ASHWORTH INC
EXHIBIT 10(I)(5)
<DOCUMENT>
<TYPE>EX-10.(I)(5)
<SEQUENCE>7
<FILENAME>a90829exv10wxiyx5y.txt
<DESCRIPTION>EXHIBIT 10(I)(5)
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                                                                Exhibit 10(i)(5)

                                DEED OF HYPOTHEC
                     ON THE UNIVERSALITY OF MOVABLE PROPERTY

BETWEEN:          ASHWORTH, INC., a Delaware corporation, having its head office
                  at 2765 Locker Avenue West, Carlsbad, California, 92008,
                  U.S.A.

                  (the "GRANTOR")

AND:              BANK OF AMERICA, N.A., a national banking association under
                  the federal laws of the United States, having an office at 800
                  Fifth Avenue, 37th Floor, Seattle, Washington, 98104, U.S.A..

                  (Bank of America, N.A., acting for itself and as agent and
                  solidary creditor for the benefit of the Lenders under the
                  hereinafter defined Credit Agreement hereinafter referred to
                  as the "AGENT")

WHO HAVE DECLARED AS FOLLOWS:

WHEREAS the Grantor as Borrower, the financial institutions listed in the
signature pages thereto, as Lenders and the Agent have been or will be entering
into contemporaneously herewith a credit agreement providing, inter alia, for
credit facilities in an initial amount not to exceed US$55,000,000 to be made
available thereunder by the Lenders to the Grantor, subject to the terms and
conditions therein set forth (said credit agreement as same may be amended,
restated, supplemented or otherwise modified from time to time, being
hereinafter referred to as the "CREDIT AGREEMENT"); all capitalized words and
expressions used herein shall have the same meaning as ascribed thereto in the
Credit Agreement, unless otherwise defined herein or unless the context
otherwise requires;

WHEREAS the Grantor has agreed to grant a hypothec on the Hypothecated Property
(as such expression is hereinafter defined) in favour of the Agent to secure,
inter alia, the Grantor's obligations to the Lenders and the Agent pursuant to
the Credit Agreement;

WHEREAS pursuant to Section 9.12 of the Credit Agreement, the Agent, on one
hand, and each Lender, respectively, on the other hand, have been or will be
conferred the legal status of solidary creditors of the Loan Parties in respect
of all amounts, liabilities and other obligations owed by each of the Loan
Parties to the Agent and each such Lender, respectively, under the Credit
Agreement and the other Loan Documents, the whole in accordance with Article
1541 of the Civil Code of Quebec;

AND WHEREAS the Agent, as solidary creditor for the benefit of the Lenders, has
the authority to hold any and all Liens created by the Security Agreements or
any other Loan Document on the Facility Collateral, for the payment and
performance of all obligations to the Agent and the Lenders of the Obligated
Parties arising under or in connection with the Credit Agreement and the other
Loan Documents;

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                                      - 2 -

NOW, THEREFORE, THE PARTIES HERETO HAVE AGREED AS FOLLOWS:

1.       SECURED OBLIGATIONS

         The hypothec granted by this deed secures the performance of the
         following obligations (hereinafter collectively called the
         "OBLIGATIONS"):

         1.1      the prompt payment, as and when due and payable, of all
                  amounts in principal, interest, fees, costs or otherwise now
                  or hereafter owing by the Grantor to the Agent and the Lenders
                  under the Credit Agreement or any other Loan Document to which
                  the Grantor is or may become a party;

         1.2      the strict performance and observance by the Grantor of all
                  agreements, warranties, representations, covenants and
                  conditions of the Grantor made pursuant to this deed, the
                  Credit Agreement, any Loan Document to which the Grantor is or
                  may become a party or any other agreement between the Grantor
                  and the Agent or any Lender all as now in effect or as
                  hereafter entered into or amended; and

         1.3      the prompt payment, as and when due and payable, of all other
                  amounts now or hereafter owing by the Grantor to the Agent and
                  the Lenders, including by way of guarantee or indemnity,
                  whether now existing or hereafter incurred, matured or
                  unmatured, direct, indirect or contingent, including any
                  extensions and renewals thereof and including the payment of
                  all amounts payable hereunder and the legitimate costs that
                  the Agent or any Lender may incur to recover the obligations
                  secured hereby and to preserve the Hypothecated Property (as
                  such expression is hereinbelow defined).

