue Code Section 1031(f)(1)(c) states that if a
taxpayer exchanges property with a Related Person, and before the expiration of
two years after the completion of the exchange the Related Person disposes of
the property the Related Person received in the exchange OR Exchanger disposes
of the property received in the exchange from the Related Person, the exchange
will be disallowed and the Exchanger will be required to recognize the gain or
loss from the transaction.

Exchanger is strongly cautioned to consult with Exchanger's own tax advisor
concerning these issues before entering into any exchange involving a Related
Person. Exchanger acknowledges that API has made no representations nor given
advice as to Exchanger's tax consequences in the event Exchanger transacts an
exchange with a Related Person.

         Q. Related Company Disclosure. Exchanger understands that API is a
subsidiary of Stewart Title Company. Exchanger is not required to use Stewart
Title Company and/or any of its issuing offices as a condition for settlement of
the purchase or sale of the Subject Property.

         R. Document Storage. Upon completion of Exchanger's transaction under
this Exchange Agreement, API's file containing documentation of this exchange
transaction will be retained on-site for six months. During this six-month
period, Exchanger may obtain copies of all documents in said file at no cost to
Exchanger. When six months have elapsed from the completion of Exchanger's
exchange, said file will be sent to a long-term storage facility. After these
six months have elapsed, Exchanger may notify API that Exchanger wishes copies
of documents from API's file. API will retrieve said file from the long-term
storage facility and provide Exchanger with the requested copies of documents
within a reasonable time. Exchanger shall pay the sum of $25.00 to API before
Exchanger receives the requested documents; this fee is charged in order to
offset API's actual cost of retrieving Exchanger's file from long-term storage.

         S. California Withholding Requirements. California law (Revenue &
Taxation Code Secs. 18661-18677) requires, in many cases, that a portion of the
proceeds from the sale of real property located in California be withheld and
forwarded to the California Franchise Tax Board. This law may require that

                                      -11-

<PAGE>

API withhold three and one-third percent (3 1/3%) of any cash or cash equivalent
Exchanger receives from the proceeds of California real property relinquished in
this exchange transaction. Further, this law may require API to withhold three
and one-third percent (3 1/3%) of the total sale price of such California real
property if the exchange does not occur or does not meet the requirements of
Internal Revenue Code Section 1031 (such as the identification and receipt
requirements set forth in Section III. of this Agreement). By signing this
Agreement, Exchanger acknowledges Exchanger's awareness that California law may
require API to use part or all of Exchanger's exchange proceeds to meet
applicable withholding requirements. A copy of this California law is available
online at: http://www.leginfo.ca.gov/cgi-bin/displaycode?section=rtc&group=
18001-19000&file-18661-18677.

         T. State Law Requirements. Various state and local government entities
impose requirements applicable to I.R.C. Section 1031 exchange transactions in
addition to those imposed by the Internal Revenue Code or I.R.S. rules. These
state or local laws may impose requirements in addition to, or different from,
the provisions of this Agreement. Exchanger is hereby notified that API is
required to comply with applicable laws imposed by states and local government
entities, and that in so complying, Exchanger's rights under this Agreement may
be affected.

         U. Disqualified Person. To the best of its knowledge, API is not a
"disqualified person" with respect to Exchanger as defined in Treasury
Regulation Section 1.1031(k)-1(k).

         IN WITNESS WHEREOF, the parties have executed this Exchange Agreement.

ASSET PRESERVATION, INC., A CALIFORNIA CORPORATION

By: /s/Joan Poimiroo               Dated:12/3/03
   --------------------------------      ---------------
    Joan Poimiroo, Sr. Vice President

EXCHANGER:

Ashworth, Inc., a Delaware corporation

By: /s/Peter Case                   Dated: 12/11/03
Its: _VP  Finance
   --------------------------------

Tax ID/SS#:


                                      -12-

<PAGE>

                                  ADDENDUM "A"

                   ASSIGNMENT OF REAL PROPERTY SALE AGREEMENT

         THIS ASSIGNMENT is entered into between ASHWORTH, INC., A DELAWARE
CORPORATION, herein called "ASSIGNOR" and ASSET PRESERVATION, INC., a California
corporation, herein called "ASSIGNEE", for the disposition of the property
located in the County of SAN DIEGO, State of CALIFORNIA, more commonly known as
2791 & 2793 LOKER AVENUE, CARLSBAD, CALIFORNIA, herein called the "SUBJECT
PROPERTY".

         WHEREAS, Assignor heretofore entered into an agreement to sell real
property ("REAL PROPERTY SALE AGREEMENT") concerning the Subject Property,
between Assignor as Seller and LBA INC., A CALIFORNIA CORPORATION as Purchaser,
and

         WHEREAS, Assignor wishes to assign Assignor's rights under the Real
Property Sale Agreement; and

         WHEREAS, Assignor represents and warrants to Assignee that Assignor has
the legal right to assign Assignor's rights under the Real Property Sale
Agreement to Assignee; and

         WHEREAS, Assignee wishes to accept said Assignment and acquire the
ownership interest in the Real Property Sale Agreement from Assignor and to
assume the rights of Assignor to convey the ownership interest in the Subject
Property to Purchaser;

         NOW, THEREFORE, Assignor hereby assigns to Assignee all of the
ownership rights and interest in the Real Property Sale Agreement, including any
deposits provided for therein. Assignee hereby accepts this assignment and
assumes all of such rights and interest in the Real Property Sale Agreement. The
Real Property Sale Agreement is hereby assigned in accordance with the terms
hereof.

