10-K

2008 Annual Report

on Form 10 – K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2008
Commission File Number 001-12215
Quest Diagnostics Incorporated
3 Giralda Farms
Madison, New Jersey 07940
(973) 520-2700
Delaware
(State of Incorporation)
16-1387862
(I.R.S. Employer Identification Number)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value per share	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:	None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes o No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer o Non-accelerated filer (do not check if a smaller reporting company) o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x

As of June 30, 2008, the aggregate market value of the approximately 158 million shares of voting and non-voting common equity held by non-affiliates of the registrant was approximately $7.7 billion, based on the closing price on such date of the registrant’s Common Stock on the New York Stock Exchange.

As of January 30, 2009, there were outstanding 190,574,834 shares of Common Stock, $.01 par value per share.

Documents Incorporated by Reference

Document	Part of Form 10-K into which incorporated
Portions of the registrant’s Proxy Statement to be filed by April 28, 2009	Part III

Such Proxy Statement, except for the portions thereof which have been specifically incorporated by reference, shall not be deemed “filed” as part of this report on Form 10-K.

TABLE OF CONTENTS

	Item	Page
Item 1.	Business	1
	Our Strategy and Strengths	1
	Business Operations	2
	The United States Clinical Testing Market	8
	General	11
	Billing and Reimbursement	13
	Regulation	15
	Available Information	18
	Executive Officers of the Company	18
Item 1A.	Risk Factors	19
	Cautionary Factors That May Affect Future Results	28
Item 1B.	Unresolved Staff Comments	29
Item 2.	Properties	30
Item 3.	Legal Proceedings	30
Item 4.	Submission of Matters to a Vote of Security Holders	32
Item 5.	Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
Item 6.	Selected Financial Data	35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 8.	Financial Statements and Supplementary Data	35
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	35
Item 9A.	Controls and Procedures	35
Item 9B.	Other Information	35
Item 10.	Directors, Executive Officers and Corporate Governance	36
Item 11.	Executive Compensation	36
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholders’ Matters	36
Item 13.	Certain Relationships and Related Transactions, and Director Independence	36
Item 14.	Principal Accounting Fees and Services	36
Item 15.	Exhibits, Financial Statement Schedules	37
Selected Historical Financial Data of Our Company		39
Management’s Discussion and Analysis of Financial Condition and Results of Operations		41
Management’s Report on Internal Control Over Financial Reporting		57
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Financial Statements and Related Notes		F-2
Supplementary Data: Quarterly Operating Results (unaudited)		F-46
Schedule II – Valuation Accounts and Reserves		F-47

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Item 1. Business

          Quest Diagnostics Incorporated is the world’s leading provider of diagnostic testing, information and services. We provide insights that enable patients, physicians and others to make decisions to improve health.

          Quest Diagnostics was incorporated in Delaware in 1990; its predecessor companies date back to 1967. We conduct business through our headquarters in Madison, New Jersey, and our laboratories, patient service centers, offices and other facilities around the United States and in selected locations outside the United States. Unless the context otherwise requires, the terms “Quest Diagnostics,” the “Company,” “we” and “our” mean Quest Diagnostics Incorporated and its consolidated subsidiaries.

          During 2008, we generated net revenues of $7.2 billion and processed approximately 150 million test requisitions. Additional financial information concerning Quest Diagnostics, including our consolidated subsidiaries, for each of the years ended December 31, 2008, December 31, 2007 and December 31, 2006 is included in the consolidated financial statements and notes thereto in “Financial Statements and Supplementary Data” in Part II, Item 8.

OUR STRATEGY AND STRENGTHS

          Our mission is to be the undisputed world leader in diagnostic testing, information and services. Our vision is that we are dedicated people improving the health of patients through unsurpassed diagnostic insights and innovation. We focus on patients, growth and people to help achieve our goals.

          We offer high value diagnostic testing services and products attractive to patients, physicians, payers, and others and have become the provider of choice in key areas of the diagnostic testing market. We believe that successful execution of our strategy will drive continued growth of our business. Additionally, we believe that, over the long term, we will be able to grow at a rate above the U.S. clinical laboratory industry growth rate, to expand margins and to increase international revenues to 10% of consolidated revenues. We plan to do this by gaining more customers, selling more services and products to existing customers and by continuously improving the efficiency of our operations. The elements of our growth strategy are described below.

• Deliver a superior patient experience. The patient is at the center of everything we do. Increasingly, patients have a choice when it comes to selecting a healthcare provider and we strive to give patients compelling reasons to put their trust in us. We have made significant investments in training our employees to provide a superior patient experience. We believe that this will drive patient and physician loyalty. Additionally, we have deployed automated patient appointment scheduling for our patient service centers. This enables patients to schedule appointments at times that are convenient for them while essentially eliminating their waiting time. We believe that we are the only national clinical test provider that offers this service in almost all of its patient service centers. We also collaborated with Google to launch Google Health™, which allows patients to share, save, organize and manage online their medical records and personal health information, including diagnostics laboratory data.

• Continuously drive Six Sigma quality. We strive to provide the highest quality in all that we do, including: phlebotomy and specimen transport services; analytical testing processes in our laboratories; accurate and timely lab reports; and accurate and timely billing. We use Six Sigma and Lean processes to continuously reduce defects, enhance quality and further increase the efficiency of our operations. Six Sigma is a management approach that utilizes a thorough understanding of customer needs and requirements, root cause analysis, process improvements and rigorous tracking and measuring to enhance quality. Lean is a management approach that seeks to streamline processes and eliminate waste. We also use Six Sigma and Lean principles to help standardize operations and processes across our Company and identify and adopt company best practices. We believe our focus on continuously driving Six Sigma quality in all aspects of our business results in superior service to our customers and drives customer loyalty.

• Leverage our unparalleled assets and capabilities. We are the world leader in the clinical testing business and the leading cancer diagnostic testing provider. We have the most extensive clinical testing network in the United States, offering national access to testing services. We operate a nationwide network of over 2,000 of our own patient service centers where we collect patient specimens, and laboratories in most major metropolitan areas. We provide anatomic pathology services, including inpatient anatomic pathology and medical director services at hospitals, throughout the country. We have a leading medical and scientific staff of approximately 900 M.D.s and Ph.D.s, primarily located in the United States. We serve approximately half of the physicians and half of the hospitals in the United States. We also operate approximately 75 locations in the United States and Canada where we coordinate the provision of paramedical examinations related to life insurance applications. We offer the broadest test menu, with more than 3,000 tests, and are the leading provider in the United States of gene-based and other esoteric testing. We have strong logistics capabilities, such as approximately 3,500 courier vehicles and 25 airplanes that make approximately 90,000 stops daily. We believe that customers and payers

