Document:

<PAGE>

                                                                    Exhibit 10.1

                      SECOND AMENDMENT TO CREDIT AGREEMENT

                  SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated
as of June 30, 2003, among STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland
corporation (the "Corporation"), each additional ALTERNATE CURRENCY REVOLVING
LOAN BORROWER from time to time party to the Credit Agreement (as referred to
below) (together with the Corporation, collectively, the "Borrowers"), the
LENDERS from time to time party to the Credit Agreement (the "Lenders"),
DEUTSCHE BANK AG, NEW YORK BRANCH, as Administrative Agent (in such capacity,
the "Administrative Agent"), J.P. MORGAN CHASE BANK, as Syndication Agent (in
such capacity, the "Syndication Agent"), BANK OF AMERICA, N.A., FLEET NATIONAL
BANK and SOCIETE GENERALE, as Co-Documentation Agents (in such capacity,
collectively, the "Co-Documentation Agents" and each, a "Co-Documentation
Agent"), and DEUTSCHE BANK SECURITIES INC. and JP MORGAN SECURITIES INC. as
Co-Lead Arrangers and Joint Book Running Managers (in such capacity,
collectively, the "Managers"). Unless otherwise defined herein, all capitalized
terms used herein shall have the respective meanings provided such terms in the
Credit Agreement referred to below.

                              W I T N E S S E T H:

                  WHEREAS, the Corporation, the Lenders, the Administrative
Agent, the Syndication Agent, the Co-Documentation Agents and the Managers are
parties to that certain Credit Agreement, dated as of October 9, 2002 (as
amended, modified and/or supplemented to, but not including, the date hereof,
the "Credit Agreement");

                  WHEREAS, the Corporation and its Subsidiaries desire to, inter
alia, (i) modify the maximum Consolidated Leverage Ratio set forth in Section
9.06 of the Credit Agreement for the last day of each fiscal quarter ending June
30, 2003 through and including June 30, 2005; (ii) modify the definition of
"Applicable Margin" set forth in Section 11.01 of the Credit Agreement; (iii)
modify the definition of "Consolidated Indebtedness" set forth in Section 11.01
of the Credit Agreement; (iv) provide for certain conditions with respect to the
ability of the Corporation to pay certain Dividends to its shareholders; and (v)
permanently reduce the maximum ratio of Encumbered EBITDA to Consolidated EBITDA
provided in Section 9.08 of the Credit Agreement; and

                  WHEREAS, in connection with the foregoing, the Corporation and
its Subsidiaries wish to request certain modifications to provisions in the
Credit Agreement in order to permit the matters described herein, subject to all
of the terms and provisions contained in this Amendment and only to the extent
set forth in this Amendment.
<PAGE>
                  NOW, THEREFORE, it is agreed:

                  SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT.

                  1.01. Maximum Consolidated Leverage Ratio; Section 9.06. From
and after the Second Amendment Effective Date (as defined below), Section 9.06
of the Credit Agreement shall be amended by (i) deleting the table appearing in
said Section in its entirety and (ii) inserting the following new table in lieu
thereof:

<TABLE>
<CAPTION>
                  "Fiscal Quarter Ending                                Ratio
                  ----------------------                                -----
<S>                                                                    <C>
                  March 31, 2003                                       5.75:1.00
                  June 30, 2003                                        6.25:1.00
                  September 30, 2003                                   6.00:1.00
                  December 31, 2003                                    6.00:1.00

                  March 31, 2004                                       6.00:1.00
                  June 30, 2004                                        5.75:1.00
                  September 30, 2004                                   5.50:1.00
                  December 31, 2004                                    5.50:1.00

                  March 31, 2005                                       5.25:1.00
                  June 30, 2005                                        5.00:1.00

                  Each fiscal quarter ending on or after               4.50:1.00
                  September 30, 2005 and on or prior to
                  June 30, 2006

                  Each fiscal quarter ending after                     4.00:1.00".
                  June 30, 2006
</TABLE>

                  1.02. Unencumbered EBITDA Ratio; Section 9.08. From and after
the Second Amendment Effective Date, Section 9.08 of the Credit Agreement shall
be amended by deleting the text "0.36:1.00" appearing in said Section and
inserting the text "(x) in the case of any Test Period ending on or prior to
June 30, 2003, 0.36:1.00 and (y) in the case of any Test Period ended
thereafter, 0.30:1.00" in lieu thereof.

                  1.03. Definition of "Applicable Margin"; Section 11.01. From
and after the Second Amendment Effective Date, the definition of "Applicable
Margin" appearing in Section 11.01 of the Credit Agreement shall be amended by
(a) (i) deleting the text "or Level 9, as the case may be" appearing in said
definition and (ii) inserting the text ", Level 9 or Level 10, as the case may
be" in lieu thereof, (b) (i) deleting the table set forth after subsection (D)
of the first proviso appearing in said definition and (ii) inserting in lieu
thereof the following new table:
<PAGE>
<TABLE>
<CAPTION>
      Level         Consolidated                                       Euro Rate Loan Margin       Base Rate Loan and
                    Leverage Ratio                                                                 Canadian Prime Rate
                                                                                                      Loan Margin
     ------        ---------------                                    ---------------------       --------------------
<S>                <C>                                                <C>                         <C>
        6           less than 4.50                                        1.250%                    0.250%
        7           greater than or equal to 4.50 less than 5.00          1.500%                    0.500%
        8           greater than or equal to 5.00 less than 5.50          1.625%                    0.625%
        9           greater than or equal to 5.50 less than 5.75          1.875%                    0.875%
        10          greater than or equal to 5.75x                        2.250%                    1.250%
</TABLE>

and (c) (i) deleting each reference to "Level 9" in subclauses (x) and (z) of
the second proviso appearing in said definition and (ii) inserting in lieu
thereof the text "Level 10".

                  1.04. Definition of "Consolidated Indebtedness"; Section
11.01. From and after the Second Amendment Effective Date, the definition of
"Consolidated Indebtedness" appearing in Section 11.01 of the Credit Agreement
shall be amended by inserting the following text immediately prior to the period
at the end of the last sentence of said definition:

                  "and, provided further, that for purposes of calculating
                  "Consolidated Indebtedness" at any time on or prior to the
                  earlier of (i) November 15, 2003 and (ii) the Segregated Funds
                  Withdrawal Date, "Consolidated Indebtedness" (determined as
                  otherwise required above in this definition) shall be reduced
                  by the lesser of (x) the aggregate amount of the Segregated
                  Funds at such time (in the case of Segregated Funds
                  constituting Cash Equivalents, taking the fair market value
                  thereof as reasonably determined by management of the
                  Corporation) and (y) $250,000,000.".

                  1.05. Certain New Definitions. From and after the Second
Amendment Effective Date, the following defined terms, as used in this
Amendment, shall have the following meanings and Section 11.01 of the Credit
Agreement is hereby amended by inserting in said Section 11.01, in appropriate
alphabetical order, the following defined terms:

                  "Designated Assets" shall mean any of those eighteen (18)
         Hotels owned by Domestic Subsidiaries of the Corporation as set forth
         in an officer's certificate from an Authorized Officer of the
         Corporation delivered to the Administrative Agent prior to the date
         hereof, which Hotels may be sold in a single transaction or in any
         combination or series of transactions.

                  "Sheraton 7-Year Senior Notes" shall mean those certain Senior
         Notes issued by Sheraton in the aggregate principal amount of $250.0
         million due November 15, 2003, as described in the first line of item 1
         on Part I of Schedule 7.17 to the Credit Agreement.

                  "Segregated Funds" shall mean cash and Cash Equivalents of the
         Credit Parties which (i) represent (directly or indirectly) the net
         sale proceeds received by any Credit Party from the sale of Designated
         Assets, (ii) are specifically designated by the Corporation for use
         solely to repay the Sheraton 7-Year Senior Notes pursuant to an
         officer's certificate from an Authorized Officer of the Corporation (x)
         delivered to the Administrative Agent within fifteen (15) Business Days
         following the respective sale of Designated Assets and (y) specifically
         identifying the initial amount of the cash and Cash Equivalents
         constituting net sale proceeds from the respective sale of Designated
         Assets to be so designated as "Segregated Funds" and (iii) are at all
         times held in one or more segregated accounts of the Credit Parties
         (and are not commingled with any other funds of the Credit Parties)
         until utilized to repay in full the Sheraton 7-Year Senior Notes in
         accordance with their terms; provided that, notwithstanding the
         foregoing, (x) the cash and Cash Equivalents described above shall not
         constitute "Segregated Funds" at any time on or after the Segregated
         Funds Withdrawal Date, (y) the Corporation may from time to time
         withdraw from the segregated accounts described above cash and Cash
         Equivalents which solely represent interest or other returns on
         investment on funds then constituting "Segregated Funds", and (z) in
         the event that the Corporation or any other Credit Party wishes to
         withdraw funds theretofore constituting "Segregated Funds" from any
         segregated account described above (other than in accordance with the
         requirements of preceding clause (y)), an Authorized Officer of the
         Corporation shall deliver an officer's certificate to the
<PAGE>
         Administrative Agent (I) demonstrating "pro forma" compliance with
         Section 9.06 as at the last day of the fiscal quarter then last ended
         (for such purposes, recalculating the Consolidated Leverage Ratio using
         Consolidated Indebtedness as at the last day of such fiscal quarter
         (for such purposes, calculated as otherwise required pursuant to this
         Agreement as at such date but without giving effect to the last proviso
         appearing in the definition of "Consolidated Indebtedness"), (II)
         containing the calculations (in reasonable detail) required to
         demonstrate compliance pursuant to preceding clause (I), and (III)
         acknowledging that upon any such withdrawal, the amount of the
         "Segregated Funds" shall at all times thereafter be zero.

