Document:

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                                                                     EXHIBIT 4.2

                                                                  EXECUTION COPY

                         REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of June
23, 2000 by and between Universal Health Services, Inc., a Delaware corporation
(the "Company"), and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), J.P. Morgan Securities Inc., UBS Warburg LLC and
Banc of America Securities LLC (collectively, the "Initial Purchasers") pursuant
to the Purchase Agreement, dated as of June 19, 2000 (the "Purchase Agreement"),
between the Company and the Initial Purchasers. In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution of
this Agreement is a condition to the closing under the Purchase Agreement.

          The Company agrees with the Initial Purchasers, (i) for the benefit of
the Initial Purchasers and (ii) for the benefit of the beneficial owners
(including the Initial Purchasers) from time to time of the Securities (as
defined herein) and the beneficial owners from time to time of the Underlying
Common Stock (as defined herein) issued upon conversion of the Securities (each
of the foregoing a "Holder" and together the "Holders"), as follows:

          Section 1. Definitions. Capitalized terms used herein without
          ----------------------
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:

          "Affiliate" means, with respect to any specified person, an
           ---------
"affiliate," as defined in Rule 144, of such person.

          "Amendment Effectiveness Deadline Date" has the meaning specified in
           -------------------------------------
Section 2(d) hereof.

          "Applicable Conversion Price" means the Applicable Conversion Price as
           ---------------------------
of any date of determination means the Applicable Principal Amount per $1,000
principal amount at maturity of Securities as of such date of determination
divided by the Conversion Rate in effect as of such date of determination or, if
no Securities are then outstanding, the Conversion Rate that would be in effect
were Securities then outstanding.

          "Applicable Principal Amount" means the Applicable Principal Amount as
           ---------------------------
of any date of determination, with respect to each $1,000 principal amount at
maturity of Securities means the sum of the initial issue price of such
Securities ($425.90) plus accrued original issue discount with respect to such
Securities through such date of determination or, if no Securities are then
outstanding, such sum calculated as if such Securities were then outstanding.

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          "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
           ------------
Friday that is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.

          "Common Stock" means any shares of Class B Common Stock, par value
           ------------
$.01 per share, of the Company and any other shares of common stock as may
constitute "Common Stock" for purposes of the Indenture, including the
Underlying Common Stock.

          "Conversion Rate" has the meaning assigned to that term in the
           ---------------
Indenture.

          "Damages Accrual Period" has the meaning specified in Section 2(e)
           ----------------------
hereof.

          "Damages Payment Date" means each [Month/Day] and [Month/Day] in the
           --------------------
case of Securities and the Underlying Common Stock.

          "Deferral Notice" has the meaning specified in Section 3(i) hereof.
           ---------------

          "Deferral Period" has the meaning specified in Section 3(i) hereof.
           ---------------

          "Effectiveness Deadline Date" has the meaning specified in Section
           ---------------------------
2(a) hereof.

          "Effectiveness Period" means the period of two years from the date the
           --------------------
Shelf Registration Statement is declared effective or such shorter period that
will terminate upon the earliest of the following: (A) when all the Securities
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement, (B) when all shares of Common Stock issued upon
conversion of any such Securities that had not been sold pursuant to the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement and (C) when, in the written opinion of counsel to the Company, all
outstanding Registrable Securities held by persons which are not affiliates of
the Company may be resold without registration under the Securities Act pursuant
to Rule 144(k) under the Securities Act or any successor provision thereto.

          "Event" has the meaning specified in Section 2(e) hereof.
           -----

          "Event Termination Date" has the meaning specified in Section 2(e)
           ----------------------
hereof.

          "Event Date" has the meaning specified in Section 2(e) hereof.
           ----------

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
           ------------
and the rules and regulations of the SEC promulgated thereunder.

          "Filing Deadline Date" has the meaning specified in Section 2(a)
           --------------------
hereof.

          "Holder" has the meaning specified in the second paragraph of this
           ------
Agreement.

          "Indenture" means the Indenture dated as of the date hereof between
           ---------
the Company and the Trustee, pursuant to which the Securities are being issued.

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          "Initial Purchasers" means Merrill Lynch & Co., Merrill Lynch, Pierce,
           ------------------
Fenner & Smith Incorporated, J.P. Morgan Securities Inc., UBS Warburg LLC and
Banc of America Securities LLC.

          "Initial Shelf Registration Statement" has the meaning specified in
           ------------------------------------
Section 2(a) hereof.

          "Issue Date" means June 23, 2000.
           ----------

          "Liquidated Damages Amount" has the meaning specified in Section 2(e)
           -------------------------
hereof.

          "Losses" has the meaning specified in Section 6 hereof.
           ------

          "Material Event" has the meaning specified in Section 3(i) hereof.
           --------------

          "Notice and Questionnaire" means a written notice delivered to the
           ------------------------
Company containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company issued June 19, 2000 relating to the Securities.

          "Notice Holder" means, on any date, any Holder that has delivered a
           -------------
Notice and Questionnaire to the Company on or prior to such date.

          "Prospectus" means the prospectus included in any Registration
           ----------
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all materials incorporated
by reference or explicitly deemed to be incorporated by reference in such
Prospectus.

          "Purchase Agreement" has the meaning specified in the first paragraph
           ------------------
of this Agreement.

          "Record Holder" means, with respect to any Damages Payment Date
           -------------
relating to any Securities or Underlying Common Stock as to which any Liquidated
Damages Amount has accrued, the registered holder of such Securities or
Underlying Common Stock, as the case may be, 15 days prior to the next
succeeding Damages Payment Date.

          "Registrable Securities" means the Securities and the Underlying
           ----------------------
Common Stock, until such securities have been converted or exchanged, and, at
all times subsequent to any such conversion or exchange, any securities into or
for which such securities have been converted or exchanged, and any security
issued with respect thereto upon any stock dividend, split or similar event
until, in the case of any such security, the earliest of (i) its effective
registration under the Securities Act and resale in accordance with the
Registration Statement covering it, (ii) expiration of the holding period that
would be applicable thereto under Rule 144(k) were it not held by an Affiliate
of the Company or (iii) its sale to the public pursuant to Rule 144.

          "Registration Expenses" has the meaning specified in Section 5 hereof.
           ---------------------

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          "Registration Statement" means any registration statement of the
           ----------------------
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.

          "Restricted Securities" has the meaning assigned to that term in Rule
           ---------------------
144.
           "Rule 144A" means Rule 144 under the Securities Act, as such Rule may
           ---------
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

          "Rule 144A" means Rule 144A under the Securities Act, as such Rule may
           ---------
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

          "SEC" means the U.S. Securities and Exchange Commission and any
           ---
successor agency.

          "Securities" means the Convertible Debentures due 2020 of the Company
           ----------
to be purchased pursuant to the Purchase Agreement.

          "Securities Act" means the Securities Act of 1933, as amended, and the
           --------------
rules and regulations promulgated by the SEC thereunder.

          "Shelf Registration Statement" has the meaning specified in Section
           ----------------------------
2(a) hereof.

          "Subsequent Shelf Registration Statement" has the meaning specified in
           ---------------------------------------
Section 2(b) hereof.

          "TIA" means the Trust Indenture Act of 1939, as amended.
           ---

          "Trustee" means Bank One Trust Company, N.A. (or any successor
           -------
entity), the Trustee under the Indenture.

          "Underlying Common Stock" means the Common Stock into which the
           -----------------------
Securities are convertible or issued upon any such conversion.

          Section 2. Shelf Registration. (a) The Company shall prepare and file
                     ------------------
or cause to be prepared and filed with the SEC, as soon as practicable but in
any event by the date (the "Filing Deadline Date") ninety (90) days after the
Issue Date, a Registration Statement for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration Statement") registering the resale from time to time by Holders
thereof of all of the Registrable Securities (the "Initial Shelf Registration
Statement"). The Initial Shelf Registration Statement shall be on Form S-3 or
another appropriate form permitting registration of such Registrable Securities
for resale by such Holders in accordance with the methods of distribution
elected by the Holders and set forth in the Initial Shelf Registration
Statement. The Company shall use reasonable efforts to cause the Initial Shelf
Registration Statement to be declared effective under the Securities Act as
promptly as is practicable but in any event by the date (the "Effectiveness
Deadline Date") that is one hundred and eighty (180)

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days after the Issue Date, and to keep the Initial Shelf Registration Statement
(or any Subsequent Shelf Registration Statement) continuously effective under
the Securities Act until the expiration of the Effectiveness Period; provided,
however, that no Holder shall be entitled to have the Registrable Securities
held by it covered by such Shelf Registration Statement unless such Holder shall
have provided a Notice and Questionnaire in accordance with Section 2(d) and is
in compliance with Section 4. None of the Company's security holders (other than
the Holders of Registrable Securities) shall have the right to include any of
the Company's securities in the Shelf Registration Statement.

     (b)  If the Initial Shelf Registration Statement or any Subsequent Shelf
Registration Statement ceases to be effective for any reason at any time during
the Effectiveness Period (other than because all Registrable Securities
registered thereunder shall have been resold pursuant thereto or shall have
otherwise ceased to be Registrable Securities), the Company shall use all
reasonable efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within thirty (30) days of such
cessation of effectiveness amend the Shelf Registration Statement in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional Shelf Registration Statement
covering all of the securities that as of the date of such filing are
Registrable Securities (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, the Company shall use all
reasonable efforts to cause the Subsequent Shelf Registration Statement to
become effective as promptly as is practicable after such filing and to keep
such Registration Statement (or subsequent Shelf Registration Statement)
continuously effective until the end of the Effectiveness Period.

     (c)  The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or, to the extent to which the Company does
not reasonably object, as reasonably requested by the Initial Purchasers or by
the Trustee on behalf of the registered Holders.