2.       HYPOTHEC

         2.1      Amount of Hypothec

                  To secure the performance of the Obligations, the Grantor
                  hereby hypothecates in favour of the Agent the property
                  described in Section 2.2 hereof for the sum of one hundred
                  thirty seven million five hundred thousand Canadian dollars
                  (CDN$137,500,000) bearing interest at the rate of twenty-five
                  percent (25%)per annum from the date hereof, compounded
                  annually.

         2.2      Description of Hypothecated Property

                  The hypothec charges the universality of all the Grantor's
                  movable property, present and future, corporeal and
                  incorporeal, of whatsoever nature and kind and wheresoever
                  situated (hereinafter collectively called the "HYPOTHECATED
                  PROPERTY"), including, without limitation, all tools and
                  equipment pertaining to the enterprises of the Grantor, all
                  claims and customer accounts, all securities, all patents,
                  trademarks and other intellectual property rights and all
                  corporeal movables included in the assets of any of the
                  Grantor's enterprises kept for sale, lease or processing in
                  the manufacture or transformation of property intended for
                  sale, for lease or for use in providing a service.

<PAGE>

                                      - 3 -

         2.3      Interpretation

                  The parties hereto acknowledge and confirm as follows:

                  2.31     that the hypothec created on the Hypothecated
                           Property pursuant to this deed is not and shall not
                           be construed as a floating hypothec within the
                           meaning of articles 2715 et seq. of the Civil Code of
                           Quebec;

                  2.3.2    that the hypothec constituted hereunder will remain
                           in full force and effect for the full amount
                           stipulated in Section 2.1 hereof until such time as
                           an express written discharge is executed by the Agent
                           and delivered to the Grantor. The hypothec, security
                           and rights hereby created in favour of the Agent will
                           not be extinguished, reduced, novated or otherwise
                           affected by any payments made to or amounts received
                           by the Agent, directly or indirectly, from the
                           Grantor or any other party or as a result of any
                           insurance indemnities arising from loss or damage to
                           any of the Hypothecated Property or by reason of the
                           collection of any claims hypothecated hereunder; and

                  2.3.3    that should the Obligations at any time be fully
                           extinguished without an express discharge of the
                           hypothec created hereunder having been granted, and
                           should any new Obligations arise, the security
                           created hereunder will secure such new Obligations in
                           the same manner and to the same extent as if there
                           had never occurred an extinction of any of the
                           Obligations and the Grantor is and shall remain
                           obligated under the provisions hereof. The Grantor
                           shall be deemed to have obligated itself for such new
                           Obligations pursuant to the provisions hereof and the
                           hypothec herein created shall secure such new
                           Obligations as contemplated by Article 2797 of the
                           Civil Code of Quebec.

3.       GRANTOR'S UNDERTAKINGS

         3.1      Alienation

                  Unless the Agent gives its prior written consent or unless
                  otherwise permitted under the Credit Agreement, the Grantor
                  agrees not to alienate, lease or otherwise dispose of any of
                  the Hypothecated Property outside the ordinary course of
                  business of its enterprise.

         3.2      Transformation

                  The Grantor may not, without the Agent's prior written
                  consent, transform any of the movables forming part of the
                  Hypothecated Property either by incorporating such movables
                  into an immovable or by combining or mixing them with other
                  movables so as to form new property, unless such immovable or
                  new property are themselves subject or made subject to the
                  hypothec hereby granted or unless such transformation is made
                  in the ordinary course of operating an enterprise of the
                  Grantor that is engaged in the business of manufacturing or
                  transforming property. In no event, however, may the Grantor
                  transform any such property

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                                     - 4 -

                  where such transformation would result in the Agent's security
                  or rights hereunder, including in particular their rank, being
                  diminished.