                  "Segregated Funds Withdrawal Date" shall mean the date of any
         withdrawal of funds (whether cash or Cash Equivalents) then
         constituting "Segregated Funds" from the segregated accounts referred
         to in the definition thereof other than in reliance on clause (y) of
         the proviso contained in said definition.

                  1.06. Restrictions on Dividends. Notwithstanding anything to
the contrary contained in Section 9.03 of the Credit Agreement, from and after
the Second Amendment Effective Date to and including June 30, 2005, during the
364-day period ending on the date of a proposed dividend declaration, the
Corporation shall not, and shall not permit Starwood REIT to, declare the
payment of cash dividends to their respective shareholders (in the case of a
dividend declared by Starwood REIT, excluding dividends to be paid to the
Corporation or any Wholly-Owned Subsidiary of the Corporation) in an aggregate
amount in excess of 25% of Consolidated EBITDA for the Test Period last ended on
or prior to the respective date of declaration; provided, that (i) any dividend
declared in reliance on the preceding provisions of this Section 6 shall be paid
within 90 days of the respective date of declaration and (ii) nothing contained
in this Section 6 will limit the requirements applicable to the payment of
Dividends by the Corporation pursuant to Section 9.03(ii) of the Credit
Agreement.

                  1.07. Acknowledgement. Each Borrower and each Lender
acknowledges and agrees that (I) any withdrawal of funds then constituting
"Segregated Funds" from the segregated accounts referred to in the definition
thereof other than (i) in accordance with clause (y) or (z) of the proviso
contained in the definition of "Segregated Funds" or (ii) to repay in full (on
such date of withdrawal) the Sheraton 7-Year Senior Notes in accordance with
their terms, and (II) any violation of the provisions of Section 6 of Part I of
this Amendment shall, in either case, constitute an Event of Default for all
purposes of the Credit Agreement and the other Credit Documents.

                  SECTION 2. MISCELLANEOUS PROVISIONS

                  A. Each Guarantor, by its signature below, hereby confirms
that its Guaranty shall remain in full force and effect and its Guaranty covers
the obligations of each of the relevant Borrowers under the Credit Agreement, as
modified and amended by this Amendment.

                  B. In order to induce the Lenders to enter into this
Amendment, the Corporation represents and warrants to the Lenders that, on the
Second Amendment Effective Date, before, as of and after giving effect to the
execution, delivery and performance by the Corporation of this Amendment and the
transactions contemplated hereby, (i) there shall exist no Default or Event of
Default and (ii) all representations and warranties contained in the Credit
Agreement and in the other Credit Documents are true and correct in all material
respects with the same effect as though such representations and warranties had
been made on the Second Amendment Effective Date (it being understood and agreed
that any representation or warranty
<PAGE>
which by its terms is made as of a specified date shall be true and correct in
all material respects only as of such specified date).

                  C. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.

                  D. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Corporation and the Administrative
Agent.

                  E. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.

                  F. This Amendment shall become effective on the date (the
"Second Amendment Effective Date") when each of the Borrowers, each Guarantor
and the Required Lenders shall have signed a counterpart hereof (whether the
same or different counterparts) and shall have delivered (including by way of
facsimile transmission) the same to the Administrative Agent (or its designee).
Administrative Agent shall promptly deliver notice to the Corporation of the
occurrence of the Second Amendment Effective Date.

                  G. From and after the Second Amendment Effective Date, all
references in the Credit Agreement and each of the other Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
modified hereby. This Amendment shall constitute a Credit Document for all
purposes under the Credit Agreement and the other Credit Documents.

                  H. The Borrowers hereby covenant and agree that, so long as
the Second Amendment Effective Date occurs, they shall pay (and shall be jointly
and severally obligated to pay) each Lender which executes and delivers to the
Administrative Agent (or its designee) a counterpart hereof by the later to
occur of (x) the close of business on the Second Amendment Effective Date or (y)
12:00 p.m. (New York time) on Monday, June 30, 2003 (the "Outside Date"), or
which is an immediate or successive assignee of any Lender described above (with
respect to amounts obtained, directly or indirectly, by assignment from such
Lender), a non-refundable cash fee in an amount equal to twenty basis points
(0.20%) of an amount equal to the sum of (x) the outstanding principal amount of
Term Loans of such Lender and (y) the Revolving Loan Commitment of such Lender,
in each case as same is in effect on the Second Amendment Effective Date, which
fees shall be paid by the Borrowers to the Administrative Agent for distribution
to the Lenders not later than the fifth (5th) Business Day following the Outside
Date.

                   [Signatures appear on the following page.]

<PAGE>
      IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Amendment as of the date first above
written.

                                     STARWOOD HOTELS & RESORTS
                                       WORLDWIDE, Inc., as the Borrower and
                                       Guarantor

                                     By:   /s/ Ronald C. Brown
                                        ----------------------------------------
                                        Name:  Ronald C. Brown
                                        Title: EVP & CFO

                                     STARWOOD CANADA CORP., as an Alternate
                                       Currency Revolving Loan Borrower

                                     By:   /s/ Ronald C. Brown
                                        ----------------------------------------
                                        Name:  Ronald C. Brown
                                        Title: EVP & CFO

                                     SHERATON HOLDING CORPORATION, as
                                       Guarantor

                                     By:   /s/ Ronald C. Brown
                                        ----------------------------------------
                                        Name:  Ronald C. Brown
                                        Title: EVP & CFO

                                     DEUTSCHE BANK AG, NEW YORK
                                       BRANCH,
                                       Individually and as Administrative Agent

                                     By:   /s/ Brenda Casey
                                        ----------------------------------------
                                        Name:  Brenda Casey
                                        Title: Vice President

                                     By:   /s/ Steven P. Lapham
                                        ----------------------------------------
                                        Name:  Steven P. Lapham
                                        Title: Director
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     BANK OF LENMI USA
                                     -------------------------------------------

                                     By:   /s/ Joung Nee Hong
                                        ----------------------------------------
                                        Name:  Joung Nee Hong
                                        Title: Vice President
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Bank of America, N.A.
                                     ---------------------

                                     By:   /s/ Ansel McDowell
                                        ----------------------------------------
                                        Name:  Ansel McDowell
                                        Title: Principal
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     BANK OF HAWAII
                                     -------------------------------------------

                                     By:   /s/ Arnold D. Martines
                                        ----------------------------------------
                                        Name:  ARNOLD D. MARTINES
                                        Title: Vice President
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     BANK OF MONTREAL
                                     -------------------------------------------

                                     By:   /s/ Greg K. Steele
                                        ----------------------------------------
                                        Name:  Greg K. Steele
                                        Title: Vice President
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     The Bank of Nova Scotia, New York Agency
                                     -------------------------------------------

                                     By:   /s/ T. J. McNaught
                                        ----------------------------------------
                                        Name:  T. J. McNaught
                                        Title: Director
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Bank One, NA
                                     -------------------------------------------

                                     By:   /s/ Dennis J. Redjalt
                                        ----------------------------------------
                                        Name:  Dennis J. Redjalt
                                        Title: Director
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     BNP PARIBAS
                                     -------------------------------------------

                                     By:   /s/ Janice Ho
                                        ----------------------------------------
                                        Name:  Janice Ho
                                        Title: Director

                                     By:   /s/ G. Bettles
                                        ----------------------------------------
                                        Name:  G. Bettles
                                        Title: Managing Director
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Centurion CDO II, Ltd.
                                     By: American Express Asset Management Group
                                         Inc.
                                         as Collateral Manager
                                     -------------------------------------------

                                     By:   /s/ Leanne Stavrakis
                                        ----------------------------------------
                                        Name:  Leanne Stavrakis
                                        Title: Director - Operations
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Sequile - Centurion V, Ltd.
                                     By: American Express Asset Management Group
                                         Inc.
                                         as Collateral Manager
                                     -------------------------------------------

                                     By:   /s/ Leanne Stavrakis
                                        ----------------------------------------
                                        Name:  Leanne Stavrakis
                                        Title: Director - Operations
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     CHANG HWA COMMERCIAL BANK, LTD.,
                                     NEW YORK BRANCH
                                     -------------------------------------------

                                     By:   /s/ Ming-Hsien Lin
                                        ----------------------------------------
                                        Name:  Ming-Hsien Lin
                                        Title: SVP & General Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Chiao Tung Bank Co., Ltd.
                                     -------------------------------------------

                                     By:   /s/ Chun-Kai Hu
                                        ----------------------------------------
                                        Name:  Chun-Kai Hu
                                        Title: VP & AGM
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Credit Lyonnais New York Branch
                                     -------------------------------------------

                                     By:   /s/ Jan Hazelton
                                        ----------------------------------------
                                        Name:  Jan Hazelton
                                        Title: Vice President
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Credit Lyonnais New York Branch
                                     -------------------------------------------

                                     By:   /s/ Jan Hazelton
                                        ----------------------------------------
                                        Name:  Jan Hazelton
                                        Title: Vice President
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     ERSTE BANK, NEW YORK BRANCH
                                     -------------------------------------------

                                     By:   /s/ Gregory T. Aptman
                                        ----------------------------------------
                                        Name:  Gregory T. Aptman
                                        Title: Vice President