     (d)  Each Holder of Registrable Securities agrees that if such Holder
wishes to sell Registrable Securities pursuant to a Shelf Registration Statement
and related Prospectus, it will do so only in accordance with this Section 2(d)
and Section 3(i). Each Holder of Registrable Securities wishing to sell
Registrable Securities pursuant to a Shelf Registration Statement and related
Prospectus agrees to deliver a Notice and Questionnaire to the Company at least
three (3) Business Days prior to any intended distribution of Registrable
Securities under the Shelf Registration Statement. From and after the date the
Initial Shelf Registration Statement is declared effective, the Company shall,
as promptly as is practicable after the date a Notice and Questionnaire is
delivered, and in any event within five (5) Business Days after such date, (i)
if required by applicable law, file with the SEC a post-effective amendment to
the Shelf Registration Statement or prepare and, if required by applicable law,
file a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that the Holder delivering such Notice and Questionnaire is named as a
selling security holder in the Shelf Registration Statement and the related
Prospectus in such a manner as to permit such Holder to deliver such Prospectus
to purchasers of the Registrable Securities in accordance with applicable law
and, if the Company shall file a post-effective amendment to the Shelf
Registration Statement, use reasonable efforts

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to cause such post-effective amendment to be declared effective under the
Securities Act as promptly as is practicable, but in any event by the date (the
"Amendment Effectiveness Deadline Date") that is thirty (30) days after the date
such post-effective amendment is required by this clause to be filed; (ii)
provide such Holder copies of any documents filed pursuant to Section 2(d)(i);
and (iii) notify such Holder as promptly as practicable after the effectiveness
under the Securities Act of any post-effective amendment filed pursuant to
Section 2(d)(i); provided, that if such Notice and Questionnaire is delivered
during a Deferral Period, the Company shall so inform the Holder delivering such
Notice and Questionnaire and shall take the actions set forth in clauses (i),
(ii) and (iii) above upon expiration of the Deferral Period in accordance with
Section 3(i), provided, further, that if under applicable law the Company has
more than one option as to the type or manner of making any such filing, it will
make the required filing or filings in the manner or of a type that is
reasonably expected to result in the earliest availability of the Prospectus for
effecting resales of Registrable Securities. Notwithstanding anything contained
herein to the contrary, the Company shall be under no obligation to name any
Holder that is not a Notice Holder as a selling security holder in any
Registration Statement or related Prospectus; provided, however, that any Holder
that becomes a Notice Holder pursuant to the provisions of Section 2(d) of this
Agreement (whether or not such Holder was a Notice Holder at the time the
Registration Statement was declared effective) shall be named as a selling
security holder in the Registration Statement or related Prospectus in
accordance with the requirements of this Section 2(d).

     (e)  The parties hereto agree that the Holders of Registrable Securities
will suffer damages, and that it would not be feasible to ascertain the extent
of such damages with precision, if (i) the Initial Shelf Registration Statement
has not been filed on or prior to the Filing Deadline Date, (ii) the Initial
Shelf Registration Statement has not been declared effective under the
Securities Act on or prior to the Effectiveness Deadline Date, (iii) the Company
has failed to perform its obligations set forth in Section 2(d) hereof within
the time period required therein, (iv) the aggregate duration of Deferral
Periods in any period exceeds the number of days permitted in respect of such
period pursuant to Section 3(i) hereof or (v) the number of Deferral Periods in
any period exceeds the number permitted in respect of such period pursuant to
Section 3(i) (each of the events of a type described in any of the foregoing
clauses (i) through (v) are individually referred to herein as an "Event," and
the Filing Deadline Date in the case of clause (i), the Effectiveness Deadline
Date in the case of clause (ii), the date by which the Company is required to
perform its obligations set forth in Section 2(d) in the case of clause (iii)
(including the filing of any post-effective amendment prior to the Amendment
Effectiveness Deadline Date), the date on which the aggregate duration of
Deferral Periods in any period exceeds the number of days permitted by Section
3(i) hereof in the case of clause (iv), and the date of the commencement of a
Deferral Period that causes the limit on the number of Deferral Periods in any
period under Section 3(i) hereof to be exceeded in the case of clause (v), being
referred to herein as an "Event Date"). Events shall be deemed to continue until
the "Event Termination Date," which shall be the following dates with respect to
the respective types of Events: the date the Initial Shelf Registration
Statement is filed in the case of an Event of the type described in clause (i),
the date the Initial Shelf Registration Statement is declared effective under
the Securities Act in the case of an Event of the type described in clause (ii),
the date the Company performs its obligations set forth in Section 2(d) in the
case of an Event of the type described in clause (iii) (including, without
limitation, the date the relevant post-effective amendment to the Shelf
Registration Statement is declared effective under the Securities Act),
termination of the

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Deferral Period that caused the limit on the aggregate duration of Deferral
Periods in a period set forth in Section 3(i) to be exceeded in the case of the
commencement of an Event of the type described in clause (iv), and termination
of the Deferral Period the commencement of which caused the number of Deferral
Periods in a period permitted by Section 3(i) to be exceeded in the case of an
Event of the type described in clause (v).

          Accordingly, commencing on (and including) any Event Date and ending
on (but excluding) the next date on which there are no Events that have occurred
and are continuing (a "Damages Accrual Period"), the Company agrees to pay, as
liquidated damages and not as a penalty, an amount (the "Liquidated Damages
Amount"), payable on the Damages Payment Dates to Record Holders of then
outstanding Securities that are Registrable Securities and of then outstanding
shares of Underlying Common Stock issued upon conversion of Securities that are
Registrable Securities, as the case may be, accruing, for each portion of such
Damages Accrual Period beginning on and including a Damages Payment Date (or, in
respect of the first time that the Liquidation Damages Amount is to be paid to
Holders on a Damages Payment Date as a result of the occurrence of any
particular Event, from the Event Date) and ending on but excluding the first to
occur of (A) the date of the end of the Damages Accrual Period or (B) the Next
Damages Payment Date, at a rate per annum equal to one-quarter of one percent
(0.25%) for the first 90-day period from the Event Date, and thereafter at a
rate per annum equal to one-half of one percent (0.5%) of the aggregate
Applicable Principal Amount of such Securities and the aggregate Applicable
Conversion Price of such shares of Underlying Common Stock, as the case may be,
in each case determined as of the Business Day immediately preceding the next
Damages Payment Date; provided, that in the case of a Damages Accrual Period
that is in effect solely as a result of an Event of the type described in clause
(iii) of the immediately preceding paragraph, such Liquidated Damages Amount
shall be paid only to the Holders that have delivered Notice and Questionnaires
that caused the Company to incur the obligations set forth in Section 2(d) the
non-performance of which is the basis of such Event; provided further, that any
Liquidated Damages Amount accrued with respect to any Securities or portion
thereof called for redemption on a redemption date or converted into Underlying
Common Stock on a conversion date prior to the Damages Payment Date, shall, in
any such event, be paid instead to the Holder who submitted such Securities or
portion thereof for redemption or conversion on the applicable redemption date
or conversion date, as the case may be, on such date (or promptly following the
conversion date, in the case of conversion). Notwithstanding the foregoing, no
Liquidated Damages Amounts shall accrue as to any Registrable Security from and
after the earlier of (x) the date such security is no longer a Registrable
Security and (y) expiration of the Effectiveness Period. The rate of accrual of
the Liquidated Damages Amount with respect to any period shall not exceed the
rate provided for in this paragraph notwithstanding the occurrence of multiple
concurrent Events. Following the cure of all Events requiring the payment by the
Company of Liquidated Damages Amounts to the Holders of Registrable Securities
pursuant to this Section, the accrual of Liquidated Damages Amounts will cease
(without in any way limiting the effect of any subsequent Event requiring the
payment of Liquidated Damages Amount by the Company).

          The Trustee shall be entitled, on behalf of Holders of Securities or
Underlying Common Stock, to seek any available remedy for the enforcement of
this Agreement, including for the payment of any Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that the sole monetary damages
payable for a violation of the terms of this Agreement with respect to which
liquidated damages are expressly provided shall be such liquidated damages.

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Nothing shall preclude a Notice Holder or Holder of Registrable SecNothing shall
preclude a Notice Holder or Holder of Registrable Securities from pursuing or
obtaining specific performance or other equitable relief with respect to this
Agreement.

          All of the Company's obligations set forth in this Section 2(e) that
are outstanding with respect to any Registrable Security at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)).

          The parties hereto agree that the liquidated damages provided for in
this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.

          Section 3.     Registration Procedures. In connection with the
          ---------------------------------------
registration obligations of the company under Section 2 hereof, the Company
shall:

          (a)  Before filing any Registration Statement or Prospectus or any
amendments or supplements thereto with the SEC, furnish to the Initial
Purchasers copies of all such documents proposed to be filed and use reasonable
efforts to reflect in each such document when so filed with the SEC such
comments as the Initial Purchasers reasonably shall propose within three (3)
Business Days of the delivery of such copies to the Initial Purchasers.

          (b)  Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 2(a); cause the related Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 (or any similar provisions then in force) under the Securities Act;
and use all reasonable efforts to comply with the provisions of the Securities
Act applicable to it with respect to the disposition of all securities covered
by such Registration Statement during the Effectiveness Period in accordance
with the intended methods of disposition by the sellers thereof set forth in
such Registration Statement as so amended or such Prospectus as so supplemented.

          (c)  As promptly as practicable give notice to the Notice Holders and
the Initial Purchasers (i) when any Prospectus, Prospectus supplement,
Registration Statement or post-effective amendment to a Registration Statement
has been filed with the SEC and, with respect to a Registration Statement or any
post-effective amendment, when the same has been declared effective, (ii) of any
request, following the effectiveness of the Initial Shelf Registration Statement
under the Securities Act, by the SEC or any other federal or state governmental
authority for amendments or supplements to any Registration Statement or related
Prospectus or for additional information, (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of any Registration Statement or the initiation or threatening
of any proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the occurrence of (but not

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the nature of or details concerning) a Material Event (provided, however, that
no notice by the Company shall be required pursuant to this clause (v) in the
event that the Company either promptly files a Prospectus supplement to update
the Prospectus or a Form 8-K or other appropriate Exchange Act report that is
incorporated by reference into the Registration Statement, which, in either
case, contains the requisite information with respect to such Material Event
that results in such Registration Statement no longer containing any untrue
statement of material fact or omitting to state a material fact necessary to
make the statements contained therein not misleading) and (vi) of the
determination by the Company that a post-effective amendment to a Registration
Statement will be filed with the SEC, which notice may, at the discretion of the
Company (or as required pursuant to Section 3(i)), state that it constitutes a
Deferral Notice, in which event the provisions of Section 3(i) shall apply.

          (d)  Use all reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale, in either case at the earliest possible moment.

          (e)  If reasonably requested by the Initial Purchasers or any Notice
Holder, promptly as reasonably practicable incorporate in a Prospectus
supplement or post-effective amendment to a Registration Statement such
information as the Initial Purchasers or such Notice Holder shall, on the basis
of an opinion of nationally-recognized counsel experienced in such matters,
determine to be required to be included therein by applicable law and make any
required filings of such Prospectus supplement or such post-effective amendment;
provided, that the Company shall not be required to take any actions under this
Section 3(e) that are not, in the reasonable opinion of counsel for the Company,
in compliance with applicable law.