                  In the event of any such transformation, even without the
                  Agent's authorization, the Grantor (who shall not be relieved
                  of the default resulting from the failure to obtain
                  authorization) shall immediately inform the Agent of the
                  details of such transformation and shall in particular provide
                  the Agent with a description of the property thereby affected,
                  the name and address of the owner of the property that may
                  result therefrom and the address where such property is
                  located.

4.       PROVISIONS APPLICABLE TO THE HYPOTHEC ON CLAIMS

         The following provisions apply to claims owed to the Grantor and
         hypothecated in favour of the Agent, including present and future rents
         payable under current and future leases affecting all or part of the
         Hypothecated Property.

         4.1      Collection

                  Except for those claims consisting of securities pledged to
                  the Agent, the Grantor shall have authority to collect
                  payments of interest and repayments of capital made on the
                  claims included in the Hypothecated Property hypothecated in
                  favour of the Agent pursuant to this deed, as they fall due.
                  The Agent may withdraw this authorization by written notice at
                  any time after the occurrence of and during the continuance of
                  an Event of Default. Notwithstanding the foregoing, the Agent
                  may at any time after the occurrence and during the
                  continuance of an Event of Default, take all necessary steps
                  to set up this hypothec against the debtors of the
                  hypothecated claims. In such event, the Grantor undertakes to
                  remit to the Agent, upon request, all titles, documents,
                  registers, invoices and accounts evidencing the claims or
                  relating thereto, whatever the nature of their medium and
                  whatever the form in which they are accessible, whether
                  written, graphic, taped, filmed, computerized, or other.

                  Any payment received by the Grantor on account of any
                  hypothecated claim other than pursuant to the foregoing
                  authorization shall be received for the Agent's account, shall
                  not entitle the Grantor to the amounts collected and shall be
                  kept separate from the Grantor's other property at all times
                  and remitted forthwith by the Grantor to the Agent without
                  compensation.

                  Notwithstanding the provisions of Section 3.1 hereof, the
                  Grantor is not authorized to alienate any claim forming a part
                  of a universality of claims hypothecated in favour of the
                  Agent without the latter's prior written consent or as
                  otherwise permitted by the Credit Agreement.

         4.2      Agent's Rights

                  The Agent shall not be obliged to exercise its rights to the
                  hypothecated claims or to ensure their recovery from the
                  debtors, whether by legal proceedings or

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                                     - 5 -

                  otherwise. Should the Agent decide to collect the hypothecated
                  claims, it shall be at liberty to negotiate such arrangements
                  as it deems appropriate with the debtors or third parties, to
                  enter into agreements with them with respect to the claims and
                  any security securing the claims, and even to waive the claims
                  and such security, the whole without the Grantor's consent or
                  intervention, and the Agent shall not thereby incur any
                  liability toward or be accountable to the Grantor. Unless the
                  Grantor so requests in writing, the Agent shall not be obliged
                  to inform the Grantor of any irregularity in the payment of
                  any amounts due on the claims. Apart from its obligation to
                  remit to the Grantor any sums collected over and above the
                  amount of the Obligations in principal, interest and costs,
                  the Agent shall not be accountable to the Grantor with respect
                  to the status of the collections made or any transactions and
                  arrangements entered into.

         4.3      Information

                  The Agent may, at its discretion, verify the existence and
                  status of the claims at any time. The Grantor shall provide
                  the necessary assistance and information for this purpose and
                  shall take such action in this respect as the Agent may
                  reasonably request: in particular, it shall allow the Agent
                  and its agents, upon seven days' prior notice, so long as no
                  Event of Default shall have occurred and be continuing, to
                  enter the premises occupied by the Grantor and to consult the
                  Grantor's accounting books and registers as well as any
                  document relating to the claims and make copies thereof.

                  At any time after the occurrence and during the continuance of
                  an Event of Default, the Grantor specifically authorizes the
                  Agent to communicate with any third party in order to obtain
                  or transmit any personal information and any information
                  relating to the claims and to the Grantor for the purpose of
                  verifying and collecting the claims.