                                     By:   /s/ Bryan Lynch
                                        ----------------------------------------
                                        Name:  Bryan Lynch
                                        Title: First Vice President
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     First Commercial Bank, New York Agency
                                     -------------------------------------------

                                     By:   /s/ Bruce Ju
                                        ----------------------------------------
                                        Name:  Bruce Ju
                                        Title: V. P. & General Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     First Hawaiian Bank
                                     -------------------------------------------

                                     By:   /s/ Charles L. Jenkins
                                        ----------------------------------------
                                        Name:  Charles L. Jenkins
                                        Title: Vice President, Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Fleet National Bank

                                     By:   /s/ Kathleen M. Ahern
                                        ----------------------------------------
                                        Name:  Kathleen M. Ahern
                                        Title: Director
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Grayston CLO 2001-01 Ltd.
                                     By: Bear Stearns Asset Management, Inc.
                                     as its Collateral Manager
                                     -------------------------------------------

                                     By:   /s/ Jonathan Berg
                                        ----------------------------------------
                                        Name:  Jonathan Berg
                                        Title: Vice President
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     GULF STREAM - COMPASS CLO 2002-1, Ltd.
                                     by: Gulf Stream Asset Management, LLC as
                                     Collateral Manager
                                     -------------------------------------------

                                     By:   /s/ Bakey K. Love
                                        ----------------------------------------
                                        Name:  Bakey K. Love
                                        Title: Chief Credit Officer
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     ING CAPITAL LLC

                                     By:   /s/ A. Adam Troso
                                        ----------------------------------------
                                        Name:  A. Adam Troso
                                        Title: Vice President
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     JFMorgan Chase Bank

                                     By:   /s/ Donald Shokrian
                                        ----------------------------------------
                                        Name:  Donald Shokrian
                                        Title: Managing Director
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     KATONAH I, LTD.
                                     -------------------------------------------

                                     By:   /s/ Ralph Della Rocca
                                        ----------------------------------------
                                        Name:  Ralph Della Rocca
                                        Title: Authorized Officer
                                               Katonah Capital, L.L.C.
                                               As Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     KATONAH II, LTD.
                                     -------------------------------------------

                                     By:   /s/ Ralph Della Rocca
                                        ----------------------------------------
                                        Name:  Ralph Della Rocca
                                        Title: Authorized Officer
                                               Katonah Capital, L.L.C.
                                               As Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     KATONAH III, LTD.
                                     -------------------------------------------

                                     By:   /s/ Ralph Della Rocca
                                        ----------------------------------------
                                        Name:  Ralph Della Rocca
                                        Title: Authorized Officer
                                               Katonah Capital, L.L.C.
                                               As Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     KATONAH IV, LTD.
                                     -------------------------------------------

                                     By:   /s/ Ralph Della Rocca
                                        ----------------------------------------
                                        Name:  Ralph Della Rocca
                                        Title: Authorized Officer
                                               Katonah Capital, L.L.C.
                                               As Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     KATONAH V, LTD.
                                     -------------------------------------------

                                     By:   /s/ Ralph Della Rocca
                                        ----------------------------------------
                                        Name:  Ralph Della Rocca
                                        Title: Authorized Officer
                                               Katonah Capital, L.L.C.
                                               As Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     LEHMAN COMMERCIAL PAPER INC.

                                     By:   /s/ Jane E. Gillard
                                        ----------------------------------------
                                        Name:  Jane E. Gillard
                                        Title: Authorized Signatory
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     THE NORINCHUKIN BANK, NEW YORK BRANCH

                                     By:   /s/ Fumiaki Ono
                                        ----------------------------------------
                                        Name:  FUMIAKI ONO
                                        Title: GENERAL MANAGER
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, THE VARIOUS
                                     LENDERS PARTY THERETO, DEUTSCHE BANK AG,
                                     NEW YORK BRANCH, AS ADMINISTRATIVE AGENT,
                                     J.P. MORGAN CHASE BANK, AS SYNDICATION
                                     AGENT AND BANK OF AMERICA, N.A., FLEET
                                     NATIONAL BANK AND SOCIETE GENERALE, AS
                                     CO-DOCUMENTATION AGENTS

                                     NAME OF INSTITUTION:

                                     Octagon Investment Partners II, LLC
                                     By: Octagon Credit Investors, LLC
                                         as sub-investment manager

                                     By:   /s/ Michael B. Nechamkin
                                        ----------------------------------------
                                        Name:  Michael B. Nechamkin
                                        Title: Portfolio Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, THE VARIOUS
                                     LENDERS PARTY THERETO, DEUTSCHE BANK AG,
                                     NEW YORK BRANCH, AS ADMINISTRATIVE AGENT,
                                     J.P. MORGAN CHASE BANK, AS SYNDICATION
                                     AGENT AND BANK OF AMERICA, N.A., FLEET
                                     NATIONAL BANK AND SOCIETE GENERALE, AS
                                     CO-DOCUMENTATION AGENTS

                                     NAME OF INSTITUTION:

                                     Octagon Investment Partners III, Ltd.
                                     By: Octagon Credit Investors, LLC
                                         as Portfolio Manager

                                     By:   /s/ Michael B. Nechamkin
                                        ----------------------------------------
                                        Name:  Michael B. Nechamkin
                                        Title: Portfolio Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, THE VARIOUS
                                     LENDERS PARTY THERETO, DEUTSCHE BANK AG,
                                     NEW YORK BRANCH, AS ADMINISTRATIVE AGENT,
                                     J.P. MORGAN CHASE BANK, AS SYNDICATION
                                     AGENT AND BANK OF AMERICA, N.A., FLEET
                                     NATIONAL BANK AND SOCIETE GENERALE, AS
                                     CO-DOCUMENTATION AGENTS

                                     NAME OF INSTITUTION:

                                     Octagon Investment Partners IV, Ltd.
                                     By: Octagon Credit Investors, LLC
                                         as collateral manager

                                     By:   /s/ Michael B. Nechamkin
                                        ----------------------------------------
                                        Name:  Michael B. Nechamkin
                                        Title: Portfolio Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, THE VARIOUS
                                     LENDERS PARTY THERETO, DEUTSCHE BANK AG,
                                     NEW YORK BRANCH, AS ADMINISTRATIVE AGENT,
                                     J.P. MORGAN CHASE BANK, AS SYNDICATION
                                     AGENT AND BANK OF AMERICA, N.A., FLEET
                                     NATIONAL BANK AND SOCIETE GENERALE, AS
                                     CO-DOCUMENTATION AGENTS

                                     NAME OF INSTITUTION:

                                     Octagon Investment Partners V, Ltd.
                                     By: Octagon Credit Investors, LLC
                                         as Portfolio Manager

                                     By:   /s/ Michael B. Nechamkin
                                        ----------------------------------------
                                        Name:  Michael B. Nechamkin
                                        Title: Portfolio Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     SANPAOLO IMI S.p.A.

                                     By:   /s/ Cathy R. Lesse
                                        ----------------------------------------
                                        Name:  Cathy R. Lesse
                                        Title: Vice President

                                     By:   /s/ Carlos Persico
                                        ----------------------------------------
                                        Name:  Carlos Persico
                                        Title: CEO for the Amerigas
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     SANPAOLO IMI S.p.A.

                                     By:   /s/ Cathy R. Lesse
                                        ----------------------------------------
                                        Name:  Cathy R. Lesse
                                        Title: Vice President

                                     By:   /s/ Carlos Persico
                                        ----------------------------------------
                                        Name:  Carlos Persico
                                        Title: CEO for the Amerigas
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Sierra CLO I
                                     -------------------------------------------

                                     By:   /s/ John M. Caspatian
                                        ----------------------------------------
                                        Name:  John M. Caspatian
                                        Title: Chief Operating Officer

                                               Centre Pacific, Manager
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     Societe Generate
                                     -------------------------------------------

                                     By:   /s/ Thomas K. Day
                                        ----------------------------------------
                                        Name:  Thomas K. Day
                                        Title: Managing Director
<PAGE>
                                     SIGNATURE PAGE TO THE SECOND AMENDMENT
                                     DATED AS OF JUNE 30, 2003, TO THE CREDIT
                                     AGREEMENT, DATED AS OF OCTOBER 9, 2002,
                                     AMONG STARWOOD HOTELS & RESORTS WORLDWIDE,
                                     INC., CERTAIN ADDITIONAL ALTERNATE CURRENCY
                                     REVOLVING LOAN BORROWERS, VARIOUS LENDERS
                                     PARTY THERETO, DEUTSCHE BANK AG, NEW YORK
                                     BRANCH, AS ADMINISTRATIVE AGENT, J.P.
                                     MORGAN CHASE BANK, AS SYNDICATION AGENT AND
                                     BANK OF AMERICA, N.A., FLEET NATIONAL BANK
                                     AND SOCIETE GENERALE, AS CO- DOCUMENTATION
                                     AGENTS

                                     NAME OF INSTITUTION:

                                     UBS AG, STAMFORD BRANCH

                                     By:   /s/ Anthony N. Joeseph
                                        ----------------------------------------
                                        Name:  Anthony N. Joeseph
                                        Title: Associate Director
                                               Banking Products Services, US

                                     By:   /s/ Jennifer L. Poccia
                                        ----------------------------------------
                                        Name:  Jennifer L. Poccia
                                        Title: Associate Director
                                               Banking Products Services, US<PAGE>

                                                                     EXHIBIT 4.1

                           ACACIA RESEARCH CORPORATION

                             SUBSCRIPTION AGREEMENT

Ladies and Gentlemen:

         1. SUBSCRIPTION; PAYMENT. The undersigned, intending to be legally
bound, hereby irrevocably agrees to purchase from Acacia Research Corporation, a
Delaware corporation (the "Company"), this subscription (the "Subscription") in
the amount of $_______________ (the "Capital Commitment") for Units (each Unit
consisting of one share of the Company's Acacia Research - CombiMatrix common
stock ("AR-CombiMatrix stock"), par value $0.001 per share, and one-half (0.5)
of one warrant to purchase one share of AR-CombiMatrix stock ("Warrant"))
pursuant to the Company's Confidential Private Placement Memorandum dated May 7,
2003 (the "Memorandum"). This Subscription is submitted to you in accordance
with and subject to the terms and conditions described in this Subscription
Agreement. For a description of the Warrant, please refer to Attachment 1 hereto
"Form of Warrant."