          (f)  Promptly as reasonably practicable furnish to each Notice Holder
and the Initial Purchasers, upon their request and without charge, at least one
(1) conformed copy of the Registration Statement and any amendment thereto,
including financial statements but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits
(unless requested in writing to the Company by such Notice Holder or the Initial
Purchasers, as the case may be).

          (g)  During the Effectiveness Period, deliver to each Notice Holder in
connection with any sale of Registrable Securities pursuant to a Registration
Statement, without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each preliminary prospectus)
and any amendment or supplement thereto as such Notice Holder may reasonably
request; and the Company hereby consents (except during such periods that a
Deferral Notice is outstanding and has not been revoked) to the use of such
Prospectus or each amendment or supplement thereto by each Notice Holder in
connection with any offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto in the manner set forth
therein.

          (h)  Prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, use all reasonable efforts to
register or qualify or cooperate with the Notice Holders in connection with the
registration or qualification (or exemption from such

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registration or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Notice Holder reasonably requests in writing (which request may be
included in the Notice and Questionnaire); prior to any public offering of the
Registrable Securities pursuant to the Shelf Registration Statement, use all
reasonable efforts to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period in connection with such
Notice Holder's offer and sale of Registrable Securities pursuant to such
registration or qualification (or exemption therefrom) and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of such Registrable Securities in the manner set forth in the
relevant Registration Statement and the related Prospectus; provided, that the
Company will not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Agreement or (ii) take any action that would
subject it to general service of process in suits or to taxation in any such
jurisdiction where it is not then so subject.

          (i)  Upon (A) the issuance by the SEC of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact (a "Material Event") as a result of which any Registration Statement
shall contain any 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, or any Prospectus shall contain any 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, in the light of the circumstances
under which they were made, not misleading, or (C) the occurrence or existence
of any pending corporate development that, in the discretion of the Company,
makes it appropriate to suspend the availability of the Shelf Registration
Statement and the related Prospectus, (i) in the case of clause (B) above,
subject to the next sentence, as promptly as practicable prepare and file a
post-effective amendment to such Registration Statement or a supplement to the
related Prospectus or any document incorporated therein by reference or file any
other required document that would be incorporated by reference into such
Registration Statement and Prospectus so that such Registration Statement does
not contain any 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 such Prospectus does not contain any 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, in the light of the
circumstances under which they were made, not misleading, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
and, in the case of a post-effective amendment to a Registration Statement,
subject to the next sentence, use all reasonable efforts to cause it to be
declared effective as promptly as is reasonably practicable, and (ii) give
notice to the Notice Holders that the availability of the Shelf Registration
Statement is suspended (a "Deferral Notice") and, upon receipt of any Deferral
Notice, each Notice Holder agrees not to sell any Registrable Securities
pursuant to the Registration Statement until such Notice Holder's receipt of
copies of the supplemented or amended Prospectus provided for in clause (i)
above, or until it is advised in writing by the Company that the Prospectus may
be used, and has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in such Prospectus. The
Company will all use reasonable efforts to ensure that the use of the Prospectus
may be resumed (x) in the case of clause (A) above, as promptly as is
practicable, (y)

                                       10
<PAGE>

in the case of clause (B) above, as soon as, in the sole judgment of the
Company, public disclosure of such Material Event would not be prejudicial to or
contrary to the interests of the Company or, if necessary to avoid unreasonable
burden or expense, as soon as reasonable practicable thereafter and (z) in the
case of clause (C) above, as soon as, in the discretion of the Company, such
suspension is no longer appropriate. The period during which the availability of
the Registration Statement and any Prospectus is suspended (the "Deferral
Period") shall, without the Company incurring any obligation to pay liquidated
damages pursuant to Section 2(e), not exceed forty-five (45) days in any three
(3) month period and ninety (90) days in any twelve (12) month period.

          (j)  If reasonably requested in writing in connection with a
disposition of Registrable Securities pursuant to a Registration Statement, make
reasonably available for inspection during normal business hours by a
representative for the Notice Holders of such Registrable Securities and any
broker-dealers, attorneys and accountants retained by such Notice Holders, all
relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the appropriate
executive officers, directors and designated employees of the Company and its
subsidiaries to make reasonably available for inspection during normal business
hours all relevant information reasonably requested by such representative for
the Notice Holders or any such broker-dealers, attorneys or accountants in
connection with such disposition, in each case as is customary for similar "due
diligence" examinations; provided, however, that such persons shall first agree
in writing with the Company that any information that is reasonably and in good
faith designated by the Company in writing as confidential at the time of
delivery of such information shall be kept confidential by such persons and
shall be used solely for the purposes of exercising rights under this Agreement,
unless (i) disclosure of such information is required by court or administrative
order or is necessary to respond to inquiries of regulatory authorities, (ii)
disclosure of such information is required by law (including any disclosure
requirements pursuant to federal securities laws in connection with the filing
of any Registration Statement or the use of any Prospectus referred to in this
Agreement), (iii) such information becomes generally available to the public
other than as a result of a disclosure or failure to safeguard by any such
person or (iv) such information becomes available to any such person from a
source other than the Company and such source is not bound by a confidentiality
agreement; and provided further, that the foregoing inspection and information
gathering shall, to the greatest extent possible, be coordinated on behalf of
all the Notice Holders and the other parties entitled thereto by the counsel
referred to in Section 5.

          (k)  Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earning statements (which need
not be audited) satisfying the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder (or any similar rule promulgated under the Securities
Act) no later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) commencing
on the first day of the first fiscal quarter of the Company commencing after the
effective date of a Registration Statement, which statements shall cover said
12-month periods.

          (l)  Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
sold pursuant to a Registration Statement, and cause such Registrable Securities
to be in such denominations as are permitted by

                                       11
<PAGE>

the Indenture and registered in such names as such Notice Holder may request in
writing at least two Business Days prior to any sale of such Registrable
Securities.

          (m)  Provide a CUSIP number for all Registrable Securities covered by
each Registration Statement not later than the effective date of such
Registration Statement and provide the Trustee for the Securities and the
transfer agent for the with printed certificates for the Registrable Securities
that are in a form eligible for deposit with The Depository Trust Company.

          (n)  Make a reasonable effort to provide such information as is
required for any filings required to be made with the National Association of
Securities Dealers, Inc.

          (o)  Upon (i) the filing of the Initial Shelf Registration Statement
and (ii) the effectiveness of the Initial Shelf Registration Statement, announce
the same, in each case by release to Reuters Economic Services and Bloomberg
Business News.

          (p)  Enter into such customary agreements and take all such other
reasonable necessary actions in connection therewith (including those reasonably
requested by the holders of a majority of the Registrable Securities being sold)
in order to expedite or facilitate disposition of such Registrable Securities.

          (q)  Cause the Indenture to be qualified under the TIA not later than
the effective date of any Registration Statement; and in connection therewith,
cooperate with the Trustee to effect such changes to the Indenture as may be
required for the Indenture to be so qualified in accordance with the terms of
the TIA and execute, and use all reasonable efforts to cause the Trustee to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable the Indenture to
be so qualified in a timely manner.

          Section 4.  Holder's Obligations. Each Holder agrees, by acquisition
          --------------------------------
of the Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with a Notice and Questionnaire as required pursuant to
Section 2(d) hereof (including the information required to be included in such
Notice and Questionnaire) and the information set forth in the next sentence.
Each Notice Holder agrees promptly to furnish to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Notice Holder not misleading and any other information
regarding such Notice Holder and the distribution of such Registrable Securities
as may be required to be disclosed in the Registration Statement under
applicable law.

          Section 5.  Registration Expenses. The Company shall bear all fees and
          ---------------------------------
expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any of the
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of

                                       12
<PAGE>

compliance with federal and state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of the counsel specified
in the next sentence in connection with Blue Sky qualifications of the
Registrable Securities under the laws of such jurisdictions as the Notice
Holders of a majority of the Registrable Securities being sold pursuant to a
Registration Statement may designate), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
in a form eligible for deposit with The Depository Trust Company), (iii)
duplication expenses relating to copies of any Registration Statement or
Prospectus delivered to any Holders hereunder, (iv) fees and disbursements of
counsel for the Company in connection with the Shelf Registration Statement, and
(v) reasonable fees and disbursements of the Trustee and its counsel and of the
registrar and transfer agent for the Common Stock. In addition, the Company
shall bear or reimburse the Notice Holders for the reasonable fees and
disbursements of one firm of legal counsel for the Holders, which shall
initially be Shearman & Sterling, but which may, upon the written consent of the
Initial Purchasers (which shall not be unreasonably withheld), be another
nationally recognized law firm experienced in securities law matters designated
by the Company. In addition, the Company shall pay the internal expenses of the
Company (including, without limitation, all salaries and expenses of officers
and employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange on which similar securities of
the Company are then listed and the fees and expenses of any person, including
special experts, retained by the Company.

          Section 6.  Indemnification; Contribution. (a) The Company agrees to
          -----------------------------------------
indemnify and hold harmless the Initial Purchasers and each holder of
Registrable Securities and each person, if any, who controls the Initial
Purchasers or any holder of Registrable Securities within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, as follows:

          (i)  against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, arising out of any untrue statement or alleged
     untrue statement of a material fact contained in the Registration Statement
     (or any amendment thereto), or the omission or alleged omission therefrom
     of a material fact necessary in order to make the statements therein, in
     light of the circumstances under which they were made, not misleading or
     arising out of any untrue statement or alleged untrue statement of a
     material fact included in any preliminary prospectus or the Prospectus (or
     any amendment or supplement thereto), or the omission or alleged omission
     therefrom of a material fact necessary in order to make the statements
     therein, in the light of the circumstances under which they were made, not
     misleading;

          (ii) against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, to the extent of the aggregate amount paid in
     settlement of any litigation, or any investigation or proceeding by any
     governmental agency or body, commenced or threatened, or of any claim
     whatsoever based upon any such untrue statement or omission, or any such
     alleged untrue statement or omission, provided that (subject to Section
     6(d) below) any such settlement is effected with the prior written consent
     of the Company; and

                                       13
<PAGE>

          (iii)  against any and all expense whatsoever, as incurred (including
     the fees and disbursements of counsel), reasonably incurred in
     investigating, preparing or defending against any litigation, or any
     investigation or proceeding by any governmental agency or body, commenced
     or threatened, or any claim whatsoever based upon any such untrue statement
     or omission, or any such alleged untrue statement or omission, to the
     extent that any such expense is not paid under (i) or (ii) above;

provided, however, that this indemnity shall not apply to any loss, liability,
--------  -------
claim, damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by the Initial
Purchasers or such holder of Registrable Securities (which also acknowledges the
indemnity provisions herein) and each person, if any, who controls the Initial
Purchasers or any such holder of Registrable Securities expressly for use in the
Registration Statement (or any amendment thereto), or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).