                  Where the hypothec granted by this deed affects a claim that
                  is itself secured by a registered hypothec, the Grantor shall
                  inform the Agent accordingly and shall supply all the
                  information that the Agent may request in this connection.

         4.4      Financial Administration Act (Canada)

                  Where any of the claims are subject to the provisions of the
                  Financial Administration Act (Canada), the Grantor hereby
                  sells, assigns and transfers the same absolutely to the Agent
                  so that, upon a withdrawal of authorization as referred to in
                  Section 4.1 hereof, the Agent shall be free to complete the
                  formalities required to make such assignment fully
                  enforceable.

5.       POSSESSION OF PROPERTY

         This deed creates a hypothec without delivery.

<PAGE>

                                     - 6 -

6.       DEFAULT

         6.1      Events of Default

                  The Grantor shall be considered in default upon the occurrence
                  of any of the following events:

                  6.1.1    an Event of Default under the Credit Agreement;

                  6.1.2    should the Grantor default in the performance of the
                           Obligations or to comply with any of its obligations
                           or undertakings under this deed;

                  6.1.3    should the Agent receive from any present or future
                           guarantor of all or any of the Obligations a notice
                           purporting to terminate or limit such guarantor's
                           liability under its guarantee.

         6.2      Effects

                  Without limiting its right, at any time and at its discretion,
                  to demand payment of any Obligations payable on demand and
                  without prejudice to any rights and remedies which it has
                  pursuant to agreements with the Grantor or at law (in
                  particular with respect to hypothecated claims), the Agent,
                  upon the occurrence of any of the events listed in Section 6.1
                  hereof, may demand immediate and full payment of the amounts
                  owing on account of the Obligations, which shall forthwith
                  become due and payable, and exercise, at its discretion,
                  without restriction and without any prior notice other than
                  such notices as are required by law, any rights and remedies
                  which it has pursuant to this deed or at law, including, in
                  particular, the following hypothecary rights:

                  -        taking of possession for purposes of administration;

                  -        taking in payment;

                  -        sale by the Agent;

                  -        sale by judicial authority.

         6.3      Agent's Rights

                  Irrespective of the particular remedy exercised by the Agent
                  in the event of the Grantor's default, the following
                  provisions shall apply in addition to any provisions that may
                  by law apply in the circumstances, the Grantor expressly
                  agreeing thereto:

                  6.3.1    the Grantor undertakes to voluntarily surrender the
                           Hypothecated Property to the Agent upon request, and
                           agrees not to put any impediment in the way of, but
                           rather to facilitate by all legal means, the exercise
                           of the powers hereby granted to the Agent and not to
                           interfere therewith; in addition, the Agent may, but
                           shall not be obliged to, conduct a verification of
                           the Hypothecated Property, assemble or move any of
                           such property or

<PAGE>

                                     - 7 -

                           take proceedings or do or take any act or action in
                           relation to the Hypothecated Property that it may
                           deem advisable, the whole at the Grantor's expense;

                  6.3.2    the Agent may, in addition, at its discretion and at
                           the Grantor's expense, whether after the Grantor has
                           surrendered the Hypothecated Property and until the
                           Agent has exercised the hypothecary right which it
                           intends to exercise, or whether after the Agent has
                           chosen to take possession of the Hypothecated
                           Property for purposes of administration, use or
                           operate all or any part of the Hypothecated Property
                           (without being obliged to make such property
                           productive), change the destination of or alienate
                           such property by onerous title (except for
                           Hypothecated Property of little value) or charge such
                           property with a hypothec or other real right, enter
                           into or renew any leases for such amounts and on such
                           terms and conditions as the Agent deems appropriate,
                           make any repairs or renovations or undertake or
                           complete any work;

                  6.3.3    the Agent may, in the exercise of its rights,
                           renounce any right belonging to the Grantor, even
                           where no valuable consideration is received;

                  6.3.4    the Agent shall not be bound to make an inventory,
                           take out insurance or furnish other security to
                           secure the performance of its obligations;

                  6.3.5    the Agent may, at its discretion, take possession,
                           through its officers, agents or mandataries, of all
                           or any part of the Hypothecated Property, with full
                           power to carry on, manage and conduct the Grantor's
                           business; the Agent may use the Hypothecated Property
                           or any information that it obtains by reason of its
                           administration for its own benefit;