         The undersigned shall either: (i) enclose herewith a certified or
official bank check payable to the Company, or (ii) transmit by wire transfer
the amount of the Capital Commitment.

         2. ACCEPTANCE OF SUBSCRIPTION. The undersigned understands and agrees
that the Company in its sole discretion reserves the right to accept or reject
this or any other subscription in whole or in part, notwithstanding prior
receipt by the undersigned of notice of acceptance. If this Subscription is
rejected by the Company in whole, the Company shall promptly return all funds
received from the undersigned, without interest, and this Subscription Agreement
shall thereafter be of no further force or effect. If this Subscription is
rejected by the Company in part, the Company shall promptly return the rejected
portion of the funds received from the undersigned, without interest, and this
Subscription Agreement shall thereafter remain in effect with respect to the
portion of the subscription not so rejected.

         3. REPRESENTATIONS AND WARRANTIES. The undersigned hereby acknowledges,
represents and warrants to, and agrees with, the Company as follows:

                  (a) The undersigned understands that the offering and sale of
         the Units are intended to be exempt from registration under the
         Securities Act of 1933, as amended, (the "Securities Act"), by virtue
         of Section 4(2) and Rule 506 of Regulation D promulgated under the
         Securities Act, and in accordance therewith and in furtherance thereof,
         the undersigned represents and warrants and agrees as follows:

                           (i) The undersigned and the undersigned's advisers
                  have been afforded an opportunity to review and receive the
                  Memorandum and reports filed by the Company under the
                  Securities Exchange Act of 1934 (the "Exchange Act") and other
                  publicly available information relating to the Company, the
                  Company's business and finances (collectively, the
                  "Information"), and any and all other information deemed
                  relevant by the undersigned in order to make an informed
                  investment decision regarding the Units, and have reviewed and
                  received such Information and understand the Information and
                  this Subscription Agreement;

                                      C-1
<PAGE>

                           (ii) No written representations have been made other
                  than as stated, or in addition to those stated, in the
                  Information;

                           (iii) The undersigned is not subscribing for the
                  Units as a result of or subsequent to any advertisement,
                  article, notice, other communication published in any
                  newspaper, magazine, or similar media or broadcast over
                  television or radio, or presented at any seminar or meeting,
                  or any solicitation of a subscription by a person other than a
                  representative of the Company;

                           (iv) If the undersigned is a natural person, the
                  undersigned has reached the age of majority in the state in
                  which the undersigned resides;

                           (v) The address set forth below is the undersigned's
                  true and correct domicile;

                           (vi) The undersigned has adequate means of providing
                  for the undersigned's current financial needs and
                  contingencies, is able to bear the substantial economic risks
                  of an investment in the Units for an indefinite period of
                  time, has no need for liquidity in such investment, and, at
                  the present time, could afford a complete loss of such
                  investment;

                           (vii) The undersigned has such knowledge and
                  experience in financial, tax, and business matters so as to
                  enable the undersigned to utilize the Information made
                  available to the undersigned in connection with the offering
                  of the Units to evaluate the merits and risks of an investment
                  in the Company and to make an informed investment decision
                  with respect thereto;

                           (viii) The undersigned is not relying on the Company
                  with respect to the legal, tax, and other economic
                  considerations of an investment and has obtained, or had the
                  opportunity to obtain the advice of the undersigned's own
                  legal, tax, and other advisors;

                           (ix) The undersigned will not sell or otherwise
                  transfer the Units or the underlying shares of the Company's
                  AR-CombiMatrix stock ("Shares") without registration under the
                  Securities Act or applicable state securities laws or an
                  exemption therefrom. The Units and the Shares have not been
                  registered under the Securities Act or under the securities
                  laws of any state. The undersigned represents that the
                  undersigned is purchasing the Units for the undersigned's own
                  account, for investment and not with a view to resale or
                  distribution except in compliance with the Securities Act. The
                  undersigned has not offered or sold any portion of the Units
                  being acquired. The undersigned does not have any present
                  intention of selling, distributing or otherwise disposing of
                  any portion of the Units, which may be a violation of the
                  Securities Act unless (i) a registration statement has been
                  filed and declared effective by the Securities and Exchange
                  Commission (the "SEC") covering such Shares to be resold or
                  otherwise distributed; or (ii) the passage of a fixed or
                  determinable period of time that makes such resale or
                  distribution exempt from registration and is pursuant to Rule

                                      C-2
<PAGE>

                  144 promulgated under the Securities Act or upon the
                  occurrence or nonoccurrence of any predetermined event or
                  circumstance in violation of the Securities Act. The
                  undersigned is aware that there is currently no public market
                  for the Units, although a public market exists for the
                  Company's AR-CombiMatrix stock;

                           (x) THE UNDERSIGNED UNDERSTANDS AND ACKNOWLEDGES THAT
                  HIS OR HER INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF
                  RISK AND IS SUITABLE ONLY FOR INVESTORS OF SUBSTANTIAL MEANS
                  WHO HAVE NO IMMEDIATE NEED FOR LIQUIDITY OF THE AMOUNT
                  INVESTED, AND THAT SUCH INVESTMENT INVOLVES A RISK OF LOSS OF
                  ALL OR A SUBSTANTIAL PART OF SUCH INVESTMENT; and

                           (xi) The undersigned is an "accredited investor"
                  within the meaning of Rule 501 of Regulation D promulgated
                  under the Securities Act.

                  (b) The undersigned's overall commitment to investments which
         are not readily marketable is reasonable in relation to the
         undersigned's net worth.

                  (c) The undersigned hereby agrees to provide such information
         and to execute and deliver such documents as may reasonably be
         necessary to comply with any and all laws and ordinances to which the
         Company is subject, including, without limitation, such additional
         information as the Company may reasonably deem appropriate with regard
         to the undersigned's suitability.

                  (d) The undersigned acknowledges:

                           (i) In making an investment decision the undersigned
                  has relied on the undersigned's own examination of the Company
                  and the terms of the offering of the Units, including the
                  merits and risks involved. THE UNITS OFFERED IN THIS
                  SUBSCRIPTION AGREEMENT HAVE NOT BEEN RECOMMENDED BY ANY
                  FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
                  AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
                  CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE
                  INFORMATION OR THIS DOCUMENT. ANY REPRESENTATION TO THE
                  CONTRARY IS A CRIMINAL OFFENSE;

                           (ii) The undersigned, if executing this Subscription
                  Agreement in a representative or fiduciary capacity, has full
                  power and authority to execute and deliver this Subscription
                  Agreement in such capacity and on behalf of the subscribing
                  individual, ward, partnership, trust, estate, corporation, or
                  other entity for whom the undersigned is executing this
                  Subscription Agreement, and such individual, ward,
                  partnership, trust, estate, corporation, or other entity has
                  full right and power to perform pursuant to this Subscription
                  Agreement and make an investment in the Company; and

                                      C-3
<PAGE>

                           (iii) The representations, warranties, and agreements
                  of the undersigned contained herein and in any other writing
                  delivered in connection with the transactions contemplated
                  hereby shall be true and correct in all respects on and as of
                  the date of the sale of the Units as if made on and as of such
                  date and shall survive the execution and delivery of this
                  Subscription Agreement and the purchase of the Units.

         4. REGISTRATION RIGHTS.

                  (a) REGISTRATION RIGHTS

                           (i) The undersigned understands that the Company will
                  use commercially reasonable efforts to file a Registration
                  Statement with the SEC for the resale of the Company's
                  AR-CombiMatrix stock included in the Units sold pursuant to
                  the Memorandum ("Unit Shares") and the Company's
                  AR-CombiMatrix stock to be issued upon exercise of the
                  Warrants included in the Units sold pursuant to the Memorandum
                  ("Warrant Shares") as soon as shall be reasonably practicable
                  following the consummation of the sale of the Units pursuant
                  to the terms of this Subscription Agreement, but in no event
                  more than sixty (60) days after the final closing of the
                  Offering (as defined in the Memorandum). Holders of the Units,
                  the Unit Shares and the Warrant Shares are collectively
                  referred to as "Holders." Subject to the provisions of this
                  Subscription Agreement, the Company shall use commercially
                  reasonable efforts to have such Registration Statement
                  declared effective by the SEC as promptly as shall be
                  practicable, but in no event more than 120 days after the
                  final closing of the Offering (as defined in the Memorandum).
                  If and when the Registration Statement becomes effective, the
                  Company shall keep such Registration Statement effective for a
                  period of up to 120 days or until the distribution
                  contemplated in such Registration Statement has been
                  completed; provided, however, that such 120-day period shall
                  be extended for a period of time equal to the period the
                  Holder refrains from selling any securities included in such
                  Registration Statement at the request of the Company or an
                  underwriter of any of the Company's common stock (or other
                  securities). For the purposes of this Subscription Agreement:
                  (a) "Registrable Shares" means the Unit Shares and the Warrant
                  Shares (and including any shares issued in connection with any
                  split or dividend in respect of any such shares); provided,
                  however, that any such share of AR-CombiMatrix stock will
                  cease to be a Registrable Share when (1) a Registration
                  Statement covering a Registrable Share has been declared
                  effective by the SEC and such share has been disposed of by
                  the Holders pursuant to such effective Registration Statement,
                  (2) the Registrable Share is transferred to another person,
                  (3) such share (after initial issuance) is held by the Company
                  or one of its subsidiaries or otherwise ceases to be
                  outstanding, or (4) such share may be traded without
                  restriction pursuant to paragraph (k) of Rule 144, if
                  applicable; and (b) "Registration Statement" means any
                  registration statement or comparable document under the
                  Securities Act through which a public sale or disposition of
                  the Registrable Shares may be registered, including the
                  prospectus, amendments and supplements to such registration
                  statement, all exhibits, and all material incorporated by
                  reference or deemed to be incorporated by reference in such
                  registration statement.