          (b)    In connection with any Shelf Registration in which a holder,
including, without limitation, the Initial Purchasers, of Registrable Securities
is participating, in furnishing information relating to such holder of
Registrable Securities to the Company in writing expressly for use in such
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto, the holders of such Registrable Securities
agree, severally and not jointly, to indemnify and hold harmless the Initial
Purchasers and each person, if any, who controls the Initial Purchasers within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act and the Company, and each person, if any, who controls the Company
within the meaning of either such Section, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such holder of
Registrable Securities (which also acknowledges the indemnity provisions herein)
and each person, if any, who controls any such holder of Registrable Securities
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).

          Each of the Initial Purchasers agrees to indemnify and hold harmless
the Company, the holders of Registrable Securities, and each person, if any, who
controls the Company or any holder of Registrable Securities within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto), or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by the Initial Purchasers expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).

                                       14
<PAGE>

          (c)    Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
--------  -------
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 hereof
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

          (d)    If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.

          (e)    If the indemnification provided for in this Section 6 is for
any reason unavailable to or insufficient to hold harmless an indemnified party
in respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate to reflect
the relative fault of the indemnifying party or parties on the one hand and of
the indemnified party on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

          The relative fault of the Company on the one hand and the holders of
the Registrable Securities or the Initial Purchasers on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
holder of the Registrable Securities or the Initial Purchasers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

                                       15
<PAGE>

          The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 6(e). The
aggregate amount of losses, liabilities, claims, damages, and expenses incurred
by an indemnified party and referred to above in this Section 6(e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

          Notwithstanding the provisions of this Section 6, neither the holder
of any Registrable Securities nor the Initial Purchasers, shall be required to
indemnify or contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such holder of Registrable
Securities or unwritten by the Initial Purchasers, as the case may be, and
distributed to the public were offered to the public exceeds the amount of any
damages that such holder of Registrable Securities or the Initial Purchasers has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.

          No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

          For purposes of this Section 6(e), each person, if any, who controls
the Initial Purchasers or any holder of Registrable Securities within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Initial Purchasers or such
holder, and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company.

          Section 7.  Information Requirements. (a) The Company covenants that,
          ------------------------------------
if at any time before the end of the Effectiveness Period the Company is not
subject to the reporting requirements of the Exchange Act, it will cooperate
with any Holder of Registrable Securities and take such further reasonable
action as any Holder of Registrable Securities may reasonably request in writing
(including, without limitation, making such reasonable representations as any
such Holder may reasonably request), all to the extent required from time to
time to enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 and Rule 144A under the Securities Act and customarily taken in
connection with sales pursuant to such exemptions. Upon the written request of
any Holder of Registrable Securities, the Company shall deliver to such Holder a
written statement as to whether it has complied with such filing requirements,
unless such a statement has been included in the Company's most recent report
required to be filed and filed pursuant to Section 13 or Section 15(d) of
Exchange Act. Notwithstanding the foregoing, nothing in this Section 7 shall be
deemed to require the Company to register any of its securities (other than the
Common Stock) under any section of the Exchange Act.

          Section 8.  Miscellaneous.
          -------------------------

                                       16
<PAGE>

          (a)  No Conflicting Agreements. The Company is not, as of the date
               -------------------------
hereof, a party to, nor shall it, on or after the date of this Agreement, enter
into, any agreement with respect to its securities that conflicts with the
rights granted to the Holders of Registrable Securities in this Agreement. The
Company represents and warrants that the rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with the rights
granted to the holders of the Company's securities under any other agreements.

          (b)  Amendments and Waivers. The provisions of this Agreement,
               ----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Securities deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such Securities are or would be convertible or
exchangeable as of the date on which such consent is requested). Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; provided, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence. Each Holder of Registrable
Securities outstanding at the time of any such amendment, modification,
supplement, waiver or consent or thereafter shall be bound by any such
amendment, modification, supplement, waiver or consent effected pursuant to this
Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.

          (c)  Notices. All notices and other communications provided for or
               -------
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:

          (w) if to a Holder of Registrable Securities, at the most current
     address given by such Holder to the Company in a Notice and Questionnaire
     or any amendment thereto;

          (x) if to the Company, to:

          Universal Health Services, Inc.
          367 South Gulph Road
          P.O. Box 61558
          King of Prussia, PA 19406-0958
          Attention: General Counsel
          Telecopy No.: (610) 768-3318

                                       17
<PAGE>

          and

          (y) if to the Initial Purchasers, to:

          Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
          Incorporated
          World Financial Center
          North Tower
          250 Vesey Street
          New York, New York 10281
          Attention: Syndicate Department
          Telecopy No.: (212) 738-1069

or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.

          (d)  Approval of Holders. Whenever the consent or approval of Holders
               -------------------
of a specified percentage of Registrable Securities is required hereunder, the
Registrable Securities held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than the Initial Purchasers
or subsequent Holders of Registrable Securities if such subsequent Holders are
deemed to be such affiliates solely by reason of their holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.

          (e)  Successors and Assigns. Any person who purchases any Registrable
               ----------------------
Securities from the Initial Purchasers shall be deemed, for purposes of this
Agreement, to be an assignee of the Initial Purchasers. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties and shall inure to the benefit of and be binding upon each Holder
of any Registrable Securities.

          (f)  Counterparts. This Agreement may be executed in any number of
               ------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.

          (g)  Headings. The headings in this Agreement are for convenience of
               --------
reference only and shall not limit or otherwise affect the meaning hereof.

          (h)  Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
               -------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.

          (i)  Severability. If any term, provision, covenant or restriction of
               ------------
this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction, it being

                                       18
<PAGE>

intended that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.

          (j)  Entire Agreement. This Agreement is intended by the parties as a
               ----------------
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties with respect to such registration rights.

          (k)  Termination. This Agreement and the obligations of the parties
               -----------
hereunder shall terminate upon the expiration of the Effectiveness Period,
except for any liabilities or obligations under Sections 4, 5 or 6 hereof and
the obligations to make payments of and provide for liquidated damages under
Section 2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
its terms.

               [Remainder of this page intentionally left blank]

                                       19
<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

UNIVERSAL HEALTH SERVICES, INC.

By: _________________________________

Name:
Title:

Confirmed and accepted as of the date
first above written:

MERRILL LYNCH & CO.
  MERRILL LYNCH, PIERCE, FENNER & SMITH
              INCORPORATED
J.P. MORGAN SECURITIES INC.
UBS WARBURG LLC
BANC OF AMERICA SECURITIES LLC

By:MERRILL LYNCH & CO.
    MERRILL LYNCH, PIERCE, FENNER & SMITH
                INCORPORATED

By: _________________________________

Name:
Title:

                                       20EXHIBIT 10.1

                                                                  EXECUTION COPY

  THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN RESTRICTIONS CONTAINED
 HEREIN AND TO RESALE RESTRICTIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED

                             STOCK OPTION AGREEMENT

                  STOCK OPTION AGREEMENT, dated as of September 12, 2000 (this
"Agreement"), by and between THE CHASE MANHATTAN CORPORATION, a Delaware
corporation ("Issuer"), and J.P. MORGAN & CO. INCORPORATED, a Delaware
corporation ("Grantee").

                  WHEREAS, Grantee and Issuer are concurrently herewith entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), pursuant to which Grantee will be merged with and into Issuer, with
Issuer being the surviving corporation (the "Merger"); and

                  WHEREAS, as a condition and inducement to Grantee's execution
of the Merger Agreement and the Morgan Stock Option Agreement (as defined in the
Merger Agreement), Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined in Section 2).

                  NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, and intending to be legally bound hereby,
Issuer and Grantee agree as follows:

                  1. Defined Terms. Capitalized terms which are used but not
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.

                  2. Grant of Option. Subject to the terms and conditions set
forth herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 260,464,725 shares (as adjusted as set forth herein,
the "Option Shares") of common stock, par value $1.00 per share, of Issuer (the
"Issuer Common Stock") at a purchase price per Option Share (as adjusted as set
forth herein, the "Purchase Price") of $56.25; provided, that in no event shall
the number of Option Shares for which this Option is exercisable exceed 19.9% of
the issued and outstanding shares of Issuer Common Stock on the date hereof.
Issuer shall make proper provision so that each Option Share issued upon
exercise of the Option shall be accompanied by the applicable number of rights
or other benefits as may be provided in any Issuer rights agreement or similar
agreement that may be adopted after the date hereof.

                  3. Exercise of Option.

                           (a) Grantee may exercise the Option, in whole or in
part, at any time and from time to time following the occurrence of a Purchase
Event (as defined in Section 3(b)); provided, that the Option shall terminate
and be of no further force or effect upon the earliest to
<PAGE>
occur of (A) the Effective Time, (B) termination of the Merger Agreement in
accordance with the terms thereof so long as, in the case of this clause (B), a
Purchase Event has not occurred and could not occur in the future, (C) the date
that Grantee's Total Profit equals $1.25 billion, and (D) the date which is 90
days after the occurrence of a Purchase Event; and provided, further, that any
purchase of shares upon exercise of the Option shall be subject to compliance
with applicable law; and provided, further, that Grantee shall have sent the
written notice of such exercise (as provided in Section 3(d)) within 90 days
following such Purchase Event. Notwithstanding the termination of the Option,
Grantee shall be entitled to purchase those Option Shares with respect to which
it has exercised the Option in accordance herewith prior to the termination of
the Option. The termination of the Option shall not affect any rights hereunder
which by their terms extend beyond the date of such termination.

                           (b) As used herein, a "Purchase Event" means any of
the following events:

                                    (i) prior to the termination of the Merger
Agreement, without Grantee's prior written consent, Issuer or any of its
Subsidiaries shall have entered into one or more agreements with any person
(other than Grantee or any Subsidiary of Grantee) to effect, or effected, in a
single transaction or a series of related transactions, any Acquisition
Proposal;

                                    (ii) prior to the termination of the Merger
Agreement, any person (other than Grantee or any Subsidiary of Grantee) shall
have acquired beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) of or the right to acquire beneficial
ownership of, or any group (as such term is defined in Section 13(d)(3) of the
Exchange Act), other than a group of which Grantee or any Subsidiary of Grantee
is a member, shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, shares of Issuer Common Stock or other voting
securities representing 20% or more of the voting power of Issuer or any of its
Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC);
or

                                    (iii) the occurrence of an event the result
of which is that the aggregate fee or fees required to be paid by Issuer
pursuant to Section 7.2(b) of the Merger Agreement equals $1.25 billion.