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	prefer providers that offer a comprehensive range of tests and services and the most convenient access to those services and that, by offering such services, we will be able to profitably enhance our market position.
•	Continue to lead in medical innovation and information technology solutions. We are a leading innovator in the clinical testing market with unmatched medical and technical expertise. We have the most comprehensive test menu and leading medical and scientific experts available for consultation. Over the past several years, we have expanded our business in more complex and faster-growing testing areas, including gene-based and esoteric testing, anatomic pathology services and point-of-care testing, reducing the percentage of our revenues from routine testing services. We remain a leading innovator in the clinical testing industry by continuing to introduce new tests, technology and services, including in the evolving area of personalized and targeted medicine. As an industry leader with the largest and broadest U.S. network and expanding presence outside the United States, we believe we are the channel of choice for developers of new tests to introduce their products to the marketplace. Through our relationships with the academic medical community and pharmaceutical and biotechnology firms, we believe that we are a leader in bringing technical innovation to the market. For example, in 2008, we expanded our growing menu of plasma-based Leumeta™ tests to 22.
	We empower healthcare organizations and clinicians with information technology solutions that can improve patient care and medical practice. We develop products, such as ChartMaxx®, and the Care360™ Physician Portal, and a clinical portal that are designed to support the creation and management of electronic patient records, by bringing together, in one patient-centric view, information that includes physician’s records and laboratory and hospital data. Our Care360™ products, which can be accessed by more than 140,000 physicians, enable physicians to order diagnostic tests and review test results online. In addition, the Care360 Physician Portal enables physicians to electronically prescribe medication, view clinical and administrative information from various sources, file certain documents into a patient-centric health record maintained in our repository and share confidential information with medical colleagues. We believe that these products enhance the value we provide to our customers and result in increased customer loyalty.
•	Expand our geographic reach. In addition to growth opportunities in the United States, we see opportunities to expand our presence in Ireland and Mexico and to bring our experience and expertise in diagnostic testing to other international markets, particularly to developing countries where the testing markets are highly fragmented and less mature. During 2008, we began offering services and products in the growing market in India. Our product offering in India includes clinical testing for life insurance companies, clinical trials testing for global pharmaceutical companies, advanced esoteric testing for hospitals, physicians and patients, point-of-care products and wellness testing.
•	Expand our diagnostic scope. Technology advances are enabling testing to move closer to the patient and are becoming increasingly available and reliable. This enables more timely and effective decisions, with the opportunity to improve patient care and reduce medical costs. Since July 2006, we have acquired three businesses that offer point-of-care, or near patient, testing: HemoCue, Focus Diagnostics and Enterix. We intend to expand their product menus, develop novel technology platforms and systems to meet the needs of our clients and pursue potential additional acquisitions to supplement our offering. Results of their tests can be entered into our Care360 system, enabling the integration of tests performed in a near patient setting with those performed in our laboratories. We are well positioned to offer choice and integrated solutions to physicians, hospitals, clinics and retail customers for the testing methods that are most appropriate for each patient and practice.

          In support of our strategy, in recent years we have undertaken several acquisitions. These acquisitions enable us to expand our capabilities, further leverage our assets and differentiate our Company from our competition, diversify our revenues and accelerate our growth. We expect to continue to selectively evaluate acquisitions in the United States and in select international markets.

BUSINESS OPERATIONS

          Quest Diagnostics is the world’s leading provider of diagnostic testing, information and services, providing insights that enable patients, physicians and others to make decisions to improve health. We offer U.S. patients and physicians the broadest access to diagnostic testing services through our nationwide network of laboratories and Company-owned patient service centers. We provide interpretive consultation through the largest medical and scientific staff in the industry, with approximately 900 M.D.s and Ph.D.s, primarily located in the United States. We are the leading provider of clinical testing, including gene-based and other esoteric testing, anatomic pathology services, including dermatopathology and testing for drugs-of-abuse, and the leading provider of risk assessment services for the life insurance industry. We are also a leading provider of testing for clinical trials. Our diagnostics products business manufactures and markets diagnostic test kits and specialized point-of-care testing. We empower healthcare organizations and clinicians with robust information technology solutions. Our activities are described below.

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          Patients are at the center of everything that we do. We are leveraging our diagnostic testing capabilities and our assets to serve multiple customer bases. In 2008, our clinical testing business accounted for greater than 90% of our net revenues, with the balance derived from insurer services, clinical trials testing, diagnostic products and healthcare information technology. Most of our services are provided in the United States. Clinical testing includes routine testing, anatomic pathology, gene-based and esoteric testing, and drugs-of-abuse testing, which generated approximately 52%, 16%, 20% and 3%, respectively, of our 2008 net revenues. Risk assessment services for the life insurance industry, clinical trials testing, diagnostic products and healthcare information technology combined generated approximately 9% of our 2008 net revenues. In 2008, we derived approximately 3% of our net revenues from foreign operations and held approximately 7% of our long-lived assets outside the United States.

          Clinical Testing. We are the world’s largest commercial clinical testing company. We offer customers the broadest access to the most extensive test menu of clinical and anatomic pathology tests in the United States. Clinical testing is an essential element in the delivery of healthcare services. Physicians use clinical tests to assist in the detection, diagnosis, evaluation, monitoring and treatment of diseases and other medical conditions. Clinical testing is generally categorized as clinical laboratory testing and anatomic pathology services. Clinical laboratory testing generally is performed on blood and body fluids, such as urine. Anatomic pathology services are performed on tissues, such as biopsies, and other samples, such as human cells. Clinical tests which can be performed by most clinical laboratories are considered routine. Esoteric tests are clinical tests that are not routine, require highly skilled personnel and generally require more sophisticated equipment. Esoteric tests, including gene-based tests, generally are performed in several of our laboratories. As testing methods become more complex, we believe that providing sound medical and scientific consultation regarding tests and test results will help spur the adoption of new tests, improve patient outcomes and enhance customer satisfaction. To this end, we have in-house medical directors, scientific directors and genetic counselors available for consultation with our customers.

          Routine clinical testing. We are the leading provider of routine clinical testing, including testing for drugs-of-abuse. We perform routine testing through our network of major laboratories and rapid response laboratories. We also perform routine testing at the hospital laboratories we manage. Rapid response laboratories are smaller facilities where we can quickly perform an abbreviated menu of routine tests for customers that require rapid turnaround times. We also perform routine testing at hospital laboratories that we manage. We operate 24 hours a day, 365 days a year, performing and reporting most routine tests within 24 hours. The majority of test results are delivered electronically.

          Routine tests measure various important bodily health parameters such as the functions of the kidney, heart, liver, thyroid and other organs. Commonly ordered tests include:

• blood chemistries, including cholesterol levels;

• complete blood cell counts;

• urinalyses;

• pregnancy and other prenatal tests;

• routine microbiology testing;

• alcohol and other substance-abuse tests; and

• allergy tests such as the ImmunoCap^® test.

          Anatomic Pathology. We are the leading provider of cancer diagnostics, including anatomic pathology services in the United States. Anatomic pathology involves the diagnosis of cancer and other diseases and medical conditions through examination of tissue and cell samples taken from patients. We provide anatomic pathology and other cancer diagnostics testing, including inpatient anatomic pathology and medical director services at hospitals, throughout the country, including through our major laboratories. We have a substantial presence in select areas and strong relationships with ordering physicians.

          We significantly strengthened our anatomic pathology services offering through our May 2007 acquisition of AmeriPath Group Holdings, Inc. (“AmeriPath”). We provide a full-range of cancer diagnostic services to all specialties including: dermatopathology, gastroenterology, hematology, urology and oncology. We have approximately 700 board-certified pathologists, including luminaries in their field, with a passion for and dedication to serving patients with the highest quality service.