                                      C-4
<PAGE>

                           (ii) Upon the written request of a Holder to include
                  all or any portion of such Holder's Registrable Shares in an
                  underwritten offering, the Company shall have the right, in
                  its sole discretion, to determine whether any of such
                  Registrable Shares are to be included in such underwritten
                  offering, and if the Company so determines, the Company alone
                  shall have the right to select the managing underwriter or
                  underwriters to administer the offering.

                           (iii) If the managing underwriter of an underwritten
                  offering under this Section 4(a) advises the Company in
                  writing that in its opinion the number of shares requested to
                  be included in such registration exceeds the number which can
                  be sold in such offering, the Company will include in such
                  registration only the number of shares which in the opinion of
                  such underwriter can be sold and may delay registering the
                  balance of the shares in a non-underwritten offering for up to
                  120 days. This provision shall not relieve or modify the
                  Company's obligations to use commercially reasonable efforts
                  to file and have declared effective any Registration Statement
                  under Section 4(a)(i). If the number of shares that can be
                  sold is less than the number of shares proposed to be
                  registered, the amount to be so registered shall be allocated
                  pro rata among the Holders of Registrable Shares desiring to
                  participate in such registration.

                           (iv) If the Company fails to have such Registration
                  Statement declared effective on or before the date which is
                  120 days following the final closing of the Offering (the
                  "Outside Date"), the Company shall return to the undersigned
                  an amount in cash equal to 1.0% of the Capital Commitment, net
                  of any finder's fees, on the Outside Date and on the monthly
                  anniversary of the Outside Date until the earlier of (A) the
                  date on which such Registration Statement is declared
                  effective and (B) the one year anniversary of the final
                  closing of the Offering, with any such payment to be made by
                  the Company within 10 business days of the date on which such
                  payment becomes payable.

                  (b) SUSPENSION OF EFFECTIVENESS. The Company's obligations
         under Section 4(a) above shall not restrict its ability to suspend the
         effectiveness of, or direct the Holders not to offer or sell securities
         under, any Registration Statement, at any time, for such reasonable
         period of time which the Company believes is necessary to prevent the
         premature disclosure of any events or information having a material
         effect on the Company. In addition, the Company shall not be required
         to keep any Registration Statement effective, or may, without
         suspending such effectiveness, instruct the Holders not to sell such
         securities, during any period during which the Company is instructed,
         directed, ordered or otherwise requested by any governmental agency or
         self-regulatory organization to stop or suspend such trading or sales.

                  (c) HOLDBACK AGREEMENT. In the event of any filing of a
         prospectus supplement or the commencement of an underwritten public
         distribution of the Company's AR-CombiMatrix stock under a Registration
         Statement, whether or not Registrable Shares are included, the Holders

                                      C-5
<PAGE>

         agree not to effect any public sale or distribution of Registrable
         Shares (except as part of such underwritten public distribution),
         including a sale pursuant to Rule 144 or Rule 144A under the Securities
         Act, during a period designated by the Company in a written notice duly
         given to the Holders, which period shall commence up to 14 days prior
         to the effective date of any such filing of such prospectus supplement
         or the commencement of such underwritten public distribution of such
         AR-CombiMatrix stock under a Registration Statement and shall continue
         for up to 44 consecutive days in the case of a sale pursuant to Rule
         144 and for up to 74 consecutive days otherwise.

                  (d) REGISTRATION PROCEDURES. Except as otherwise expressly
         provided herein, in connection with any registration of Registrable
         Shares pursuant to this Agreement, the Company shall, as expeditiously
         as possible:

                           (i) use commercially reasonable efforts to prepare
                  and file with the SEC a Registration Statement with respect to
                  such Registrable Shares and use commercially reasonable
                  efforts to cause such Registration Statement to become
                  effective as soon as practicable thereafter; and before filing
                  a Registration Statement or prospectus or any amendments or
                  supplements thereto, furnish to the Holders copies of such
                  Registration Statement and such other documents as proposed to
                  be filed (including copies of any document to be incorporated
                  by reference therein), and thereafter furnish to the Holders
                  such number of copies as may be reasonably requested in
                  writing by the Holders of such Registration Statement, each
                  amendment and supplement thereto (including copies of any
                  document to be incorporated by reference therein), including
                  all exhibits thereto, the prospectus included in such
                  Registration Statement (including each preliminary
                  prospectus), and, promptly after the effectiveness of a
                  Registration Statement, the definitive final prospectus filed
                  with the SEC;

                           (ii) notify the Holders, at any time when a
                  prospectus relating thereto is required to be delivered under
                  the Securities Act, of the occurrence of any event as a result
                  of which the prospectus included in such Registration
                  Statement (including any document to be incorporated by
                  reference therein) contains an untrue statement of a material
                  fact or omits any fact necessary to make the statements
                  therein not misleading and, the Company shall prepare a
                  supplement or amendment to such prospectus, as soon as
                  practicable, so that, as thereafter delivered to the
                  purchasers of such Registrable Shares, such prospectus will
                  not contain an untrue statement of a material fact or omit to
                  state any material fact required to be stated therein or
                  necessary to make the statements therein not misleading and
                  promptly make available to the Holders any such supplement or
                  amendment;

                           (iii) notify the Holders and the managing
                  underwriters, if any, promptly, and (if requested by any such
                  Person) confirm such advice in writing, (i) when the
                  Registration Statement, the prospectus or any prospectus
                  supplement or post-effective amendment has been filed, and,
                  with respect to the Registration Statement or any
                  post-effective amendment, when the same has become effective,

                                      C-6
<PAGE>

                  (ii) of the issuance by the SEC of any stop order suspending
                  the effectiveness of a Registration Statement or of any order
                  preventing or suspending the use of any preliminary prospectus
                  or the initiation of any proceedings for that purpose and the
                  Company shall promptly use commercially reasonable efforts to
                  prevent the issuance of any stop order or to obtain its
                  withdrawal if such stop order should be issued, and (iii) of
                  the receipt by the Company of any notification with respect to
                  the suspension of the qualification or exemption from
                  qualification of a Registration Statement or any of the
                  Registrable Shares for offer or sale in any jurisdiction, or
                  the initiation or threatening of any proceeding for such
                  purpose.

                  The Company may require the Holders to furnish to the Company
         such information regarding themselves and the distribution of such
         Registrable Shares as the Company may from time to time reasonably
         request in writing and such other information as may be legally
         required in connection with such registration. The Holders agree, by
         their acquisition of Registrable Shares and their acceptance of the
         benefits provided to it hereunder, to furnish promptly to the Company
         all information required to be disclosed in order to make any
         previously furnished information not materially misleading. All Holders
         proposing to distribute their Registrable Shares through an
         underwritten offering shall (together with the Company) enter into an
         underwriting agreement in customary form with the underwriter or
         underwriters selected by the Company for such underwriting and shall
         provide to such underwriter or underwriters any opinions and
         certificates, and any indemnification with respect to such Holder as
         reasonably required by such underwriter or underwriters.

                  The Holders agree that upon receipt of any notice from the
         Company of the happening of any event of the kind described herein
         requiring the cessation of the distribution of a prospectus or the
         distribution of a supplemented or amended prospectus, the Holders will
         forthwith discontinue disposition of Registrable Shares pursuant to the
         Registration Statement covering such Registrable Shares until the
         Holders' receipt of the copies of the supplemented or amended
         prospectus contemplated by this Subscription Agreement, or until it is
         advised in writing by the Company that the use of the prospectus may be
         resumed, and, if so directed by the Company, the Holders will deliver
         to the Company (at the Company's expense) all copies, other than
         permanent file copies then in the Holders' possession, of the
         prospectus covering such Registrable Shares current at the time of
         receipt of such notice.

                  (e) REGISTRATION EXPENSES. All expenses incident to the
         Company's performance of or compliance with the registration of shares
         pursuant to this Subscription Agreement, including, without limitation,
         all registration and filing fees, fees and expenses of compliance with
         securities or blue sky laws (including reasonable fees and
         disbursements of counsel of the Company and counsel for the
         underwriters in connection with "blue sky" qualifications of the
         Registrable Shares), fees and expenses associated with filings required
         to be made with the National Association of Securities Dealers, Inc.,
         and with listing on any national securities exchange or exchanges in
         which listing may be sought, printing expenses, messenger and delivery
         expenses, fees and expenses of counsel for the Company and its
         independent certified public accountants, securities acts liability
         insurance (if the Company elects to obtain such insurance), the fees

                                      C-7
<PAGE>

         and expenses of any special experts retained by the Company in
         connection with such registration, and fees and expenses of other
         persons retained by the Company (all such expenses being herein called
         "Registration Expenses") will be borne by the Company; provided that in
         no event shall Registration Expenses payable by the Company include any
         (i) underwriting discounts, commissions, or fees attributable to the
         sale of Registrable Shares, (ii) fees and expenses of any counsel,
         accountants, or other persons retained or employed by the Holders or
         underwriters, or (iii) transfer taxes, if any.