                  6.3.6    the Grantor, through its officers and directors,
                           shall forthwith execute such documents and transfers
                           as may be necessary to place the Agent in legal
                           possession of the Hypothecated Property and the
                           business of the Grantor in connection therewith, and
                           thereupon all the powers, functions, rights and
                           privileges of each and every one of the directors and
                           officers of the Grantor shall cease and terminate
                           with respect to the Hypothecated Property;

                  6.3.7    the Agent shall not be obliged to render an account
                           with respect to its actions in the exercise of its
                           hypothecary rights, except as stipulated by law.
                           Should the Agent see fit to render an account, it may
                           do so in summary fashion;

                  6.3.8    for the purpose of exercising any of its rights, the
                           Agent may make use of any premises on which the
                           Hypothecated Property is located, the whole at the
                           Grantor's expense;

                  6.3.9    the Agent may, at its discretion, decide to sell and
                           dispose of the Hypothecated Property as a whole or in
                           separate parcels, by tender, public auction or
                           private contract, on such date and on such terms and

<PAGE>

                                     - 8 -

                           conditions as the Agent may stipulate, after giving
                           such prior notices as are required by articles 2784
                           and following of the Civil Code of Quebec, and the
                           Agent may make such sale for cash or credit upon such
                           reasonable conditions as to upset or reserve bid or
                           price and as to terms of payment as it may deem
                           proper, and may rescind or vary any contract of sale
                           that may have been entered into and resell such
                           property under any of the powers conferred by this
                           deed, adjourn any such sale from time to time and
                           execute and deliver to the purchaser or purchasers of
                           the said property or any part thereof good and
                           sufficient deed or deeds for the same, the Grantor
                           hereby giving the Agent an irrevocable power of
                           attorney for the purpose of making such sale and
                           executing such deeds, and any such sale made as
                           aforesaid shall be a perpetual bar in law and in
                           equity against the Grantor and its assigns and
                           against any other persons who may claim the said
                           property or any part thereof from the Grantor or its
                           assigns; and

                  6.3.10   the Agent, or its agents or representatives, may
                           become purchasers at any sale of the Hypothecated
                           Property, whether made under the power of sale herein
                           contained or pursuant to foreclosure or other legal
                           proceedings.

7.       MISCELLANEOUS PROVISIONS

         7.1      Nature of the Obligations

                  Each of the Obligations of the Grantor is indivisible.

         7.2      Nullity of a Provision

                  In the event that any provision of this deed is declared null
                  and void or is deemed not to have been written, the other
                  provisions of this deed shall be severable from such provision
                  and shall continue to have full force and effect.

         7.3      Application of Payments

                  Any insurance indemnity, as well as any other amount or other
                  property received by the Agent in the exercise of the rights
                  conferred upon it by this deed or by law or in any other
                  manner with respect to any of the Hypothecated Property, may
                  be retained by the Agent as Hypothecated Property or applied
                  to the payment of the Obligations, whether or not they are
                  due. Any amount collected by the Agent, even on account of the
                  voluntary performance of the Obligations, shall be applied at
                  the Agent's discretion, and the Agent may vary such
                  application from time to time, in whole or in part, as it sees
                  fit.

                  Should any of the Hypothecated Property or its proceeds be in
                  a currency different from that of the Obligations, the Agent
                  is hereby authorized to convert the amount or the claim in
                  question into the currency of the Obligations at the Agent's
                  rate of exchange for the currencies concerned on the date the
                  payment is applied or on such other date as the Agent deems
                  appropriate.

<PAGE>

                                     - 9 -

         7.4      Rights Cumulative and Exercise of Remedies

                  The rights hereby created are in addition to and not in
                  substitution for any other right or security held by the Agent
                  including, without limitation, under the Credit Agreement. The
                  exercise by the Agent of any of its rights and remedies shall
                  not prevent it from exercising any other right or remedy
                  conferred upon it by this deed or any other security or by
                  law.