                  As used in this Agreement, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.

                           (c) Issuer shall notify Grantee promptly in writing
of the occurrence of any Purchase Event, it being understood that the giving of
such notice by Issuer shall not be a condition to the right of Grantee to
exercise the Option.

                           (d) In the event Grantee wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which is herein
referred to as the "Notice Date") specifying (i) the total number of Option
Shares it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 60 business days from
the Notice Date for the closing (the "Closing") of such purchase (the "Closing
Date"); provided, that if the Closing cannot be consummated by reason of any
applicable law, rule, regulation or order or the

                                       2
<PAGE>
need to obtain any necessary approvals or consents of applicable Governmental
Entities, the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which such restriction on consummation has
expired or been terminated; and provided, further, without limiting the
foregoing, that if prior notification or application to, approval of or
authorization by any Governmental Entity is required in connection with such
purchase, Issuer shall use its reasonable best efforts to cooperate with Grantee
in the prompt filing of the required notice or application for approval or
authorization, and the Closing shall occur immediately following the date on
which such approvals have been obtained and any required notification or waiting
periods have expired.

                           (e) Notwithstanding Section 3(d), in no event shall
any Closing Date be more than six months after the related Notice Date, and if
the Closing Date shall not have occurred within six months after the related
Notice Date due to the failure to obtain any such required approval or consent,
the exercise of the Option effected on the Notice Date shall be deemed to have
expired. In the event (i) Grantee receives official notice that an approval or
consent of any Governmental Entity required for the purchase of Option Shares
will not be issued or granted or (ii) a Closing Date shall not have occurred
within six months after the related Notice Date due to the failure to obtain any
such required approval or consent, Grantee shall be entitled to exercise the
Option (whether or not the Option would have otherwise terminated) in connection
with the resale of Issuer Common Stock or other securities pursuant to a
registration statement as provided in Section 10. The provisions of this Section
3 and Section 4 shall apply with appropriate adjustments to any such exercise.

                  4. Payment and Delivery of Certificates.

                           (a) On each Closing Date, Grantee shall (i) pay to
Issuer, in immediately available funds by wire transfer to a bank account
designated by Issuer (provided that the failure or refusal of Issuer to
designate a bank account shall not preclude Grantee from exercising the Option),
an amount equal to the Purchase Price multiplied by the number of Option Shares
to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to Issuer at the address of Issuer specified in Section 14(f).

                           (b) At each Closing, simultaneously with the delivery
of immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Grantee (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be fully paid, validly issued and non-assessable, free
and clear of all liens, claims, charges, security interests or other
encumbrances ("Liens") other than those created by the express terms of this
Agreement, and subject to no preemptive or other similar rights, and (B) if the
Option is exercised in part only, an executed new agreement with the same terms
as this Agreement evidencing the right to purchase the balance of the shares of
Issuer Common Stock purchasable hereunder, and (ii) Grantee shall deliver to
Issuer a letter agreeing that Grantee shall not offer to sell or otherwise
dispose of such Option Shares in violation of applicable federal and state
securities laws or of the provisions of this Agreement.

                           (c) In addition to any other legend that is required
by applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:

                                       3
<PAGE>
         THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
         RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if such Option Shares have been
registered pursuant to the Securities Act, such Option Shares have been sold in
reliance on and in accordance with Rule 144 under the Securities Act or Grantee
shall have delivered to Issuer a copy of a letter from the staff of the SEC, or
an opinion of counsel in form and substance reasonably satisfactory to Issuer
and its counsel, to the effect that such legend is not required for purposes of
the Securities Act.

                           (d) Upon the giving by Grantee to Issuer of the
written notice of exercise of the Option provided for under Section 3(d), the
tender of the applicable Purchase Price in immediately available funds and the
tender of this Agreement to Issuer, Grantee shall be deemed to be the holder of
record of the shares of Issuer Common Stock issuable upon such exercise,
regardless of whether the stock transfer books of Issuer are then closed or
certificates representing such shares of Issuer Common Stock are then actually
delivered to Grantee. Issuer shall pay all expenses, and any and all federal,
foreign, state, and local taxes and other charges, that may be payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section 4(d) in the name of Grantee or its assignee, transferee, or
designee.

                           (e) Issuer agrees (i) that it shall at all times
maintain, free from Liens and preemptive or similar rights, sufficient
authorized but unissued or treasury shares of Issuer Common Stock so that the
Option may be exercised without additional authorization of Issuer Common Stock
after giving effect to all other options, warrants, convertible securities and
other rights to purchase Issuer Common Stock then outstanding, (ii) that it will
not, by charter amendment or through reorganization, recapitalization,
consolidation, merger, dissolution, liquidation, spin-off, sale of assets or
similar transaction, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, agreements, stipulations or
conditions to be observed or performed hereunder by Issuer and (iii) that it
will promptly take all action as may from time to time be required (including
(A) complying with all premerger notification, reporting and waiting period
requirements and (B) in the event prior approval or authorization of or notice
or application to any Governmental Entity is necessary before the Option may be
exercised, cooperating fully with Grantee in preparing such applications or
notices and providing such information to such Governmental Entities as may be
required) in order to permit Grantee to exercise the Option and Issuer to duly
and effectively issue shares of Issuer Common Stock pursuant hereto on a timely
basis.

                  5. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:

                           (a) Corporate Authority. Issuer has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this Agreement
and, subject to receiving any necessary approvals or consents from Governmental
Entities, the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Issuer, and no other
corporate proceedings on the part of Issuer are necessary to authorize this
Agreement or to

                                       4
<PAGE>
consummate the transactions so contemplated; this Agreement has been duly and
validly executed and delivered by Issuer and (assuming due authorization,
execution and delivery by Grantee) constitutes a valid and binding obligation of
Issuer, enforceable against Issuer in accordance with its terms, except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium or other similar laws, now or hereinafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

                           (b) Shares Reserved for Issuance; Capital Stock.
Issuer has taken all necessary corporate action to authorize and reserve and
permit it to issue, and at all times from the date hereof through the
termination of this Agreement in accordance with its terms, will have reserved
for issuance, upon the exercise of the Option, that number of shares of Issuer
Common Stock equal to the maximum number of shares of Issuer Common Stock and
other shares and securities which are at any time and from time to time
purchasable upon exercise of the Option, and all such shares and other
securities, upon issuance pursuant to the Option, will be duly authorized,
validly issued, fully paid and non-assessable, and will be delivered free and
clear of all Liens (other than those created by the express terms of this
Agreement) and not subject to any preemptive or other similar rights.

                           (c) No Violations. The execution, delivery and
performance of this Agreement does not and will not, and the consummation by
Issuer of any of the transactions contemplated hereby will not, constitute or
result in (A) a breach or violation of, or a default under, its certificate of
incorporation or by-laws, or the comparable governing instruments of any of its
Subsidiaries, or (B) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its Subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, regulation or order
or governmental or non-governmental permit or license to which it or any of its
Subsidiaries is subject, that would in any case give any other person the
ability to prevent or enjoin Issuer's performance under this Agreement in any
material respect.

                           (d) Board Action. The Board of Directors of Issuer
has approved this Agreement and the consummation of the transactions
contemplated hereby as required under Section 203 of the DGCL and, to its
knowledge, any other applicable state takeover laws so that any such state
takeover laws do not and will not apply to this Agreement or any of the
transactions contemplated hereby (including the purchase of shares of Issuer
Common Stock pursuant to the Option).

                           (e) No Restrictions. No Delaware law applicable
generally to corporations or, to Issuer's knowledge, other takeover statute
applicable generally to corporations or similar corporate law and no provision
of the certificate of incorporation or by-laws of Issuer or any agreement to
which Issuer is a party (i) would or would purport to impose restrictions which
might adversely affect or delay the consummation of the transactions
contemplated by this Agreement, or (ii) as a result of the consummation of the
transactions contemplated by this Agreement, (A) would or would purport to
restrict or impair the ability of Grantee to vote or otherwise exercise the
rights of a shareholder with respect to securities of

                                       5
<PAGE>
Issuer or any of its Subsidiaries that may be acquired or controlled by Grantee
or (B) would or would purport to entitle any person to acquire securities of
Issuer.

                  6. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer as follows:

                           (a) Corporate Authority. Grantee has full corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement; the execution and delivery of this
Agreement and, subject to obtaining any necessary approvals or consents from
Governmental Entities, the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Grantee; and this Agreement has been duly executed and delivered by Grantee and
(assuming due authorization, execution and delivery by Issuer) constitutes a
valid and binding obligation of Grantee, enforceable against Grantee in
accordance with its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, fraudulent conveyance, moratorium or other
similar laws, now or hereinafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.

                           (b) Purchase Not for Distribution. Any Option Shares
or other securities acquired by Grantee upon exercise of the Option will not be
acquired with a view to the public distribution thereof in violation of any
federal or state securities laws and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the Securities Act and any applicable state securities laws.

                  7. Adjustment upon Changes in Issuer Capitalization, Etc.

                           (a) In the event of any change from time to time in
Issuer Common Stock or any other shares or securities subject to the Option by
reason of a stock dividend, subdivision, spinoff, stock split, split-up, merger,
consolidation, recapitalization, combination, exchange of shares, or dividend or
distribution, other than regular cash dividends, on or in respect of the Issuer
Common Stock, the type and number of shares or securities subject to the Option,
and the Purchase Price therefor, shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction, so that
Grantee shall receive, upon exercise of the Option, the number and class of
shares or other securities or property that Grantee would have received in
respect of Issuer Common Stock if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable. If any
additional shares of Issuer Common Stock are issued or otherwise become
outstanding after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a) or upon exercise of the
Option), the number of shares of Issuer Common Stock subject to the Option shall
be increased so that, after such issuance, it, together with any shares of
Issuer Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Issuer Common Stock then issued and outstanding, without
giving effect to any shares subject to or issued pursuant to the Option. No
provision of this Section 7 shall be deemed to affect or change, or constitute
authorization for any violation of, any of the covenants, agreements,
representations or warranties in the Merger Agreement.