                  (f) INDEMNIFICATION.

                           (i) To the extent permitted by law, the Company shall
                  indemnify each Holder, each underwriter of the Registrable
                  Shares and each person controlling such Holder within the
                  meaning of Section 15 of the Securities Act, with respect to
                  which any registration, qualification or compliance has been
                  sought pursuant to this Subscription Agreement, against all
                  claims, losses, damages and liabilities (or action in respect
                  thereof), including any of the foregoing incurred in
                  settlement of any litigation, commenced or threatened (subject
                  to Section 4(f)(iii) below), arising out of or based on (i)
                  any untrue statement (or alleged untrue statement) of a
                  material fact contained in any Registration Statement incident
                  to any such registration, qualification or compliance, or
                  based on any omission (or alleged omission) to state therein a
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading in light of the
                  circumstances in which they were made, or (ii) any violation
                  or alleged violation by the Company of the Securities Act, the
                  Exchange Act, or any rule or regulation promulgated under the
                  Securities Act, or the Exchange Act, and shall reimburse each
                  Holder, each underwriter of the Registrable Shares and each
                  person controlling such Holder, for legal and other expenses
                  reasonably incurred in connection with investigating or
                  defending any such claim, loss, damage, liability or action as
                  incurred; provided that the Company shall not be liable in any
                  such case to the extent that any untrue statement or omission
                  or allegation thereof is made in reliance upon and in
                  conformity with written information furnished to the Company
                  by or on behalf of such Holder and stated to be specifically
                  for use in preparation of such Registration Statement;
                  provided that the Company shall not be liable in any such case
                  where the claim, loss, damage or liability arises out of or is
                  related to the failure of the Holder to comply with the
                  covenants and agreements contained in this Subscription
                  Agreement respecting sales of Registrable Shares, and except
                  that the foregoing indemnity agreement is subject to the
                  condition that, insofar as it relates to any such untrue
                  statement or alleged untrue statement or omission or alleged
                  omission made in the preliminary prospectus but eliminated or
                  remedied in the amended prospectus on file with the SEC at the
                  time the Registration Statement becomes effective or in the
                  amended prospectus filed with the SEC pursuant to Rule 424(b)
                  of the Securities Act or in the prospectus subject to
                  completion and term sheet under Rule 434 of the Act, which
                  together meet the requirements of Section 10(a) of the Act
                  (the "Final Prospectus"), such indemnity agreement shall not
                  inure to the benefit of any such Holder, any such underwriter
                  or any such controlling person, if a copy of the Final
                  Prospectus furnished by the Company to the Holder for delivery

                                      C-8
<PAGE>

                  was not furnished to the person or entity asserting the loss,
                  liability, claim or damage at or prior to the time such
                  furnishing is required by the Securities Act and the Final
                  Prospectus would have cured the defect giving rise to such
                  loss, liability, claim or damage.

                           (ii) Each Holder will severally, if Registrable
                  Shares held by such Holder are included in the securities as
                  to which such registration, qualification or compliance is
                  being effected, indemnify the Company, each of its directors
                  and officers, each underwriter of the Registrable Shares and
                  each person who controls the Company within the meaning of
                  Section 15 of the Securities Act, against all claims, losses,
                  damages and liabilities (or actions in respect thereof),
                  including any of the foregoing incurred in settlement of any
                  litigation, commenced or threatened (subject to Section
                  4(f)(iii) below), arising out of or based on any untrue
                  statement (or alleged untrue statement) of a material fact
                  contained in any Registration Statement incident to any such
                  registration, qualification or compliance or based on any
                  omission (or alleged omission) to state therein a material
                  fact required to be stated therein or necessary to make the
                  statements therein not misleading in light of the
                  circumstances in which they were made, and will reimburse the
                  Company, such directors and officers, each underwriter of the
                  Registrable Shares and each person controlling the Company for
                  reasonable legal and any other expenses reasonably incurred in
                  connection with investigating or defending any such claim,
                  loss, damage, liability or action as incurred, in each case to
                  the extent, but only to the extent, that such untrue statement
                  or omission or allegation thereof is made in reliance upon,
                  and in conformity with, written information furnished to the
                  Company by or on behalf of the Holder and stated to be
                  specifically for use in preparation of such Registration
                  Statement; provided that the indemnity shall not apply to the
                  extent that such claim, loss, damage or liability results from
                  the fact that a current copy of the prospectus or offering
                  circular was not made available to the Holder and such current
                  copy the prospectus or offering circular would have cured the
                  defect giving rise to such loss, claim, damage or liability.
                  Notwithstanding the foregoing, in no event shall a Holder be
                  liable for any such claims, losses, damages or liabilities in
                  excess of the proceeds received by such Holder in the
                  offering, except in the event of fraud by such Holder.

                           (iii) Each party entitled to indemnification under
                  this Section 4(f) (the "Indemnified Party") shall give notice
                  to the party required to provide indemnification (the
                  "Indemnifying Party") promptly after such Indemnified Party
                  has actual knowledge of any claim as to which indemnity may be
                  sought, and shall permit the Indemnifying Party to assume the
                  defense of any such claim or any litigation resulting
                  therefrom, provided that counsel for the Indemnifying Party,
                  who shall conduct the defense of such claim or litigation,
                  shall be approved by the Indemnified Party (whose approval
                  shall not unreasonably be withheld), and the Indemnified Party
                  may participate in such defense with its own counsel at such
                  Indemnified Party's expense, and provided further that the
                  failure of any Indemnified Party to give notice as provided
                  herein shall not relieve the Indemnifying Party of its
                  obligations under this Agreement, unless such failure is

                                      C-9
<PAGE>

                  materially prejudicial to the Indemnifying Party in defending
                  such claim or litigation. An Indemnifying Party shall not be
                  liable for any settlement of an action or claim effected
                  without its written consent (which consent shall not be
                  unreasonably withheld).

                           (iv) If the indemnification provided for in this
                  Section 4(f) is held by a court of competent jurisdiction to
                  be unavailable to an Indemnified Party with respect to any
                  loss, liability, claim, damage or expense referred to therein,
                  then the Indemnifying Party, in lieu of indemnifying such
                  Indemnified Party thereunder, shall contribute to the amount
                  paid or payable by such Indemnified Party as a result of such
                  loss, liability, claim, damage or expense in such proportion
                  as is appropriate to reflect the relative fault of the
                  Indemnifying Party on the one hand and of the Indemnified
                  Party on the other in connection with the statements or
                  omissions which resulted in such loss, liability, claim,
                  damage or expense as well as any other relevant equitable
                  considerations. The relative fault of the Indemnifying Party
                  and of the Indemnified Party shall be determined by reference
                  to, among other things, whether the untrue or alleged untrue
                  statement of a material fact or the omission to state a
                  material fact relates to information supplied by the
                  Indemnifying Party or by the Indemnified Party and the
                  parties' relative intent, knowledge, access to information and
                  opportunity to correct or prevent such statement or omission.

         5. LEGEND OF CERTIFICATES. Each stock certificate of the Company issued
to represent a Share shall bear the following (or substantially equivalent)
legend on the face or reverse side thereof:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                  "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
                  TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE APPLICABLE
                  SECURITY HAS BEEN REGISTERED UNDER THE ACT AND SUCH LAWS OR
                  (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN
                  OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO
                  THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT AND
                  THE APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."

         Any stock certificate issued at any time in exchange or substitution
for any certificate bearing such legend (except a new certificate issued upon
the completion of a public distribution of shares represented thereby) shall
also bear such legend, unless in the opinion of counsel satisfactory to the
Company the securities represented thereby need no longer be subject to the
restrictions contained herein. The provisions of this Subscription Agreement
shall be binding upon, and shall inure to the benefit of, the undersigned and

                                      C-10
<PAGE>

all subsequent holders of the Units who acquired such Units directly or
indirectly from the undersigned in a transaction or series of transactions not
involving any public offering.

         6. NO UNTRUE STATEMENTS; INDEMNIFICATION.

                  (a) The Company hereby warrants and represents that the
         Memorandum provided by the Company to the undersigned in connection
         with this transaction and the documents incorporated therein by
         reference, is accurate, complete and correct, and does not contain an
         untrue statement of a material fact or omit a material fact necessary
         in order to make the Memorandum and other data not misleading.

                  (b) Each party agrees to indemnify and hold harmless the other
         party, its officers, members, directors, employees, agents, and
         affiliates against any and all loss, liability, claim, damage, and
         expense whatsoever (including, without limitation, any and all expenses
         reasonably incurred in investigating, preparing, or defending against
         any litigation commenced or threatened or any claim whatsoever) arising
         out of or based upon any materially false representation or warranty or
         material breach or failure by the undersigned to comply with any
         covenant or agreement made by the undersigned herein or in any other
         document furnished by the undersigned to any of the foregoing in
         connection with this transaction.