Assignor and Assignee further agree as follows:

         1. As additional consideration to Assignee, Assignor hereby agrees to
hold Assignee harmless, release, defend and indemnify Assignee from any and all
liability, loss, damage or injury in any manner arising out of or incident to
Assignee's acquiring ownership interest in, holding, transferring or conveying
the property, including, without limitation, any and all consequential damages
arising therefrom.

         2. Assignor and Assignee agree that this assignment is made for the
purposes of facilitating the I.R.C. Section 1031 exchange pursuant to the
Exchange Agreement to which this Addendum "A" relates. Therefore, pursuant to
U.S. Treasury Regulation 1.1031 (k)-1(g)(4)(iv), only the rights of Assignor
under the Real Property Sale Agreement have been assigned to Assignee. For
purposes of any dispute regarding any aspect of the Subject Property other than
Assignee's holding or transferring the Subject Property pursuant to the Exchange
Agreement and this Addendum "A" thereto, this transaction shall be deemed to
have occurred only between Assignor and Purchaser, and Assignee shall not be
made a party to any dispute, suit, claim, arbitration or other proceeding
concerning the Subject Property without Assignee's prior written consent.

         3. This Agreement shall be binding upon and shall inure to the benefit
of their respective heirs, successors and assigns of the parties hereto.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this assignment of
the Real Property Sale Agreement.

ASSIGNOR:

Ashworth, Inc., a Delaware corporation

By:/s/Peter Case                  Dated:     12/11/03
   -------------------------------
Its: VP Finance

ASSIGNEE:

Asset Preservation, Inc., a California corporation

By: /s/Joan Poimiroo                 Dated:  12/3/03
   ----------------------------------
    Joan Poimiroo, Sr. Vice President

<PAGE>

                                  ADDENDUM "B"

                       AMENDMENT TO CLOSING INSTRUCTIONS:

           NOTICE OF ASSIGNMENT AND SUBSTITUTION OF SELLER-DIRECT DEED

To:                   STEWART TITLE OF SAN DIEGO

Re: File number       1050925

Subject Property:     2791 & 2793 LOKER AVENUE, CARLSBAD, CALIFORNIA

         ASHWORTH, INC., A DELAWARE CORPORATION, "ASSIGNOR", by a separate
document entitled "ASSIGNMENT OF REAL PROPERTY SALE AGREEMENT", which is being
provided to you herewith, has assigned all of Assignor's rights as Seller under
the Real Property Sale Agreement for the Subject Property to ASSET PRESERVATION,
INC., a California corporation, as "ASSIGNEE".

         Assignee has accepted said assignment of rights. By virtue of said
Assignment, Assignee has been substituted as Seller under the Real Property Sale
Agreement, and has agreed to convey the ownership interest in the Subject
Property to the Purchaser under the Real Property Sale Agreement ("PURCHASER").

         By your receipt of a copy of this executed Addendum "B", you are hereby
instructed as follows:

         1. To prepare an instrument transferring legal title directly from
Assignor to Purchaser pursuant to and consistent with U.S. Treasury Regulations
Section 1.1031 (k)-1(g)(4)(iv). Said transfer shall avoid the duplication of any
transfer taxes and/or recording fees.

         2. Not to record any instrument in the name of Assignee unless
specifically directed to do so in writing signed by Assignor and Assignee.

         3. To remit directly to Assignee, by wire transfer only, all net cash
proceeds immediately upon the close of closing.

         4. In the event you learn that Assignor intends to accept seller
financing as part of the consideration for sale of the Subject Property, you
shall inform Assignee of this fact immediately, unless instructions regarding
such seller financing have previously been issued to you by Assignee.

         5. To accept Assignee as the substituted Seller of the Subject Property
in the above mentioned closing.

<PAGE>

This Notice of Assignment and Substitution of Seller shall be effective
immediately, and in all events prior to the closing of the purchase and sale of
the Subject Property.

ASSIGNOR:

Ashworth, Inc., a Delaware corporation

By: /s/Peter Case            Dated: 12/11/03
   --------------------------
Its: VP Finance

ASSIGNEE:

Asset Preservation, Inc., a California corporation

By: /s/Joan Poimiroo          Dated: 12/3/03
   ---------------------------
       Joan Poimiroo, Sr. Vice President

<PAGE>

                              NOTICE OF ASSIGNMENT
                   OF RIGHTS UNDER PURCHASE AND SALE AGREEMENT

To:                   LBA INC., A CALIFORNIA CORPORATION
Assignor:             ASHWORTH, INC., A DELAWARE CORPORATION
Assignee:             ASSET PRESERVATION, INC.
Property address:     2791 & 2793 LOKER AVENUE, CARLSBAD, CALIFORNIA, 92008

         YOU ARE HEREBY NOTIFIED that ASHWORTH, INC., A DELAWARE CORPORATION,
"ASSIGNOR" assigned his/her/their/its rights under an agreement to sell ("Real
Property Sale Agreement") entered into concerning the above referenced property
between Assignor as Seller and LBA INC., A CALIFORNIA CORPORATION as Purchaser
to ASSET PRESERVATION, INC., "ASSIGNEE", as his/her/their/its Qualified
Intermediary, for the purpose of an I.R.C. Section 1031 Tax Deferred Exchange.

ASSIGNOR:

Ashworth, Inc., a Delaware corporation

By: /s/Peter Case              Dated: 12/11/03
   ----------------------------
Its: VP Finance

ASSIGNEE:

ASSET PRESERVATION, INC., a California Corporation

By: /s/Joan Poimiroo           Dated: 12/3/03
    ---------------------------
     Joan Poimiroo, Sr. Vice President

PURCHASER ACKNOWLEDGEMENT:

LBA Inc., a California corporation

By: _______________________________________Dated:_______________________

Its: ______________________________________


</TEXT>
</DOCUMENT>