          We have a strong history of leadership and innovation in cancer diagnostics. We introduced the Leumeta™ family of tests for leukemia and lymphoma. These proprietary plasma-based molecular tests may some day eliminate the need for painful bone marrow biopsies. We offer Pap testing using liquid-based technology in addition to conventional Pap testing and provide physicians the option of computer assisted Pap screening. We were one of the industry leaders

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educating physicians about molecular testing for human papilloma virus (“HPV”), the leading cause of cervical cancer. During 2008, the National Cancer Screening Service of the Republic of Ireland selected the Company to provide cervical cancer screening testing for women age 25 to 60 participating in Ireland’s first nationwide cytology-screening program.

          Gene-Based and Other Esoteric Testing. Gene-based and other esoteric tests increasingly are ordered by physicians to assist in the diagnostic process, to establish a prognosis and to choose or monitor a therapeutic regimen. Esoteric tests include procedures in the areas of molecular diagnostics, protein chemistry, cellular immunology and advanced microbiology. Commonly ordered esoteric tests include viral and bacterial detection tests, drug therapy monitoring tests, autoimmune panels and complex cancer evaluations. Esoteric tests typically require professional “hands-on” attention from highly-skilled technical personnel, generally require more sophisticated technology, equipment or materials and may be performed less frequently than routine tests. Consequently, esoteric tests are generally reimbursed at higher levels than routine tests. It is not practical, from a cost-effectiveness or infrastructure perspective, for most hospitals, independent laboratories or physician office laboratories to develop and perform a broad menu of esoteric tests, or to perform low-volume esoteric testing in-house. Such tests generally are outsourced to an esoteric clinical testing laboratory, such as our Nichols Institute or Focus Diagnostics, which specializes in performing these complex tests.

          We are the leading provider in the United States of gene-based and other esoteric testing, with net revenues of over $1.4 billion, or 20% of consolidated net revenues, in 2008. We conduct complex and specialized testing, including molecular diagnostics, in our two world renowned Nichols Institute laboratory facilities (one on each U.S. coast), and in a number of other locations.

          Our esoteric laboratories provide reference testing services to physicians, large academic medical centers, hospitals and other commercial laboratories. Our esoteric testing laboratories perform hundreds of complex tests that are not routinely performed by our regional laboratories, including but not limited to the following fields:

• endocrinology and metabolism (the study of glands, their hormone secretions and their effects on body growth and metabolism);

• genetics (the study of chromosomes, genes and their protein products and effects);

• hematology (the study of blood and bone marrow cells) and coagulation (the process of blood clotting);

• immunogenetics and human leukocyte antigens (HLA) (solid organ and bone marrow transplantation; eligibility for vaccines; selection of pharmacotherapeutic agents and immunotherapy);

• immunology (the study of the immune system, including antibodies, cytokines, immune system cells and their effect, receptor systems and autoimmune diseases);

• microbiology and infectious diseases (the study of microscopic forms of life, including parasites, bacteria, viruses, fungi and other infectious agents);

• oncology (the study of abnormal cell growth, including benign tumors and cancer);

• serology (a science dealing with body fluids and their analysis, including antibodies, proteins and other characteristics); and

• toxicology (the study of chemicals and drugs and their adverse effects on the body).

          We believe that offering a full range of gene-based and other esoteric tests strengthens our market offering and market position and enhances our reputation as the nation’s leading test provider.

          Scientific Innovation. We are a leading innovator in the clinical testing industry, with the ability to develop technologies from the earliest discovery stage to a commercially validated clinical test. We develop tests at our laboratories, such as Quest Diagnostics Nichols Institute and Focus Diagnostics, and develop innovative techniques in anatomic pathology. We are a leader in transferring technical innovations to the market through our relationships with technology developers, including the academic community and pharmaceutical and biotechnology firms, as well as through collaborations with emerging medical technology companies that develop and commercialize novel diagnostics, pharmaceutical and device technologies. We search for new opportunities and continue to build a robust pipeline of new tests in screening, diagnosis, prognosis and treatment choice, which assists in early detection of diseases and may reduce healthcare costs. Through our strengths in assay development, distribution and commercialization, we believe that we are the best partner for developers of new technologies and tests to introduce their products to the marketplace.

          We focus our resources on key disease states and technologies to help doctors care for their patients through better screening, monitoring, diagnosis, prognosis and treatment choices. We also look for tests that are less invasive than currently available options. With these priorities in mind, in 2008, we introduced a number of new tests. A representative sampling of recent new tests is set forth below.

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• Oncology.

- We expanded to 22 our growing menu of plasma-based Leumeta™ tests. These tests are useful in determining many different types of hematological disorders, and in particular, use qualitative findings to assist in the diagnosis of certain hematological disorders in patients who lack the JAK2 mutation. Plasma-based assays are an effective and less invasive way of diagnosing and monitoring leukemia and lymphoma patients and allows for more frequent disease progression monitoring, compared to other laboratory diagnostic methods that require patients to undergo painful procedures, such as bone marrow biopsies.

- We introduced KRAS Mutation Analysis, a molecular test that helps to determine if patients with metastatic colorectal or lung cancer are eligible for treatment with EGFR-targeted therapy.

- We introduced HE4, a new serum-based test exclusively licensed from Fujirebio. HE4 is the first test in the last 20 years to receive clearance from the U.S. Food and Drug Administration (“FDA”) for monitoring woman with ovarian cancer. This test provides valuable information in determining patient prognosis and is selected in certain instances by physicians who traditionally order the CA125 test for monitoring.

- We introduced InScape™ Virtual Pathology which is a novel Immunohistochemistry (IHC) that allows pathologists to access their cases through a secured HIPAA compliant website. This supports a pathologist’s ability to remotely review stained slides and provide information back to treating physicians more quickly and reduce the anxious waiting time of patients.

- We licensed the Septin 9 biomarker. Methylation of the Septin 9 gene is a marker in blood plasma of colorectal cancer patients. We plan to develop plasma-based colorectal cancer screening tests using the Septin 9 marker to act as a supplement to conventional methods of colorectal cancer screening, including colonoscopy and fecal occult blood tests. Too often, patients fail to undergo a colonoscopy or conduct other types of colorectal cancer screenings because they find these methods invasive, unpleasant or costly. A blood test for detecting colorectal cancer, once developed, will be a convenient option that complements other screening methods.

- We also licensed and are developing additional oncology applications for our ClariSure™ CGH (Comparative Genomic Hybridization) Assay.

• Urology.

- We acquired exclusive rights to and launched the UroRisk™ Diagnostics Profile and the StoneRisk™ Diagnostics Profile. These tests are considered to be the gold standard for kidney stone risk assessment and monitoring of recurrence and help determine lifestyle changes needed to avoid further stone development.

• Infectious Disease.

- We continued to expand our menu of tests focused on esoteric infectious diseases, drawing on our expertise and strength in this field. Our Focus Diagnostics subsidiary was the first CLIA-approved service laboratory in the United States to develop and introduce a test for detecting the mosquito-borne Chikungunya virus. Commercial availability of this molecular polymerase chain reaction (PCR) test enables physicians to test patients who may have contracted the virus while traveling to endemic areas.

- We also introduced a PCR-based test which detects virtually all known enterovirus strains, along with multiple parecho virus strains that cause infections that can be especially severe in infants and young children.