         7. IRREVOCABILITY; BINDING EFFECT; ENTIRE AGREEMENT. The undersigned
hereby acknowledges and agrees that the Subscription hereunder is irrevocable by
the undersigned, that, except as required by law, the undersigned is not
entitled to cancel, terminate, or revoke this Subscription Agreement or any
agreements of the undersigned hereunder, and that this Subscription Agreement
and such other agreements shall survive the death or disability of the
undersigned and shall be binding upon and inure to the benefit of the parties
and their heirs, executors, administrators, successors, legal representatives,
and permitted assigns. If the undersigned is more than one person, the
obligations of the undersigned hereunder shall be joint and several and the
agreements, representations, warranties, and acknowledgments herein contained
shall be deemed to be made by and be binding upon each such person and his/her
heirs, executors, administrators, successors, legal representatives, and
permitted assigns. This Agreement sets forth the entire agreement and
understanding among the parties hereto with respect to the transactions
contemplated hereby and supersedes any and all prior agreements and
understandings relating to the subject matter hereof.

         8. MODIFICATION. Neither this Subscription Agreement nor any provisions
hereof shall be waived, modified, discharged, or terminated except by an
instrument in writing signed by the party against whom any such waiver,
modification, discharge, or termination is sought.

         9. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given (a) if to the Company, at the address set forth above, or (b) if
to the undersigned, at the address set forth on the signature page hereof (or,
in either case, to such other address as the party shall have furnished in
writing in accordance with the provisions of this Section 9). Any notice or

                                      C-11
<PAGE>

other communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.

         10. ASSIGNABILITY. This Subscription Agreement and the rights and
obligations hereunder are not transferable or assignable by the undersigned.

         11. APPLICABLE LAW. This Subscription Agreement shall be governed by
and construed in accordance with the laws of the State of California as applied
to residents of that state executing contracts wholly to be performed in that
State, regardless of any laws on choice of law or conflicts of law of any
jurisdiction.

         12. NATURE OF SUBSCRIBER. The undersigned is (check one):

                  [ ]      (a)     One or more individuals
                  [ ]      (b)     A corporation
                  [ ]      (c)     A partnership
                  [ ]      (d)     A trust
                  [ ]      (e)     Another entity or organization, namely
                                   ____________________(please specify)

         13. INVESTMENT PURPOSE FOR NON-INDIVIDUALS.

                  (a) If the undersigned is not an individual, indicate the
         approximate date the undersigned's entity was formed:
         _______________________

                  (b) If the undersigned is not an individual, initial the
         appropriate blank below which correctly describes the application of
         the following statement to your situation: the undersigned (i) was not
         organized or reorganized for the specific purpose of acquiring the
         Units, (ii) has made investments prior to the date hereof, and each
         beneficial owner thereof has and will share in the same proportion in
         each investment and (iii) the undersigned's investment in the Company
         will not constitute more than forty percent (40%) of the undersigned's
         total capital.

                  [ ]      True
                  [ ]      False

                  If the "False" box is checked, the undersigned will as of the
         closing of the transaction (the "Closing") have __________ individual
         stockholders, partners or other record owners and __________
         non-individual stockholders, partners or other record owners. Those
         non-individual stockholders, partners or other record owners to whom
         application of the above statement would be "False" have an aggregate
         of __________ ultimate beneficial owners who are either individuals or
         to whom application of the above statement and the statement in Section
         14 would be "True." IF THE "FALSE" BOX IS CHECKED, EACH PARTICIPATING
         PERSON MAY BE REQUIRED TO FILL OUT A SUBSCRIPTION AGREEMENT, INCLUDING
         MAKING THE REPRESENTATIONS AS TO INVESTOR STATUS SET FORTH IN SECTIONS
         3(c), 12, 13 AND 14.

                                      C-12
<PAGE>

         14. LIMITATIONS ON INVESTMENT IN INVESTMENT COMPANIES.

         If the undersigned is not a individual, initial the box below which
correctly describes the application of the following statement to your
situation: the undersigned would not, upon acquiring the Units, have more than
ten percent (10%) of its assets invested in one or more investment companies
that rely solely on the exclusion from the definition of "investment company"
provided in Section 3(c)(1)(a) of the Investment Company Act of 1940:

                  [ ]      True
                  [ ]      False

         If the "False" box is checked, the undersigned will as of the Closing
have individual stockholders, partners or other record owners and __________
non-individual stockholders, partners or other record owners. Those
non-individual stockholders, partners or other record owners to whom application
of the above statement would be "False" have an aggregate of __________ ultimate
beneficial owners who are either individuals or to whom application of the above
statement and the statement in Section 13 would be "True."

         15. MATTERS RELATING TO THE UNDERSIGNED'S OWNERSHIP OF THE UNITS.

                  (a) All correspondence relating to the undersigned's
         investment should be sent (check one):

                  [ ]      (i)      to the address of the undersigned set forth
                                    on the signature page hereof
                  [ ]      (ii)     to the following address:

                                    _______________________________

                                    _______________________________

                                    _______________________________

                  (b) The undersigned may be contacted by telephone at the
         following telephone numbers:

                  (i) Home telephone:        _____________________________

                  (ii) Business telephone:   _____________________________

                  (iii) Facsimile telephone: _____________________________

                  (iv) E-mail address:       _____________________________

                                      C-13
<PAGE>

                      SUBSCRIPTION AGREEMENT SIGNATURE PAGE
                 FOR INDIVIDUALS AND LIVING OR REVOCABLE TRUSTS

         IN WITNESS WHEREOF, the undersigned executed this Agreement as of
___________, 2003.

No. of Units Purchased:                  _______________________________________
                                         Print Name
_______________________
                                         _______________________________________
                                         Signature of Investor

                                         _______________________________________
                                         Social Security Number

                                         _______________________________________

                                         _______________________________________
                                         Residence Address

         If the purchaser has indicated that the Units will be held as JOINT
TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY, please complete the
following:

                                         _______________________________________
                                         Print Name of Spouse or Other Purchaser

                                         _______________________________________
                                         Signature of Spouse or Other Purchaser

                                         _______________________________________
                                         Social Security Number

ACCEPTED AND AGREED:

ACACIA RESEARCH CORPORATION

By:  _______________________________________

Name:_______________________________________

Title:______________________________________

Dated:  ___________, 2003

                                      S-1
<PAGE>

                      SUBSCRIPTION AGREEMENT SIGNATURE PAGE
            FOR PARTNERSHIPS, CORPORATIONS, TRUSTS, OR OTHER ENTITIES

         IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
______________, 2003.

No. of Units Purchased:
                                        ________________________________________
_______________________                 Print Name of Partnership, Corporation,
                                        Trust or other Entity

                                        By:  ___________________________________
                                             (Signature of Authorized Signatory)

                                        Name:___________________________________

                                        Title:__________________________________

                                        Address:________________________________

                                                ________________________________

                                        Jurisdiction where organized:

                                        ________________________________________

                                        Taxpayer Identification
                                        Number:_________________________________

                                        Date of Formation:______________________

                                        Address of Chief Executive Officer of
                                        Subscriber:

                                        ________________________________________

                                        ________________________________________

ACCEPTED AND AGREED:

ACACIA RESEARCH CORPORATION

By:  _________________________________

Name:_________________________________

Title:________________________________

Dated:  ___________, 2003

                                      S-2
<PAGE>

                                  ATTACHMENT 1

                                                                    NO.

                                 FORM OF WARRANT

THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

                           ACACIA RESEARCH CORPORATION

WARRANT TO PURCHASE AR-COMBIMATRIX STOCK

         This certifies that, for value received, _____________________________
("the Holder") is entitled to subscribe for and purchase up to [________] shares
(subject to adjustment from time to time pursuant to the provisions of Section 5
hereof) of fully paid and nonassessable Acacia Research-CombiMatrix common stock
of Acacia Research Corporation, a Delaware corporation (the "Company"), at the
price specified in Section 2 hereof, as such price may be adjusted from time to
time pursuant to Section 5 hereof (the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth and callable
by the Company upon the terms and conditions set forth in Section 1 hereof.

         As used herein, the term "AR-CombiMatrix stock" shall mean the
Company's presently authorized Acacia Research-CombiMatrix common stock, par
value $0.001 per share, and any stock into or for which such stock may hereafter
be converted or exchanged.

         This Warrant is issued pursuant to that certain Subscription Agreement
between the Holder and the Company dated May __, 2003 (the "Subscription
Agreement").

         1. TERM OF WARRANT; CALLABILITY BY COMPANY.

         The purchase right represented by this Warrant is exercisable, in whole
or in part, at any time during the period beginning on the date hereof and
ending on May __, 2008 (the "Term") However, at any time during the Term after
the first anniversary of the date hereof, if the daily average of the high and
low prices of the Company's AR-CombiMatrix stock on the Nasdaq SmallCap Market
is equal to or above $4.50 (the "Call Price") for 20 consecutive trading days,
the Company will have the right, but not the obligation, to redeem all of the
Warrants on 30 days prior written notice at a redemption price of $0.10 per New
Warrant. If the Company elects to exercise its redemption right, the Holder of
this Warrant may either exercise the Warrant, in whole or in part, or tender the
Warrant to the Company for redemption, in whole or in part. Within five business

                                      A-1
<PAGE>

days after the end of the 30-day period, the Company will deliver the redemption
price to the Holder of this Warrant should this Warrant remain outstanding in
whole or in part as of the end of the 30-day period, whether or not the Holder
has surrendered this Warrant for redemption. This Warrant may not be exercised
after the end of such 30-day period. Notwithstanding the provisions of this
Section 1, if for any reason, the Company suspends or otherwise prohibits the
Holder from distributing any shares of the Company's AR-CombiMatrix stock
issuable pursuant to this Warrant pursuant to any provision of Section 4 of the
Subscription Agreement, the Company shall not exercise its right to redeem this
Warrant until such suspension or prohibition is lifted.