                  The Agent may, separately or successively, exercise the rights
                  conferred upon it by this deed on any part of the Hypothecated
                  Property, without being obliged to do so on the entire
                  Hypothecated Property and without prejudice to its rights and
                  remedies with respect to the remaining Hypothecated Property,
                  and it shall not be in any way obliged to exercise its rights
                  and remedies against any other person liable for the
                  Obligations or to realize any other security securing the
                  Obligations.

                  The Agent may delegate the exercise of its rights or the
                  performance of its obligations arising from this deed to
                  another person and may in such case supply to such other
                  person any information that it holds on the Grantor or on the
                  Hypothecated Property.

         7.5      Notice of Default

                  The mere expiry of the time limit for performing any of the
                  Obligations shall serve to put the Grantor in default, without
                  any notice or demand being required for that purpose.

         7.6      Waivers

                  The Grantor may not claim that an act or omission by the Agent
                  constitutes or implies a waiver of its right to invoke a
                  default by the Grantor or to assert a right arising out of
                  such default, unless the Agent has expressly so stated after
                  the occurrence of the default.

         7.7      Power of Attorney

                  The Grantor hereby grants to the Agent and each of its
                  officers, agents, correspondents or mandataries, including any
                  depositary, an irrevocable power of attorney with full powers
                  of substitution and revocation, to do, make and execute, for
                  the Grantor and in its name, all such deeds, documents,
                  transfers, assignments, hypothecs, assurances, consents and
                  things as the Agent may deem necessary or appropriate to be
                  done, made or executed by the Grantor to protect the Agent's
                  rights hereunder and/or preserve the Hypothecated Property and
                  to give effect to all the provisions of this deed and the
                  documents and other acts, matters and things that the Grantor
                  has agreed to do, make and execute or that may be required in
                  the exercise of the powers conferred upon the Agent by this
                  deed, and in particular, without limiting the generality of
                  the foregoing, to obtain from any taxation authority at any
                  time, if deemed useful, any information necessary to allow the
                  Agent to determine the amount of the Grantor's indebtedness to
                  such taxation authorities. The Grantor also grants to each of
                  such persons holding its

<PAGE>

                                     - 10 -

                  power of attorney the right to use its name whenever they may
                  deem it necessary or appropriate to do so for the purposes
                  hereof and the Grantor further ratifies and confirms, and
                  undertakes to ratify and confirm, all acts and actions done or
                  taken by each of such persons in connection herewith.

         7.8      Indemnification

                  The Grantor hereby agrees and undertakes to indemnify the
                  Agent and save and hold it harmless from and against any and
                  all losses, expenses, costs and liabilities (including
                  reasonable legal fees and disbursements) that the Agent or any
                  of its mandataries or persons holding its power of attorney
                  may sustain or incur in the exercise of the powers and rights
                  conferred upon the Agent hereunder except to the extent any
                  such loss, expense, cost or liability results from the gross
                  negligence or wilful misconduct of the Agent.

         7.9      Election of Domicile

                  Any service, notice or demand shall be given or made upon the
                  Grantor at the latter's address indicated in the appearance
                  section hereof or at the last address communicated in writing
                  by the Grantor to the Agent.

         7.10     Interpretation

                  References herein to gender shall include all genders and the
                  singular shall include the plural and vice versa, as required
                  by the context.

         7.11     Further Assurances

                  The Grantor hereby agrees to do, make and execute, at its own
                  expense, all such deeds, documents and things as may be
                  necessary or advisable, in the opinion of the Agent's legal
                  counsel, to give effect to the provisions of this deed,
                  including without limiting the generality of the foregoing, in
                  order that a valid and enforceable hypothec be created and
                  maintained on any property forming part of the Hypothecated
                  Property as of the execution of this deed or at any time in
                  the future.

         7.12     Divisions and Titles

                  The division of this deed into sections and subsections and
                  the insertion of titles are for ease of reference only and
                  shall not influence its meaning or construction.

         7.13     Applicable Law

                  This deed shall be governed and construed in accordance with
                  the laws in force in the Province of Quebec.

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