• Genetics and Personalized Medicine. Increasingly, tests will be introduced that determine a patient’s genotype or gene expression profile associated with a particular disease. These tests can help physicians to determine a patient’s susceptibility to disease or to tailor medical care to an individual’s needs – such as determining if a medication might be more or less effective for a particular person, or which of several medications might work better, and tailoring the right dosage once the proper medicine is prescribed. A few examples are set forth below:

- Carbamazepine is a common anti-seizure and pain medication, which has the potential for a severe and sometimes fatal dermatologic reaction. This risk is 10-fold higher in Asians. We introduced the HLA (Human Leukocyte Antigen) test to screen Asian patients, thus helping physicians identify which patients should not be given carbamazepine.

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- The leading cause of vision loss in older individuals is age-related macular degeneration, which typically starts showing symptoms, such as blurring in one’s central vision, in the fifth decade of life. We introduced the Macular Degeneration Mutation Analysis that helps determine one’s risk of developing age-related macular degeneration.

- Aspirin therapy is often prescribed to prevent atherothrombosis. However, sometimes aspirin does not work, and there may be issues with patient compliance and the correct dosage. We introduced the Corgenix AspirinWorks® test, a urine test that helps identify patients that do not respond to aspirin therapy.

          In addition, we recently acquired additional biomarker capabilities to advance our efforts to develop companion diagnostics for new therapies that will enable personalized patient treatment.

          Clinical Trials Testing. We believe that we are the second largest provider of central laboratory testing performed in connection with clinical research trials on new drugs and vaccines. Clinical research trials are required by the FDA and other international regulatory authorities to assess the safety and efficacy of new drugs and vaccines. We see opportunities to develop pharmacogenetic tests to help speed drug approval processes for our clinical trials customers and, capitalizing on the trend to personalized medicine, better focus patient therapy based on patient genetic markers.

          We have clinical trials testing centers in the United States, the United Kingdom and India, and we provide clinical trials testing in Australia, China and Singapore through affiliated laboratories. While we serve most of the major pharmaceutical companies, approximately 40% of our net revenues from clinical trials testing in 2008 represented testing for GlaxoSmithKline plc (GSK). We are the primary provider of central laboratory testing to support GSK’s clinical trials testing requirements worldwide.

          Life Insurer Services. We are the largest provider of risk assessment services to the life insurance industry in the United States and Canada. We also provide risk assessment services for insurance companies doing business in many countries outside the United States. In 2008, we began providing risk assessment services in India.

          Our risk assessment services comprise underwriting support services to the life insurance industry including teleunderwriting, specimen collection and paramedical examinations, clinical testing, medical record retrieval, case management, motor vehicle reports, telephone inspections, prescription histories and credit checks. The clinical tests that we perform and data we gather are designed specifically to assist insurance companies in objectively evaluating the mortality and morbidity risks posed by policy applicants. The majority of the testing is performed on specimens of life insurance applicants, but also includes specimens of applicants for other types of insurance. Factors such as the number of applications for fully-underwritten life insurance policies can affect the utilization of clinical testing and other services we provide to our insurance customers. Most of our specimen collections and paramedical examinations are performed at the applicant’s home or workplace. We operate approximately 75 locations other than patient service centers in the United States and Canada where we provide paramedical examinations. We have been actively performing paramedical examinations in select patient service centers and during the first quarter of 2009, we plan to offer paramedical examinations through 500 of our patient service centers, bringing to approximately 575 the total number of sites where we provide these examinations. We also contract with third parties at over an additional 125 locations across the United States and Canada to coordinate providing these exams.

          We seek to grow our insurance revenues by increasing our market share and by offering new and innovative clinical tests and other services. Our life insurance customers have been consolidating, which has resulted in increased individual customer purchasing power. We expect that this trend will continue. We charge our life insurance customers on a fee-for-service basis, typically under multi-year agreements.

          Employer Services. We believe that we are the leading provider of clinical testing to employers for drugs-of-abuse. Our Drug Testing Index, which is an annual report of our aggregate drug testing results, is used nationally by employers, the federal government and the media to help identify and quantify drug abuse among the nation’s workforce.

          As healthcare costs have increased, so has the value of preventative care. Employers grappling with increased healthcare costs are considering wellness testing as a key tool to reduce their healthcare costs. We provide wellness testing to employers to enable their employees to take an active role in improving their health and empower employers with aggregated health information. Our Blueprint for Wellness™ program offers employers actionable data to power their health improvement and cost containment programs. We are leveraging our patient service centers and paramedical network to deliver wellness screening nationwide. Additionally, in the fourth quarter of 2008, we began to offer Blueprint for Wellness™ directly to individuals through our partnership with Google Health™.

          Diagnostic Products, Including Point-of-care, or Near Patient, Testing. Technology advances are enabling testing to move closer to the patient and are becoming increasingly available and reliable. Over time, some testing that is now done in clinical laboratories will cease to be performed in clinical laboratories and will be performed closer to the

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patient. We believe that our point-of-care testing strategy will strengthen our relationship with our customers by enabling us to offer more solutions that improve the effectiveness of our customers and the care of their patients by enabling faster diagnosis and treatment. We are well positioned to offer options and integrated solutions to physicians, hospitals and clinics for the testing methods that are most appropriate for each patient and practice.

          We develop and manufacture products that enable healthcare professionals to make healthcare diagnoses, including products for point-of-care, or near patient, testing for the professional market. Since July 2006, we have acquired several companies, including Focus Diagnostics, Enterix, and HemoCue, that enhance our offerings and better enable us to serve these markets. We will consider additional acquisitions or licenses of selective products to complement the products and services we provide. The results of the InSure^® Quik FIT^TM point-of-care test and HemoCue hemoglobin, glucose, urine albumin and white blood cell tests, as well as tests performed by our laboratories, can be entered into our Care360™ Physician Portal so that they all are available in one electronic medical record. We intend to offer additional data links in the future. This will differentiate our point-of-care test products from other products that are not integrated into an electronic repository.

          Focus Diagnostics is a leading provider of infectious disease testing that has established a reputation for being first to introduce new tests to the market, including diagnostic tests for Lyme disease, West Nile Virus and SARS. Focus Diagnostics develops, manufactures and markets diagnostic products, such as HerpeSelect^® ELISA tests that detect patient antibodies to specific types of Herpes Simplex Virus, which can be performed on a variety of instrument platforms. Focus received FDA 510(k) clearance to sell in the United States its new multiplexed Plexus^TM product to detect type specific antibodies to herpes simplex virus. Focus has also submitted an application to the FDA for 510(k) clearance to allow U.S. sales of Plexus^TM products for the detection of antibodies specific to Epstein-Barr virus. Both the Plexus^TM products have received the CE mark and are available for purchase in European Union countries. Focus Diagnostics sells its diagnostic products to large academic medical centers, hospitals and commercial laboratories globally.