         2. WARRANT PRICE.

         The Warrant Price is $2.75 per share, subject to adjustment from time
to time pursuant to the provisions of Section 5 hereof.

         3. METHOD OF EXERCISE: PAYMENT; ISSUANCE OF NEW WARRANT.

         (a) Subject to Section 1 hereof, the purchase right represented by this
Warrant may be exercised by the Holder, in whole or in part, by the surrender of
this Warrant (with the notice of exercise form attached hereto as Exhibit 1 duly
executed) at the principal office of the Company and by the payment to the
Company, by cashier's check or wire transfer, of an amount equal to the then
applicable Warrant Price per share multiplied by the number of shares then being
purchased. The Company agrees that the shares so purchased shall be deemed to be
issued to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such shares as aforesaid. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the Holder within 15 days thereafter and, unless
this Warrant has been fully exercised or expired, a new Warrant representing the
portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder within such 15 day
period.

         (b) If, within one year following the date hereof, the Company has not
filed a Registration Statement, which has been declared effective by the SEC,
for the resale of the shares of AR-CombiMatrix stock to be issued upon exercise
of this Warrant, the Holders of this Warrant shall be entitled to exercise this
Warrant, in whole but not in part, by the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit 1 duly executed) at the
principal office of the Company, and upon such surrender, the Holder shall be
entitled to receive a number of shares of AR-CombiMatrix stock equal to the
quotient obtained by dividing [(A-B)(X)] by (A), where:

         (A) = the closing bid price of the AR-CombiMatrix stock on the trading
         day immediately preceding the date of such exercise;

         (B) = the then applicable Warrant Price; and

         (X) = the number of shares of AR-CombiMatrix stock issuable upon
         exercise of this Warrant in accordance with its terms.

                                      A-2
<PAGE>

         In the event of any exercise of the rights represented by this Warrant
pursuant to this paragraph 3 (b), certificates for the shares of stock so
purchased shall be delivered to the Holder within 15 days thereafter

         4. STOCK FULLY PAID; RESERVATION OF SHARES.

         All AR-CombiMatrix stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its AR-CombiMatrix
stock to provide for the exercise of the rights represented by this Warrant.

         5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.

         The kind of securities purchasable upon the exercise of this Warrant,
the Warrant Price and the number of shares purchasable upon exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
the following events:

                  (a) RECLASSIFICATION, CONSOLIDATION, OR MERGER. In case of any
         reclassification or change of outstanding securities of the class
         issuable upon exercise of this Warrant (other than a change in par
         value, or from par value to no par value, or from no par value to par
         value, or as a result of a subdivision or combination), or in case of
         any consolidation or merger of the Company with or into another
         corporation, other than a merger with another corporation in which the
         Company is a continuing corporation and which does not result in any
         reclassification or change of outstanding securities issuable upon
         exercise of this Warrant, the Company, or such successor, as the case
         may be, shall execute a new Warrant, providing that the Holder of this
         Warrant shall have the right to exercise such new Warrant and procure
         upon such exercise, in lieu of each share of AR-CombiMatrix stock
         theretofore issuable upon exercise of this Warrant, the kind and amount
         of shares of stock, other securities, money and property receivable
         upon such reclassification, change, consolidation, or merger by a
         Holder of one share of AR-CombiMatrix stock. Such new Warrant shall
         provide for adjustments, which shall be as nearly equivalent as may be
         practicable to the adjustments provided for in this Section 5. The
         provisions of this subparagraph (a) shall similarly apply to successive
         reclassification, changes, consolidations, and mergers.

                  (b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at
         any time while this Warrant remains outstanding and unexpired shall
         subdivide or combine its AR-CombiMatrix stock, or distribute dividends
         on its AR-CombiMatrix stock payable in AR-CombiMatrix stock, the
         Warrant Price shall be proportionately decreased in the case of a
         subdivision or increased in the case of a combination or dividend.

                  (c) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in
         the Warrant Price pursuant to subparagraphs (a) or (b) of this Section
         5, the number of shares of AR-CombiMatrix stock purchasable hereunder
         shall be adjusted, to the nearest whole share, to the product obtained

                                      A-3
<PAGE>

         by multiplying the number of shares purchasable immediately prior to
         such adjustment in the Warrant Price by a fraction, the numerator of
         which shall be the Warrant Price immediately prior to such adjustment
         and the denominator of which shall be the Warrant Price immediately
         thereafter. No adjustment in the number of shares shall be made upon
         any adjustment in the Warrant Price pursuant to subparagraph (d) below.

         6. NOTICE OF ADJUSTMENTS.

         Whenever any Warrant Price shall be adjusted pursuant to Section 5
hereof, the Company shall prepare a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, the Warrant Price after giving effect to such adjustment and the
number of shares then purchasable upon exercise of this Warrant, and shall cause
copies of such certificate to be mailed (by first class mail, postage prepaid)
to the Holder of this Warrant at the address specified in Section 10(c) hereof,
or at such other address as may be provided to the Company in writing by the
Holder of this Warrant.

         7. FRACTIONAL SHARES.

         No fractional shares of AR-CombiMatrix stock will be issued in
conjunction with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor on the basis of the Warrant Price
then in effect.

         8. COMPLIANCE WITH SECURITIES ACT.

         The Holder of this Warrant, by acceptance hereof, agrees that this
Warrant and the shares of AR-CombiMatrix stock to be issued on exercise hereof
are being acquired for investment and that it will not offer, sell or otherwise
dispose of this Warrant or any shares of AR-CombiMatrix stock to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). This Warrant and all
shares of AR-CombiMatrix stock issued upon exercise of this Warrant (unless
registered under the Act) shall be stamped and imprinted with a legend
substantially in the following form:

         "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED (THE ACT"), OR APPLICABLE STATE SECURITIES LAWS AND
         MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
         REGISTERED UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH
         LAWS IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE
         COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION
         UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
         REQUIRED."

         9. TRANSFER AND EXCHANGE OF WARRANT.

         This Warrant is not transferable or exchangeable without the consent of
the Company.

                                      A-4
<PAGE>

         10. MISCELLANEOUS.

                  (a) NO RIGHTS AS STOCKHOLDER. The Holder of this Warrant shall
         not be entitled to vote or receive dividends or be deemed the Holder of
         AR-CombiMatrix stock or any other securities of the Company that may at
         any time be issuable on the exercise hereof for any purpose, nor shall
         anything contained herein be construed to confer upon the Holder of
         this Warrant, as such, any of the rights of a stockholder of the
         Company or any right to vote for the election of directors or upon any
         matter submitted to stockholders at any meeting thereof, or to give or
         withhold consent to any corporate action (whether upon any
         recapitalization, issuance of stock, reclassification of stock, change
         of par value or change of stock to no par value, consolidation, merger,
         conveyance or otherwise) or to receive notice of meetings, or to
         receive dividends or subscription rights or otherwise until the Warrant
         shall have been exercised and the shares purchasable upon the exercise
         hereof shall have become deliverable, as provided herein.

                  (b) REPLACEMENT. On receipt of evidence reasonably
         satisfactory to the Company of the loss, theft, destruction, or
         mutilation of this Warrant and, in the case of mutilation, on surrender
         and cancellation of this Warrant, the Company, at its expense, will
         execute and deliver, in lieu of this Warrant, a new Warrant of like
         tenor.

                  (c) NOTICE. Any notice given to either party under this
         Warrant shall be in writing, and any notice hereunder shall be deemed
         to have been given upon the earlier of delivery thereof by hand
         delivery, by courier, or by standard form of telecommunication or three
         (3) business days after the mailing thereof in the U.S. mail if sent
         registered mail with postage prepaid, addressed to the Company at its
         principal executive offices and to the Holder at its address set forth
         in the Company's books and records or at such other address as the
         Holder may have provided to the Company in writing.

                  (d) GOVERNING LAW. This Warrant shall be governed and
         construed under the laws of the State of California, regardless of any
         laws on choice of law or conflicts of law of any jurisdiction.

This Warrant is executed as of May __, 2003.

                                          ACACIA RESEARCH CORPORATION

                                          By:   ________________________________

                                          Name: ________________________________

                                          Title:________________________________

                                      A-5
<PAGE>

                                    EXHIBIT 1
                                    ---------

                               NOTICE OF EXERCISE

TO:  ACACIA RESEARCH CORPORATION

         1. The undersigned hereby elects to purchase _______________ shares of
AR-CombiMatrix stock of Acacia Research Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.

         2. Please issue a certificate or certificates representing said shares
of AR-CombiMatrix stock in the name of the Holder at the address specified
below:

                  ____________________________________________________
                  (Name)

                  ____________________________________________________
                  (Address)

                  ____________________________________________________
                  (Address)

         3. The undersigned represents that any of the aforesaid shares of
AR-CombiMatrix stock not subject to an effective Registration Statement under
the Securities Act of 1933 are being acquired for the account of the undersigned
for investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.

         4. The undersigned represents that each of the representations and
warranties and each of the responses in the confidential purchaser questionnaire
given with the Subscription Agreement are true, correct and complete as of the
date hereof.

                                           ____________________________________
                                           (Signature of Holder)

                                           ____________________________________
                                           (Print Name of Holder)

                                       -1-

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