                                       6
<PAGE>
                           (b) Without limiting the parties' relative rights,
remedies, liabilities and obligations under the Merger Agreement or this
Agreement, in the event that, prior to the termination of the Option, Issuer
shall enter into an agreement (other than the Merger Agreement) (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for another
class or series of stock or other securities of Issuer or any other person or
cash or any other property or the outstanding shares of Issuer Common Stock
immediately prior to such merger shall, after such merger, represent less than
50% of the outstanding shares and share equivalents having general voting power
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets (or those of its Subsidiaries taken as a whole)
in one transaction or a series of related transactions, to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Grantee, of either (x) the
Acquiring Corporation (as hereinafter defined), (y) any person that controls the
Acquiring Corporation, or (z) in the case of a merger described in clause (ii),
Issuer (such person being referred to as the "Substitute Option Issuer").

                           (c) The Substitute Option shall have the same terms
as the Option; provided, that the exercise price therefor and number of shares
subject thereto shall be as set forth in this Section 7 and the repurchase
rights relating thereto shall be as set forth in Section 9; provided, further,
that if a Purchase Event shall have occurred prior to or in connection with the
issuance of such Substitute Option, the Substitute Option shall be exercisable
immediately upon issuance without the occurrence of a further Purchase Event;
and provided, further, that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee. Substitute Option Issuer
shall also enter into an agreement with Grantee in substantially the same form
as this Agreement, which shall be applicable to the Substitute Option.

                           (d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock (as hereinafter defined) as is
equal to the Market/Offer Price (as hereinafter defined) multiplied by the
number of shares of Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as hereinafter defined). The exercise
price of the Substitute Option per share of Substitute Common Stock (the
"Substitute Option Price") shall then be equal to the Purchase Price multiplied
by a fraction in which the numerator is the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares of Substitute Common Stock for which the Substitute Option
is exercisable.

                           (e) The following terms have the meanings indicated:

                                    (i) "Acquiring Corporation" shall mean (x)
the continuing or surviving corporation of a consolidation or merger with Issuer
(if other than Issuer), or at

                                       7
<PAGE>
Grantee's election, any person that controls such surviving corporation, (y)
Issuer in a merger in which Issuer is the continuing or surviving person, or (z)
the transferee of all or substantially all of Issuer's assets (or of the assets
of its Subsidiaries taken as a whole).

                                    (ii) "Market/Offer Price" shall mean the
highest of (v) the highest price per share of Issuer Common Stock at which a
Tender Offer or an Exchange Offer therefor has been made, (w) the highest price
per share of Issuer Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (x) the price per share of Issuer Common Stock received
by holders of Issuer Common Stock in connection with any merger or other
business combination transaction described in Section 7(b)(i), 7(b)(ii) or
7(b)(iii), (y) the highest closing price for shares of Issuer Common Stock
within the 12-month period immediately preceding the date on which the merger,
consolidation, asset sale or other transaction in question is consummated, and
(z) in the event of a sale of all or substantially all of Issuer's assets (or
those of its Subsidiaries taken as a whole) an amount equal to (I) the sum of
the price paid in such sale for such assets and the current market value of the
remaining assets of Issuer, as determined by a nationally-recognized independent
investment banking firm selected by Grantee, divided by (II) the number of
shares of Issuer Common Stock outstanding at such time. In calculating the
Market/Offer Price, in the event that a Tender Offer or an Exchange Offer is
made for Issuer Common Stock or an agreement is entered into involving
consideration other than cash, the value of the securities or other property
issuable or deliverable in exchange for Issuer Common Stock shall be determined
by a nationally-recognized independent investment banking firm selected by
Grantee.

                                    (iii) "Average Price" shall mean the average
closing sales price per share of a share of Substitute Common Stock quoted on
the NYSE (or if Substitute Common Stock is not quoted on the NYSE, the average
closing sales price per share as quoted on the Nasdaq National Market System or,
if the shares of Substitute Common Stock are not quoted thereon, the highest bid
price per share as quoted on the principal trading market on which such shares
are traded as reported by a recognized source) for the 12-month period
immediately preceding the date of consummation of the consolidation, merger or
sale in question; provided, that if Issuer is the issuer of the Substitute
Option, the Average Price shall be computed with respect to a share of common
stock issued by Issuer, by the person merging into Issuer or by any company
which controls such person, as Grantee may elect.

                                    (iv) "Substitute Common Stock" shall mean
the shares of capital stock (or similar equity interest) with the greatest
voting power in respect of the election of directors (or persons similarly
responsible for the direction of the business and affairs) of the Substitute
Option Issuer.

                           (f) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than 19.9% of
the shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the shares of Substitute Common Stock but for the
limitation in the first sentence of this Section 7(f), Substitute Option Issuer
shall make a cash payment to Grantee equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in the first sentence
of this Section 7(f) over (ii) the value of the Substitute Option after giving
effect to the limitation in the first sentence of this Section 7(f). This

                                       8
<PAGE>
difference in value shall be determined by a nationally-recognized independent
investment banking firm selected by Grantee.

                           (g) Issuer shall not enter into any transaction
described in Section 7(b) unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the holders of the other
shares of common stock issued by Substitute Option Issuer are not entitled to
exercise any rights by reason of the issuance or exercise of the Substitute
Option and the shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than any diminution in
value resulting from the fact that the shares of Substitute Common Stock are
restricted securities, as defined in Rule 144 under the Securities Act or any
successor provision) than other shares of common stock issued by Substitute
Option Issuer).

                  8. Repurchase at the Option of Grantee.

                           (a) At the request of Grantee at any time commencing
upon the first occurrence of a Repurchase Event (as defined in Section 8(c)) and
prior to the termination of the Option pursuant to Section 3(a), Issuer (or any
successor) shall repurchase from Grantee (x) the Option and (y) all shares of
Issuer Common Stock purchased by Grantee pursuant hereto with respect to which
Grantee then has beneficial ownership. The date on which Grantee exercises its
rights under this Section 8 is referred to as the "Request Date". Such
repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:

                                    (i) the aggregate Purchase Price paid by
Grantee for any shares of Issuer Common Stock acquired pursuant to the Option
with respect to which Grantee then has beneficial ownership;

                                    (ii) the excess, if any, of (x) the
Market/Offer Price for each share of Issuer Common Stock over (y) the Purchase
Price (as adjusted pursuant to Section 7), multiplied by the number of shares of
Issuer Common Stock with respect to which the Option has not been exercised; and

                                    (iii) the excess, if any, of the
Market/Offer Price over the Purchase Price paid (or, in the case of Option
Shares with respect to which the option has been exercised but the Closing Date
has not occurred, payable, as adjusted pursuant to Section 7) by Grantee for
each share of Issuer Common Stock with respect to which the Option has been
exercised and with respect to which Grantee then has beneficial ownership,
multiplied by the number of such shares.

                           (b) If Grantee exercises its rights under this
Section 8, Issuer shall, within 5 business days after the Request Date, pay the
Section 8 Repurchase Consideration to Grantee in immediately available funds,
and contemporaneously with such payment, Grantee shall surrender to Issuer the
Option and the certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the

                                       9
<PAGE>
same are then free and clear of all Liens. Notwithstanding the foregoing, to the
extent that prior notification to or approval of any Governmental Entity is
required in connection with the payment of all or any portion of the Section 8
Repurchase Consideration, Grantee shall have the ongoing option to revoke its
request for repurchase pursuant to Section 8, in whole or in part, or to require
that Issuer deliver from time to time that portion of the Section 8 Repurchase
Consideration that it is not then so prohibited from paying and promptly file
the required notice or application for approval and expeditiously process the
same (and each party shall cooperate with the other in the filing of any such
notice or application and the obtaining of any such approval) and the period of
time that would otherwise run pursuant to the preceding sentence for the payment
of the portion of the Section 8 Repurchase Consideration shall run instead from
the date on which, as the case may be, (i) any required notification period has
expired or been terminated or (ii) such approval has been obtained and, in
either event, any requisite waiting period shall have passed. If any
Governmental Entity disapproves of any part of Issuer's proposed repurchase
pursuant to this Section 8, Issuer shall promptly give notice of such fact to
Grantee. If any Governmental Entity prohibits the repurchase (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required approvals
from Governmental Entities to accomplish such repurchase) in part but not in
whole, then Grantee shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such Governmental Entity, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent to
each, and Grantee shall thereupon have the right to exercise the Option as to
the number of Option Shares for which the Option was exercisable at the Request
Date less the sum of the number of shares covered by the Option in respect of
which payment has been made pursuant to Section 8(a)(ii) and the number of
shares covered by the portion of the Option (if any) that has been repurchased;
whereupon, in the case of clause (ii), Issuer shall promptly (x) deliver to
Grantee that portion of the Section 8 Repurchase Consideration that Issuer is
not prohibited from delivering and (y) deliver to Grantee, as appropriate,
either (A) a new Stock Option Agreement evidencing the right of Grantee to
purchase that number of shares of Issuer Common Stock obtained by multiplying
the number of shares of Issuer Common Stock for which the surrendered Stock
Option Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Section 8 Repurchase
Consideration less the portion thereof theretofore delivered to Grantee and the
denominator of which is the Section 8 Repurchase Consideration, or (B) a
certificate for the Option Shares it is then so prohibited from repurchasing;
provided, that if the Option shall have terminated prior to the date of such
notice or shall be scheduled to terminate at any time before the expiration of a
period ending on the thirtieth business day after such date, Grantee shall
nonetheless have the right so to exercise the Option or exercise its rights
under this Section 8 until the expiration of such period of 30 business days.
Grantee shall notify Issuer of its determination under the preceding sentence
within 10 business days of receipt of notice of disapproval of the repurchase.

                           (c) As used herein, a "Repurchase Event" shall occur
if (A) (i) any person (other than Grantee or any Subsidiary of Grantee) shall
have acquired beneficial ownership of (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), or the right to acquire beneficial
ownership of, or any group shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 50% or more of the then
outstanding shares of Issuer Common Stock or (ii) any of the transactions
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) has been consummated and (B)
a Purchase Event shall have occurred prior to the termination of the Option.

                                       10
<PAGE>
                  9. Repurchase of Substitute Option.