          HemoCue, headquartered in Angelholm, Sweden, specializes in point-of-care testing. HemoCue is the leading global provider in point-of-care testing for hemoglobin, with a growing market share for glucose, microalbumin and white blood cell testing. The measurement of hemoglobin is important for blood donors and for patients being considered for transfusion therapy, or undergoing dialysis or chemotherapy, where instant test results can lead to immediate treatment decisions. The HemoCue handheld systems are used in physician’s offices, blood banks, hospitals, diabetes clinics and public health clinics. In developing countries, these systems are used as the primary means to screen for anemia. Approximately one-half of HemoCue products are sold outside the United States. We believe that HemoCue has a strong product development pipeline, based on its pioneering use of its patented microfluidic systems.

          In October 2007, HemoCue received FDA 510(k) clearance for its White Blood Cell Analyzer, a whole-blood test performed on finger-stick samples that can assist physicians by providing a total white blood cell count (WBC). Changes in WBC may be indicative of infection, inflammation, bone marrow failure, autoimmune diseases and many other medical conditions. The WBC can be useful to physicians in helping to diagnose a patient’s disease state and determine at the point of care what, if any, treatment may be appropriate for the patient in conjunction with other clinical signs and symptoms. WBC is a test routinely performed by most laboratories. In addition, Focus Diagnostics received FDA 510(k) clearance for its HerpeSelect® Express™ HSV-2, which is used for aiding in the diagnosis of herpes simplex type-2 virus, the primary cause of genital herpes. With 510(k) clearance for marketing, physicians who operate CLIA-certified moderately complex laboratories may now use these two products to quickly produce results in a single office visit. These two tests can help physicians quickly determine the possible presence of an infection and allow physicians to make more informed and immediate treatment decisions for their patients. We have applied for CLIA-waived status for these two products which, if granted, would permit physicians to use these products in a much larger segment of physician offices. In 2008, a CLIA waiver was granted for our urine albumin test.

          Enterix, an Australia-based company, manufactures the InSure® fecal immunochemical test (FIT™) for screening for colorectal cancer and has developed the InSure® Quik FIT™ test for processing by the physician in his or her office.

          International. We have laboratory facilities in Mexico City, Mexico; San Juan, Puerto Rico; Gurgaon, India; and Heston, England. These laboratories support our clinical trials business and clinical testing in their local markets. In India, our laboratory also supports our risk assessment services and sales directly to employers and consumers. We also have sales representatives dedicated to offering our point-of-care test products in countries outside the United States. We see opportunities to bring our experience and expertise in diagnostic testing and point-of-care products to international markets, particularly developing countries where the testing markets are highly fragmented and less mature.

          Healthcare Information Technology. We empower healthcare organizations and clinicians with information technology solutions that can improve patient care and medical practice. We develop differentiated products that are designed to support the creation and management of patient records, by bringing together, in one patient-centric view, information from various sources, including physician’s records and laboratory and hospital data. We believe that these

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products enhance the value we provide to our customers and result in increased customer loyalty by providing more convenient ordering and reporting of clinical tests and better access to patient-centric information.

          We develop and integrate clinical connectivity and data management solutions for healthcare organizations, physicians and clinicians primarily through our Care360 suite of products and the ChartMaxx^® electronic document management system for hospitals. The Care360 products, including our Care360 Physician Portal, enable physicians to order diagnostic tests and review test results from Quest Diagnostics online. In addition, the Care360 Physician Portal enables physicians to electronically prescribe medication, view clinical and administrative information in a patient-centric record maintained in our repository and share confidential information with medical colleagues in a HIPAA-compliant manner. Demand has been growing for our information technology solutions as physicians have expanded their usage of the Internet. By the end of 2008, approximately 140,000 physicians had access to Care360 products. Excluding our AmeriPath business, over 70% of our test orders and approximately 85% of our test results were being transmitted electronically. E-prescribing medications processed through Care360 in 2008 more than doubled compared to 2007. The annualized rate as we exited 2008 was 4.5 million. We believe that recent e-prescribing incentives promulgated by the Centers for Medicare and Medicaid Services (“CMS”) will foster increased demand for our information technology solutions.

          Additionally, in 2007 we acquired the capabilities to deploy a health information exchange system comprised of proprietary technologies that enable healthcare providers to access and manage a range of patient data from multiple sources at the point-of-care. These capabilities will enable us to provide solutions to the many health information exchanges that are being developed.

          In 2008, we collaborated with Google to launch Google Health™. Google Health™ enables patients and physicians to share diagnostic laboratory data online, and allows users to save, organize and manage their medical records and personal health information online. Using our Care360 connectivity products, physicians can securely provide diagnostic data with a brief explanation of test results to a patient’s Google Health™ account.

THE UNITED STATES CLINICAL TESTING MARKET

          Most clinical tests are performed by one of three types of laboratories: commercial clinical laboratories; hospital-affiliated laboratories; and physician-office laboratories. We believe that hospital-affiliated laboratories account for approximately 60% of the market, commercial clinical laboratories approximately one-third and physician-office laboratories the balance.

          Key Trends. There are a number of key trends that we expect to have a significant impact on the clinical testing business in the United States and on our business. These trends present both opportunities and risks. The recent economic slowdown may temporarily reduce industry growth rates. However, because clinical testing is an essential healthcare service and because of the key trends discussed below, we believe that the industry will continue to grow over the long term and that we are well positioned to benefit from the long-term growth expected in the industry.

          Demographics. The growing and aging population is increasing the demand for clinical testing.

          Increased testing. We believe that we have entered the decade of diagnostics, moving from greater focus on curative care to a greater recognition of the value of detection, prevention and personalized care. Physicians increasingly are relying on testing to help identify risk factors and symptoms of disease, the choice of therapeutic regimen and the evaluation of treatment results. Physicians, consumers and payers increasingly recognize the value of testing as a means to improve health and reduce the overall cost of healthcare through early detection and prevention.

          Science and technology advances. Medical advances allow for more accurate and earlier diagnosis and treatment of diseases. Continuing research and development in the area of genomics is expected to yield new, more sophisticated and specialized tests. These advances also are spurring interest in and demand for personalized or tailored medicine, which relies on diagnostic and prognostic testing. In addition, pharmacogenetic testing increasingly is used as a parameter to help speed drug approval processes and to better focus therapy based on patient and tumor-specific genetic markers.

          Health information technologies. Demand is growing toward comprehensive care management solutions that serve patients, payers and practitioners by improving access to patient data, increasing patient participation in care management, reducing medical errors and improving clinical outcomes. There is an increasing focus on interconnectivity, the ability to interact with other software and systems, and real time data aggregation. Electronic medical records and patient health records continue to grow.

          Customer and payer consolidation. Our customers and payers, including physicians, health insurance plans, employers, pharmaceutical companies and other intermediaries, have been consolidating. We expect that this trend will continue. Consolidation is increasing customer and payer bargaining power, enhancing purchasing sophistication and encouraging internalization of testing.

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          Highly competitive. The clinical testing industry remains fragmented, is highly competitive and is subject to new competition. Competition is growing from non-traditional competitors. New market entrants with extensive resources may make acquisitions or expand into our traditional areas of operations. We also are expanding into new diagnostic testing areas that are highly competitive.

          Regulatory and policy environment. Government oversight of and attention to the healthcare industry in the United States is significant and may increase. There has been extensive discussion of healthcare reform. While it is not possible to predict whether change in U.S. government regulation of healthcare will occur, or the nature or impact of any such change, we believe that any such change should recognize the value and importance of diagnostic testing to patient care.

          Globalization. There is a growing demand for healthcare services in emerging market countries. Opportunities are arising to participate in the restructuring or growth of the healthcare systems in these countries. Additionally, our customers are establishing positions outside the United States. Demographic changes globally may also create opportunities.

          Customers and Payers. We provide testing services to a broad range of customers, with orders for clinical testing generally generated by physicians, hospitals and employers. In most cases, the customer that orders the testing is not responsible for the payments of services. We consider a party that refers a test to us a “customer” and a party that reimburses us a “payer.” Depending on the billing arrangement and applicable law, the payer may be (1) a third party responsible for providing health insurance coverage to patients, such as a health insurance plan, self-insured employer benefit fund, or the traditional Medicare or Medicaid program, (2) the patient or (3) the physician or other party (such as a hospital, another laboratory or an employer) who referred the testing to us.

          The following table shows current estimates of the breakdown of the percentage of our total volume of requisitions and net revenues associated with our clinical testing business during 2008 applicable to each payer group:

	Requisition Volume as % of Total Volume	Net Revenues as % of Total Clinical Laboratory Testing Net Revenues
Traditional Medicare and Medicaid Programs	15% - 20%	15% - 20%
Physicians, Hospitals, Employers and Other Monthly-Billed Clients	30% - 35%	20% - 25%
Health Plans: Fee-for-Service	30% - 35%	40% - 45%
Health Plans: Capitated	15% - 20%	5% - 10%
Patients	2% - 5%	5% - 10%

          Health plans, including managed care organizations and other health insurance providers, typically reimburse us as a contracted provider on behalf of their members for clinical testing services performed. Reimbursement from our two largest health insurer payers totaled approximately 13% of our net revenues in 2008. Aetna, which accounted for over 7% of our consolidated net revenues for 2008, was our largest health insurer payer.

          Physicians. Physicians requiring testing for patients are the primary referral source of our clinical testing volume. Physicians determine which laboratory to recommend or use, based on a variety of factors, including: service; patient access and convenience, including inclusion in a health plan network; price; and depth and breadth of test and service offering. Physicians also order our point-of-care tests.

          Most of our clinical testing is referred by primary care physicians. We historically have provided a strong value proposition in routine and esoteric clinical testing. In 2007, we acquired AmeriPath, expanding our service capabilities. This will enable us to leverage our capabilities and to more effectively compete in several physician sub-specialties, including dermatology, urology, gastroenterology, hematology and oncology, where historically we had a smaller market share. We plan to continue to enhance our test menu and service capabilities.

          Health Plans. Health plans typically negotiate directly or indirectly with a number of clinical laboratories, and represent approximately one-half of our total clinical testing volumes and one-half of our net revenues from clinical testing. In certain markets, such as California, health plans may delegate to independent physician associations (“IPAs”) the ability to negotiate for clinical testing services on behalf of certain members. The trend of consolidation among health plans has continued.

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          Health plans and IPAs often require that clinical test service providers accept discounted fee structures or assume all or a portion of the financial risk associated with providing testing services through capitated payment arrangements and discounted fee-for-service arrangements. Under capitated payment arrangements, we provide services at a predetermined monthly reimbursement rate for each covered member, generally regardless of the number or cost of services provided by us. Average reimbursement rates under capitated payment arrangements are typically lower than our overall average reimbursement rate. Health plans continue to focus product offerings on point-of-service (“POS”) plans, and consumer driven health plans (“CDHPs”) that offer a greater choice of healthcare providers. Reimbursement under these programs is typically negotiated on a fee-for-service basis, which generally results in higher revenue per requisition than under capitation arrangements. In addition, several health plans have made strategic acquisitions or have developed products to more broadly serve the individual (non-group) market. We do not expect that the design of these plans will pose a significant barrier to accessing clinical testing services. Increased number of patients in CDHPs and high deductible plans, such as those offered in the individual market, involve greater patient cost-sharing; this could negatively impact patient collection experience.

          Most of our agreements with major health plans are non-exclusive arrangements. Certain health plans, however, have limited their laboratory network to only a single national laboratory to obtain improved pricing. In cases where members choose to use a non-contracted provider due to service, quality or convenience, the non-contracted provider is generally reimbursed at rates considered “reasonable and customary.” Contracted rates are generally lower than “reasonable and customary” rates because of the potential for greater volume as a contracted provider. A non-contracted clinical test service provider with quality and service preferred by physicians and patients to that of contracted providers may realize greater profits than if it were a contracted provider, if physicians and patients continue to have choice in selecting their clinical test provider and any potential additional cost to the patient of using a non-contracted provider is not considered prohibitive.

          We also may be a member of a “complementary network.” A complementary network is generally a set of contractual arrangements that a third party will maintain with various providers that allow for discounted fees for the benefit of members of the customers that arrange access through the third party. A member of a health plan may choose to access a non-contracted provider that is a member of a complementary network; if so, the provider will be reimbursed at a rate negotiated by the complementary network.

          We attempt to strengthen our relationships with health plans and increase the volume of testing services by offering health plans services and programs that leverage our Company’s expertise and resources, including in such areas as wellness and disease management.

          Hospitals and Other Laboratories. Hospitals generally maintain an on-site laboratory to perform the significant majority of clinical testing for their patients and refer less frequently needed and highly specialized procedures to outside laboratories, which typically charge the hospitals on a negotiated fee-for-service basis. Fee schedules for hospital reference testing typically are negotiated on behalf of hospitals by group purchasing organizations. We provide services to hospitals throughout the United States, including esoteric testing, helping manage their laboratories and serving as the medical directors of the hospital’s histology or clinical laboratory. We believe that we are the industry’s market leader in servicing hospitals. Hospitals generally continue to look for ways to fully utilize their existing laboratory capacity: they perform tests their patients need and compete with commercial laboratories for outreach (non-hospital patients) testing. Continuing to obtain referrals from hospitals depends on our ability to provide high quality services that are more cost-effective than if the hospitals were to perform the services themselves. We believe that our combination of full-service, bi-coastal esoteric testing capabilities, medical and scientific professionals available for consultation, innovative connectivity products, point-of-care testing products, focus on Six Sigma quality and dedicated sales and service professionals has positioned us to be an attractive partner for hospital customers.

          Most physicians have admitting privileges or other relationships with hospitals as part of their medical practice. Many hospitals seek to leverage their relationships with community physicians by encouraging the physicians to send their outreach testing to the hospital’s laboratory. In addition, hospitals that own physician practices generally require the physicians to refer tests to the hospital’s affiliated laboratory. Hospitals can have greater leverage with health insurers than do commercial clinical laboratories, particularly hospitals that have a significant market share; hospitals thus are frequently able to negotiate higher reimbursement rates with health insurance plans than commercial clinical laboratories for comparable clinical testing services.

          We also have joint venture arrangements with leading integrated healthcare delivery networks in several metropolitan areas. These joint venture arrangements, which provide testing for affiliated hospitals as well as for unaffiliated physicians and other local healthcare providers, serve as our principal laboratory facilities in their service areas. Typically, we have either a majority ownership interest in, or day-to-day management responsibilities for, our hospital joint venture relationships.

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          We also provide testing services to federal, state and local governmental agencies, and perform esoteric testing services for other commercial clinical laboratories that do not have a full range of testing capabilities. These customers are charged on a fee-for-service basis.