                           (a) At the request of Grantee at any time, Substitute
Option Issuer (or any successor) shall repurchase from Grantee (x) the
Substitute Option and (y) all shares of Substitute Common Stock purchased by
Grantee pursuant hereto with respect to which Grantee then has beneficial
ownership. The date on which Grantee exercises its rights under this Section 9
is referred to as the "Section 9 Request Date". Such repurchase shall be at an
aggregate price (the "Section 9 Repurchase Consideration") equal to the sum of:

                                    (i) the aggregate purchase price paid by
Grantee for any shares of Substitute Common Stock acquired pursuant to the
Option or Substitute Option with respect to which Grantee then has beneficial
ownership;

                                    (ii) the excess, if any, of (x) the
Substitute Applicable Price (as hereinafter defined) for each share of
Substitute Common Stock over (y) the Substitute Option Price (as adjusted
pursuant to Section 7) multiplied by the number of shares of Substitute Common
Stock with respect to which the Substitute Option has not been exercised; and

                                    (iii) the excess, if any, of the Substitute
Applicable Price over the purchase price paid (or in the case of shares with
respect to which the Option or Substitute Option has been exercised but the
Closing Date has not occurred, payable) by Grantee for each share of Substitute
Common Stock with respect to which the Option or Substitute Option has been
exercised and with respect to which Grantee then has beneficial ownership,
multiplied by the number of such shares.

                           (b) If Grantee exercises its rights under this
Section 9, Substitute Option Issuer shall, within 5 business days after the
Section 9 Request Date, pay the Section 9 Repurchase Consideration to Grantee in
immediately available funds, and contemporaneously with such payment, Grantee
shall surrender to Substitute Option Issuer the Substitute Option and the
certificates evidencing the shares of Substitute Common Stock purchased
thereunder with respect to which Grantee then has beneficial ownership, and
Grantee shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens. Notwithstanding
the foregoing, to the extent that prior notification to or approval of any
Governmental Entity is required in connection with the payment of all or any
portion of the Section 9 Repurchase Consideration, Grantee shall have the
ongoing option to revoke its request for repurchase pursuant to Section 9, in
whole or in part, or to require that Substitute Option Issuer deliver from time
to time that portion of the Section 9 Repurchase Consideration that it is not
then so prohibited from paying and promptly file the required notice or
application for approval and expeditiously process the same (and each party
shall cooperate with the other in the filing of any such notice or application
and the obtaining of any such approval) and the period of time that would
otherwise run pursuant to the preceding sentence for the payment of the portion
of the Section 9 Repurchase Consideration shall run instead from the date on
which, as the case may be, (i) any required notification period has expired or
been terminated or (ii) such approval has been obtained and, in either event,
any requisite waiting period shall have passed. If any Governmental Entity
disapproves of any part of Substitute Option Issuer's proposed repurchase
pursuant to this Section 9, Substitute Option Issuer shall promptly give notice
of such fact to Grantee. If any Governmental Entity prohibits the repurchase
(and Substitute Option Issuer

                                       11
<PAGE>
hereby undertakes to use its reasonable best efforts to obtain all required
approvals from Governmental Entities to accomplish such repurchase) in part but
not in whole, then Grantee shall have the right (i) to revoke the repurchase
request or (ii) to the extent permitted by such Governmental Entity, determine
whether the repurchase should apply to the Substitute Option and/or Option
Shares and to what extent to each, and Grantee shall thereupon have the right to
exercise the Substitute Option as to the number of Option Shares for which the
Substitute Option was exercisable at the Section 9 Request Date less the sum of
the number of shares covered by the Substitute Option in respect of which
payment has been made pursuant to Section 9(a)(ii) and the number of shares
covered by the portion of the Substitute Option (if any) that has been
repurchased; whereupon, in the case of clause (ii), Substitute Option Issuer
shall promptly (x) deliver to Grantee that portion of the Section 9 Repurchase
Consideration that Substitute Option Issuer is not prohibited from delivering
and (y) deliver to Grantee, as appropriate, either (A) a new Stock Option
Agreement evidencing the right of Grantee to purchase that number of shares of
Substitute Common Stock obtained by multiplying the number of shares of
Substitute Common Stock for which the surrendered Stock Option Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Section 9 Repurchase Consideration less the
portion thereof theretofore delivered to Grantee and the denominator of which is
the Section 9 Repurchase Consideration or (B) a certificate for the Option
Shares it is then so prohibited from repurchasing; provided, that if the
Substitute Option shall have terminated prior to the date of such notice or
shall be scheduled to terminate at any time before the expiration of a period
ending on the thirtieth business day after such date, Grantee shall nonetheless
have the right so to exercise the Substitute Option or exercise its rights under
Section 9 until the expiration of such period of 30 business days. Grantee shall
notify Substitute Option Issuer of its determination under the preceding
sentence within ten (10) business days of receipt of notice of disapproval of
the repurchase.

                           (c) For purposes of this Agreement, the "Substitute
Applicable Price" means the highest closing sales price per share of Substitute
Common Stock during the six months preceding the Section 9 Request Date.

                           (d) Following the conversion of the Option into a
Substitute Option, all references to "Issuer", "Issuer Common Stock" and
"Section 8" contained herein shall also be deemed to be references to
"Substitute Option Issuer", "Substitute Common Stock" and "Section 9",
respectively.

                  10. Registration Rights.

                           (a) Demand Registration Rights. Issuer shall, subject
to the conditions of Section 10(c) below, if requested by any Grantee following
a Purchase Event that occurs prior to the termination of the Option, including
Grantee and any permitted transferee ("Selling Stockholder"), as expeditiously
as possible prepare, file and keep current a registration statement under the
Securities Act if such registration is necessary in order to permit the sale or
other disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to the Selling Stockholder
upon exercise of the Option in accordance with the intended method of sale or
other disposition stated by the Selling Stockholder in such request, including,
without limitation, a "shelf" registration statement under Rule 415 under the

                                       12
<PAGE>
Securities Act or any successor provision, and Issuer shall use its best efforts
to qualify such shares or other securities for sale under any applicable state
securities laws.

                           (b) Additional Registration Rights. If Issuer at any
time after the exercise of the Option proposes to register any shares of Issuer
Common Stock under the Securities Act in connection with an underwritten public
offering of such Issuer Common Stock, Issuer will promptly give written notice
to Grantee of its intention to do so and, upon the written request of any
Selling Stockholder given within 30 days after receipt of any such notice (which
request shall specify the number of shares of Issuer Common Stock intended to be
included in such underwritten public offering by the Selling Stockholder),
Issuer will cause all such shares for which a Selling Stockholder requests
participation in such registration to be so registered and included in such
underwritten public offering; provided, however, that Issuer may elect to not
cause any such shares to be so registered (i) if in the reasonable good faith
opinion of the underwriters for such offering, the inclusion of all such shares
by the Selling Stockholder would materially interfere with the marketing of such
offering (in which case Issuer shall register as many shares as possible without
materially interfering with the marketing of the offering), or (ii) in the case
of a registration solely to implement an employee benefit plan or a registration
filed on Form S-4 of the Securities Act or any successor Form. If some but not
all the shares of Issuer Common Stock with respect to which Issuer shall have
received requests for registration pursuant to this Section 10(b) shall be
excluded from such registration, Issuer shall make appropriate allocation of
shares to be registered among the Selling Stockholders desiring to register
their shares pro rata in the proportion that the number of shares requested to
be registered by each such Selling Stockholder bears to the total number of
shares requested to be registered by all such Selling Stockholders then desiring
to have Issuer Common Stock registered for sale.

                           (c) Conditions to Required Registration. Issuer shall
use its reasonable best efforts to cause each registration statement referred to
in Section 10(a) above to become effective and to obtain all consents or waivers
of other parties which are required therefor and to keep such registration
statement effective as may be reasonably necessary to effect such sale or other
disposition; provided, however, that Issuer may delay any registration of Option
Shares required pursuant to Section 10(a) above for a period not exceeding 90
days provided Issuer shall in good faith determine that any such registration
would adversely affect an offering or contemplated offering of other securities
by Issuer or would require disclosure of nonpublic information that would
materially and adversely affect Issuer, and Issuer shall not be required to
register Option Shares under the Securities Act pursuant to Section 10(a) above:

                                    (i) prior to the earlier of (a) termination
of the Merger Agreement pursuant to Article VII thereof and (b) a Purchase
Event;

                                    (ii) on more than three occasions;

                                    (iii) within 90 days after the effective
date of a registration referred to in Section 10(b) above pursuant to which the
Selling Stockholder or Selling Stockholders concerned were afforded the
opportunity to register all such shares under the Securities Act and shares were
registered to the extent requested; and

                                       13
<PAGE>
                                    (iv) unless a request therefor is made to
register at least 25% or more of the aggregate number of Option Shares
(including shares of Issuer Common Stock and other securities issuable upon
exercise of the Option) then outstanding.

                  In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration
of three months from the effective date of such registration statement. Issuer
shall use its reasonable best efforts to make any filings, and take all steps,
under all applicable state securities laws to the extent necessary to permit the
sale or other disposition of the Option Shares so registered in accordance with
the intended method of distribution for such shares; provided, however, that
Issuer shall not be required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business. If requested by any such Grantee
in connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in secondary offering
underwriting agreements. Upon receiving any request under this Section 10 from
any Grantee, Issuer agrees to send a copy thereof to any other person known to
Issuer to be entitled to registration rights under this Section 10, in each case
by promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies.

                  Notwithstanding anything else in this Section 10, in lieu of
complying with its obligations pursuant to a request made by any Grantee under
this Section 10, Issuer may, at its election, repurchase the Option Shares
requested to be registered by such Grantee at a purchase price per share equal
to the average closing price of such Option Shares during the ten business days
preceding the date on which Issuer gives notice to Grantee of its intention to
repurchase such Option Shares (which notice shall be given no later than fifteen
days after Grantee has given notice to Issuer of its election to exercise its
registration rights under Section 10(a) or 10(b)).

                           (d) Expenses. Except where applicable state law
prohibits such payments and except for underwriting discounts or commissions and
brokers' fees, Issuer will pay all expenses (including, without limitation,
registration fees, qualification fees, blue sky fees and expenses (including the
fees and expenses of counsel), legal fees and expenses, including the reasonable
fees and expenses of one counsel to the holders whose Option Shares are being
registered, printing expenses and the costs of special audits or "cold comfort"
letters, expenses of underwriters, excluding discounts and commissions but
including liability insurance if Issuer so desires or the underwriters so
require, and the reasonable fees and expenses of any necessary special experts)
in connection with each registration pursuant to Section 10(a) or 10(b) above
(including the related offerings and sales by holders of Option Shares) and all
other qualifications, notifications or exemptions pursuant to Section 10(a) or
10(b) above.

                           (e) Indemnification. In connection with any
registration under Section 10(a) or 10(b) above, Issuer hereby indemnifies the
Selling Stockholders, and each underwriter thereof, including each person, if
any, who controls such Selling Stockholders or underwriter within the meaning of
Section 15 of the Securities Act, and including each director, officer,
stockholder, partner, member, employee, representative and agent of any thereof,
against all expenses, losses, claims, damages and liabilities caused by any
untrue, or alleged untrue,

                                       14
<PAGE>
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by 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, except
insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each person, if any, who controls Issuer within the meaning of
Section 15 of the Securities Act, and each director, officer, stockholder,
partner, member, employee, representative and agent of Issuer shall be
indemnified by such Selling Stockholders, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by Issuer in any
such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such Selling
Stockholders or such underwriter, as the case may be, expressly for such use.

                  Promptly upon receipt by a party indemnified under this
Section 10(e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this Section 10(e), such indemnified party
shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
Section 10(e) unless the failure so to notify the indemnified party results in
substantial prejudice thereto. In case notice of commencement of any such action
shall be given to the indemnifying party as above provided, the indemnifying
party shall be entitled to participate in and, to the extent it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(i) the indemnifying party agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party that
may be contrary to the interest of the indemnified party, in which case the
indemnifying party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement entered into without its
consent, which consent may not be unreasonably withheld.

                  If the indemnification provided for in this Section 10(e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, the Selling

                                       15
<PAGE>
Stockholders and the underwriters from the offering of the securities and also
the relative fault of Issuer, the Selling Stockholders and the underwriters in
connection with the statements or omissions which resulted in such expenses,
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the
expenses, losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim;
provided, however, that in no case shall any Selling Stockholder be responsible,
in the aggregate, for any amount in excess of the net offering proceeds
attributable to its Option Shares included in the offering. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Any obligation by any Selling
Stockholder to indemnify shall be several and not joint with other Selling
Stockholders.

                  In connection with any registration pursuant to Section 10(a)
or 10(b) above, Issuer and each Selling Stockholder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
Section 10(e).

                           (f) Miscellaneous Reporting. Issuer shall comply with
all reporting requirements and will do all such other things as may be necessary
to permit the expeditious sale at any time of any Option Shares by the Selling
Stockholders thereof in accordance with and to the extent permitted by any rule
or regulation promulgated by the SEC from time to time, including, without
limitation, Rule 144. Issuer shall at its expense provide the Selling
Stockholders with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by them under the
Securities Act or the Exchange Act, or required pursuant to any state securities
laws or the rules of the NASD or any stock exchange.

                           (g) Issue Taxes. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares and in connection
with the exercise of the Option, and will save the Selling Stockholders
harmless, without limitation as to time, against any and all liabilities with
respect to all such taxes.

                  11. Quotation or Listing. If Issuer Common Stock or any other
securities to be acquired in connection with the exercise of the Option are then
authorized for quotation or trading or listing on the NYSE, the Nasdaq National
Market System or any other securities exchange or securities quotation system,
Issuer, upon the request of Grantee, will promptly file an application, if
required, to authorize for quotation or trading or listing the shares of Issuer
Common Stock or any other securities to be acquired upon exercise of the Option
on such securities exchange or securities quotation system and will use its
reasonable best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.

                  12. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any other Stock Option Agreement and related Options for

                                       16
<PAGE>
which this Agreement (and the Option granted hereby) may be exchanged. Upon
receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification to protect Issuer from
any loss which it may suffer if this Agreement is replaced, and upon surrender
and cancellation of this Agreement, if mutilated, Issuer will execute and
deliver a new Agreement of like tenor and date.

                  13. Limitation of Grantee Profit. (a) Notwithstanding any
other provision herein or in the Merger Agreement, in no event shall Grantee's
Total Profit (as defined below) exceed $1.25 billion (the "Maximum Profit"),
and, if it otherwise would exceed such amount, Grantee, at its sole discretion,
shall either (i) reduce the number of shares subject to the Option (and any
Substitute Option), (ii) deliver to Issuer, or the Substitute Issuer, as the
case may be, for cancellation shares of Issuer Common Stock or Substitute Common
Stock, as the case may be (or other securities into which such Option Shares are
converted or exchanged), (iii) pay cash to Issuer, or the Substitute Issuer, as
the case may be, (iv) reduce the amount of the Section 8 Repurchase
Consideration or Section 9 Repurchase Consideration or (v) any combination of
the foregoing, so that Grantee's actually realized Total Profit shall not exceed
the Maximum Profit after taking into account the foregoing actions.
Notwithstanding any other provision of this Agreement, the Option may not be
exercised for a number of shares as would, as of the date of exercise, result in
a Notional Total Profit (as defined below) of more than the Maximum Profit and,
if exercise of the Option would otherwise result in the Notional Total Profit
exceeding such amount, Grantee, in its discretion, may take any of the actions
specified in this Section 13(a) so that the Notional Total Profit shall not
exceed the Maximum Profit; provided, that nothing in this sentence shall
restrict any subsequent exercise of the Option which at such time complies with
this sentence.

                           (b) For purposes of this Agreement, "Total Profit"
shall mean: (i) the aggregate amount (before taxes) of (A) the excess of (x) the
net cash amounts or fair market value of any property received by Grantee
pursuant to a sale of Option Shares (or securities into which such shares are
converted or exchanged), other than to a wholly-owned subsidiary of Grantee, or
a repurchase of Option Shares by Issuer pursuant to Section 8 hereof, after
payment of applicable brokerage or sales commissions and discounts, over (y)
Grantee's aggregate purchase price for such Option Shares (or other securities),
plus (B) all amounts received by Grantee upon the repurchase of the Option by
Issuer pursuant to Section 8 hereof, plus (C) all equivalent net amounts with
respect to the Substitute Option and any amounts paid pursuant to Section 7(f)
hereof, plus (D) all amounts theretofore received by Grantee pursuant to Section
7.2(b) of the Merger Agreement, minus (ii) all amounts of cash previously paid
to Issuer pursuant to Section 13(a) plus the value of the Option Shares (or
other securities) previously delivered to Issuer for cancellation pursuant to
Section 13(a), which value shall be deemed to be the aggregate Purchase Price
paid for such Option Shares (or other securities). For purposes of this
Agreement, "Notional Total Profit" with respect to any number of shares as to
which Grantee may propose to exercise the Option shall be the Total Profit,
determined as of the date of such proposed exercise assuming that the Option
were exercised on such date for such number of shares, and assuming that such
shares, together with all other Option Shares held by Grantee and its affiliates
as of such date, were sold for cash at the closing market price for the Issuer
Common Stock as of the close of business on the preceding trading day (less
customary brokerage commissions). For purposes of this Section 13, transactions
by a wholly-owned

                                       17
<PAGE>
subsidiary transferee of Grantee in respect of the Option or Option Shares
transferred to it shall be treated as if made by Grantee.

                           (c) Notwithstanding any other provision of this
Agreement, nothing in this Agreement shall affect the ability of Grantee to
receive, nor relieve Issuer's obligation to pay, any payment provided for in
Section 7.2(b) of the Merger Agreement; provided, that if and to the extent the
Total Profit received by Grantee would exceed the Maximum Profit following
receipt of such payment, Grantee shall be obligated to comply with the terms of
Section 13(a) within 15 days of the date on which Grantee has realized cash
and/or property representing Total Profit in excess of Maximum Profit.

                  14. Miscellaneous.

                           (a) Expenses. Except as otherwise provided herein or
in the Merger Agreement, each of the parties hereto shall bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including, without limitation, fees and expenses of its
own financial consultants, investment bankers, accountants and counsel.

                           (b) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is entitled to the
benefits of such provision. This Agreement may not be modified, amended, altered
or supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights. No single or partial exercise of any right, remedy,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. Any
waiver shall be effective only in the specific instance and for the specific
purpose for which given and shall not constitute a waiver to any subsequent or
other exercise of any right, remedy, power or privilege hereunder.

                           (c) Entire Agreement; No Third-Party Beneficiaries;
Severability. This Agreement, together with the Merger Agreement and the other
documents and instruments referred to herein and therein, between Grantee and
Issuer constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof. This Agreement is not intended to confer upon any person
other than the parties hereto (or their respective successors and assigns)
(other than any transferees of the Option Shares or any permitted transferee of
this Agreement pursuant to Section 14(h)) any rights, remedies, obligations or
liabilities hereunder. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or Governmental Entity to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected impaired or invalidated. If for any
reason such court or Governmental Entity determines that the Option does not
permit Grantee to acquire, or does not require Issuer to repurchase, the full
number of shares of Issuer Common Stock as provided in Section 2 (as may be
adjusted herein), it is the express intention of Issuer to allow Grantee to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible without any amendment or modification hereof.

                                       18
<PAGE>
                           (d) Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware (without
giving effect to choice of law principles thereof).

                           (e) Descriptive Headings. The descriptive headings
contained herein are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.

                           (f) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the addresses set forth in the Merger
Agreement (or at such other address for a party as shall be specified by like
notice).

                           (g) Counterparts. This Agreement and any amendments
hereto may be executed in two counterparts, each of which shall be considered
one and the same agreement and shall become effective when both counterparts
have been signed, it being understood that both parties need not sign the same
counterpart.

                           (h) Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option shall be assigned
by any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party, except that Grantee may assign
this Agreement to a wholly-owned Subsidiary of Grantee (in which event the term
"Grantee" as used herein shall be deemed to refer to such Subsidiary). Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
permitted assigns. For the avoidance of doubt, nothing in this paragraph (h)
shall prohibit Issuer from engaging in a transaction contemplated by Section
7(b) in accordance with the provisions of Section 7(b), provided that the terms
of this Agreement and the Merger Agreement shall remain applicable with respect
to any such transaction.

                           (i) Further Assurances. In the event of any exercise
of the Option by Grantee, Issuer and Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.

                           (j) Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any Federal court or
New York State court sitting in the Borough of Manhattan, City of New York, this
being in addition to any other remedy to which they are entitled at law or in
equity.

                                       19
<PAGE>
                  IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.

                                   THE CHASE MANHATTAN CORPORATION

                                   By:  /s/ William B. Harrison, Jr.
                                        ----------------------------
                                        Name: William B. Harrison, Jr.
                                        Title: Chairman and CEO

                                   J.P. MORGAN & CO. INCORPORATED

                                   By:  /s/ Douglas A. Warner III
                                        ----------------------------
                                        Name: Douglas A. Warner III
                                        Title: Chairman and CEO

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