          Employers. Employers use clinical tests for drugs-of-abuse to determine an individual’s employability and his or her “fitness for duty.” Companies with high turnover and safety conscious environments provide the highest volumes of testing. Factors such as the general economy and job market can impact the utilization of clinical testing. We seek to grow our employer volumes through offering new and innovative programs to help companies with their goal in maintaining a safe and productive workplace. We also offer employers our Blueprint for Wellness program, providing wellness screenings to employers for their employees, to help employers manage increasing healthcare costs and to capitalize on trends in personalized health.

GENERAL

          Competition. While there has been significant consolidation in the clinical testing industry in recent years, our industry remains fragmented and highly competitive. We primarily compete with three types of clinical testing providers: hospital-affiliated laboratories, other commercial clinical laboratories and physician-office laboratories. Our largest independent clinical laboratory competitor is Laboratory Corporation of America Holdings, Inc. In addition, we compete with many smaller regional and local commercial clinical laboratories, specialized esoteric laboratories and laboratories owned by physicians and hospitals. In anatomic pathology, additional competitors include anatomic pathology practices, including those in academic institutions. In addition, there has been a trend among specialty physician practices to bring pathologists into those practices.

          We believe that healthcare providers consider a number of factors when selecting a testing provider, including:

• service capability and quality;

• accuracy, timeliness and consistency in reporting test results;

• pricing;

• patient insurance coverage;

• number and type of tests performed by the provider;

• number, convenience and geographic coverage of patient service centers;

• reputation in the medical community;

• healthcare information technology solutions;

• qualifications; and

• ability to develop new and useful tests.

          We believe that we are an effective competitor in each of these areas. We also believe that the differentiation we are creating through our focus on providing the most comprehensive test menu, innovative test and information technology offerings, a superior patient experience, Six Sigma quality and unparalleled access and distribution provides us with a competitive advantage and enables us to compete on more than price alone.

          We believe that large commercial clinical laboratories may be able to increase their share of the overall clinical testing market due to their large service networks and lower cost structures. These advantages should enable larger clinical laboratories to more effectively serve large customers and members of large healthcare plans. In addition, we believe that consolidation in the clinical testing industry will continue. However, a significant portion of clinical testing is likely to continue to be performed by hospitals, which generally have affiliations with community physicians that refer testing to us. As a result of these affiliations, we compete against hospital-affiliated laboratories primarily on the basis of service capability and quality as well as other non-pricing factors. Our failure to provide service superior to hospital-affiliated laboratories and other laboratories could have a material adverse effect on our net revenues and profitability. In addition, recent market activity, including actions by payers to exclude large national clinical laboratories from contracts, may enhance the relative competitive position of regional laboratories.

          The diagnostic testing industry is faced with changing technology and new product introductions. Advances in technology may lead to the development of more cost-effective tests that can be performed outside of a commercial clinical laboratory such as (1) point-of-care tests that can be performed by physicians in their offices; (2) complex tests that can be performed by hospitals in their own laboratories; and (3) home testing that can be carried out without requiring the services of clinical laboratories. Development of such technology and its use by our customers and patients would

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reduce the demand for our laboratory testing services and negatively impact our net revenues. With our point-of-care test strategy, we are positioning ourselves to service this market for physicians and hospitals. We also believe that our overall point-of-care test strategy will strengthen our relationship with our customers by enabling us to offer more solutions that improve their effectiveness and the care of their patients by enabling faster diagnosis and treatment.

          The diagnostic product market is highly competitive. We have many competitors, some of which have much more extensive experience in this market and some of which have greater resources. We compete in this area by attempting to find and exploit unique differentiated products, including products that take advantage of our healthcare information technology solutions. There is no guarantee that we will be able to compete successfully in this market.

          Sales and Marketing. Our sales force is organized to focus on customer groups and service types. The majority of representatives focus on marketing clinical laboratory testing, anatomic pathology and related services to physicians, including physician specialists. Supporting our physician sales teams are genomics and esoteric testing specialists, who are specially trained and focused on educating our clients on new and more complex tests. In addition, we have a health plan sales organization that focuses on regional and national insurance and healthcare organizations. We also have a hospital sales organization that focuses on meeting the unique clinical testing needs of hospitals and promotes the specialized capabilities of our Nichols Institute esoteric testing laboratories and our Focus Diagnostics infectious and immunologic disease testing laboratory. A smaller portion of our sales force focuses on selling drugs-of-abuse and wellness testing to employers. We also have a sales force that focuses on selling risk assessment testing services to life insurance companies. In addition, we have a sales organization that focuses on selling diagnostic products to hospitals, commercial clinical laboratories, physician office laboratories, blood banks and clinics, and a sales force that sells our point-of-care tests to customers globally. We also have a sales force that focuses on our clinical trials services to drug developers. We focus our sales efforts on obtaining and retaining profitable accounts. We have an active customer management process to evaluate the growth potential and profitability of all accounts.

          Information Technology. Information systems are used extensively in virtually all aspects of our business, including clinical laboratory testing, test reporting, billing, customer service, logistics and management of medical data. We endeavor to establish systems that create value and efficiencies for our patients and customers. The successful delivery of our services depends, in part, on the continued and uninterrupted performance of our information technology systems.

          We believe that our healthcare information technology systems help differentiate us favorably. Innovations in our healthcare information technology have the potential to improve patient care, promote efficiency and reduce expense. Both at the federal and state levels, there are public and private efforts to bring together healthcare providers, information technology vendors and other stakeholders to facilitate the creation of standards for the exchange and use of electronic healthcare data, including standard clinical code sets.

          Some of our historic growth has come through acquisitions and we continue to use non-standardized billing, laboratory or other core information systems. We have standardized some of our systems and are implementing standard laboratory information and billing systems across our operations, including those from our most recent acquisitions. We expect implementation will take several more years to complete, and will result in significantly more centralized systems, improve operating efficiency, provide management with more timely and comprehensive information and enhance control over our operational environment.

          Quality Assurance. In our clinical testing business, our goal is to continually improve the processes for collection, storage and transportation of patient specimens, as well as the precision and accuracy of analysis and result reporting. Our quality assurance efforts focus on positive patient identification of specimens and reports, proficiency testing, process audits, statistical process control and personnel training for all of our laboratories and patient service centers. We also focus on the licensing, credentialing, training and competency of our professional and technical staff. We are implementing an enhanced specimen tracking system, with global positioning system capabilities, that will enable us to better track specimens. We continue to implement our Six Sigma and standardization initiatives to help achieve our goal of becoming recognized as the undisputed quality leader in the healthcare services industry. In addition, some of our laboratories have achieved International Organization for Standardization, or ISO, certification. These certifications are international standards for quality management systems.

          As part of our comprehensive quality assurance program, we have internal proficiency testing, extensive quality control and rigorous process audits for our clinical laboratory operations. For most clinical laboratory tests, quality control samples are processed in parallel with the analysis of patient specimens. The results of tests on these quality control samples are monitored to identify trends, biases or imprecision in our analytical processes.

          We participate in external proficiency testing and have accreditation for our clinical laboratory operations from various regulatory agencies, such as CMS, the College of American Pathologists (“CAP”) and certain states. All of our laboratories participate in various external quality surveillance programs. They include, but are not limited to, proficiency testing programs administered by CAP, as well as some state agencies. CAP is an independent, non-governmental

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organization of board-certified pathologists approved by CMS to inspect clinical laboratories to determine compliance with the standards required by the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”). CAP offers an accreditation program to which laboratories may voluntarily subscribe. All of our major regional and esoteric laboratories, including our recently-opened facility in India, and most of our rapid response laboratories, are accredited by CAP. Accreditation includes on-site inspections and participation in the CAP (or equivalent) proficiency testing program. Also, all of our cytotechnologists and pathologists participate in an individual proficiency testing program.

          Our diagnostic products businesses, Focus Diagnostics, Enterix and HemoCue, maintain extensive quality assurance programs focused on compliance with applicable regulatory requirements in the United States, Europe and Australia. They are regulated by the FDA and are required to be in compliance with the Quality Systems Regulations, 21 CFR part 820. In addition, they maintain sites certified in accordance with, or audited by the deemed authority for, ISO 13485: 2003 standards. We endeavor to design and manufacture our diagnostics products in compliance with Quality Systems Regulations so that the finished products are safe and effective. In addition, the diagnostics products businesses maintain procedures designed to ensure that products we purchase conform to the manufacturer’s specifications.

          Intellectual Property Rights. We own significant intellectual property, including patents, patent applications, technology, trade secrets, know-how, copyrights and trademarks in the United States and other countries. From time to time, we also license U.S. and non-U.S. patents, patent applications, technology, trade secrets, know-how, copyrights or trademarks owned by others. In the aggregate, these intellectual property assets and licenses are of material importance to our business. We believe, however, that no single patent, technology, trademark, intellectual property asset or license is material to our business as a whole.

          Our approach is to manage our intellectual property assets to safeguard them and to maximize their value to our enterprise. We generally actively defend our intellectual property assets and pursue protection of our products, processes and other intellectual property where possible.

          Our success in remaining a leading innovator in the diagnostic testing industry by continuing to introduce new tests, technology and services will depend, in part, on our ability to license new and improved technologies on favorable terms. Other companies or individuals, including our competitors, may obtain patents or other property rights on tests or processes that we may be performing, particularly in such emerging areas as gene-based testing and other specialty testing, that could prevent, limit or interfere with our ability to develop, perform or sell our tests or operate our business.

          Employees. At December 31, 2008, we employed approximately 42,800 people. This total excludes employees of the joint ventures where we do not have a majority interest. We have no collective bargaining agreements with any unions covering any employees in the United States, and we believe that our overall relations with our employees are good.

BILLING AND REIMBURSEMENT

          Billing. We generally bill for clinical testing services on a fee-for-service basis under one of two fee schedules. These fees are generally subject to negotiation with or discounted to non-governmental payers. The fee schedules are:

• “Client” fees charged to physicians, hospitals, and institutions for which a clinical laboratory performs testing services on a wholesale basis and which are billed on a monthly basis.

• “Patient” fees charged to individual patients and third-party payers, like Medicare and Medicaid.

          Billing for clinical testing services is very complicated, and we have compliance policies and procedures that increase our billing costs. Patients, insurance companies, Medicare, Medicaid, physicians, hospitals and employer groups all have different billing requirements. Billing arrangements require us to bill various payers, and there are several other factors that complicate billing (e.g., disparity in coverage and information requirements among various payers; incomplete or inaccurate billing information provided by ordering physicians). We incur additional costs as a result of our participation in Medicare and Medicaid programs because clinical laboratory testing and anatomic pathology services are subject to complex, stringent and frequently ambiguous federal and state laws and regulations, including those relating to billing and reimbursement. Changes in laws and regulations could further complicate our billing and increase our billing expense. CMS establishes procedures and continuously evaluates and implements changes to the reimbursement process.

          In 2008, our bad debt expense was 4.5% of our net revenues. We believe that most of our bad debt expense is primarily the result of missing or incorrect billing information on requisitions and Advance Beneficiary Notices (ABNs) received from healthcare providers and the failure of patients to pay the portion of the receivable that is their responsibility, rather than credit related issues. Deteriorating economic conditions may adversely impact our bad debt expense. In general, we perform the requested tests and report test results regardless of whether the billing information is correct or complete. We subsequently attempt to contact the healthcare provider or patient to obtain any missing information and to rectify incorrect billing information. Missing or incorrect information on requisitions complicates and slows down the billing process, creates backlogs of unbilled requisitions and generally increases the aging of accounts

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receivable and bad debt expense. The increased use of electronic ordering reduces the incidence of missing or incorrect information.

          Billing Compliance. As an integral part of our billing compliance program, we investigate reported failures or suspected failures to comply with federal and state healthcare reimbursement requirements. Any Medicare or Medicaid overpayments resulting from non-compliance are reimbursed by us. As a result of these efforts, we have periodically identified and reported overpayments, reimbursed the overpayments and taken appropriate corrective action.

          Penalties for violations of laws relating to billing federal healthcare programs and for violations of federal and state fraud and abuse laws include: (1) exclusion from participation in Medicare/Medicaid programs; (2) asset forfeitures; (3) civil and criminal fines and penalties; and (4) the loss of various licenses, certificates and authorizations necessary to operate our business. Civil monetary penalties for a wide range of violations may be assessed on a per violation basis. A parallel civil remedy under the federal False Claims Act provides for damages on a per violation basis, plus damages of up to three times the amount claimed.

          Government Reimbursements. The healthcare industry has experienced significant changes in reimbursement practices during the past several years. Government payers, such as Medicare and Medicaid, have taken steps and can be expected to continue to take steps to control the cost, utilization and delivery of healthcare services, including clinical test services. With regard to the clinical test services performed on behalf of Medicare beneficiaries, we must bill the Medicare program directly and must accept the carrier’s fee schedule amount as payment in full. In addition, state Medicaid programs are prohibited from paying more (and in most instances, pay significantly less) than Medicare. Currently, Medicare does not require the beneficiary to pay a co-payment for clinical laboratory testing. Certain Medicaid programs require Medicaid recipients to pay co-payment amounts for clinical laboratory testing. Medicare patients generally are required to make co-payments for anatomic pathology services.

          Federal law contains a Medicare fee schedule payment methodology for clinical testing services performed for patients covered under Part B of the Medicare program, and a national ceiling on the amount that carriers could pay under their local Medicare fee schedules. Effective January 1, 2009, the national fee schedule for clinical testing services was increased 4.5%. Federal law also contains a Medicare fee schedule payment methodology for pathology and other physician services performed for patients covered under Part B of the Medicare program. Effective January 1, 2009, the national fee schedule for physician fees was increased 1.1%. If Medicare fee schedules are reduced, or if independent clinical laboratories are prohibited from billing Medicare directly for certain services, such as the technical component of pathology services provided to hospitals, it could have a material adverse effect on our business.

          We are generally permitted to bill Medicare beneficiaries directly for statutorily excluded clinical testing services. An advance beneficiary notice (“ABN”) is a notice signed by the beneficiary which documents the patient’s informed decision to personally assume financial liability for clinical tests which are likely to be denied and not reimbursed by Medicare because they are deemed to be not medically necessary (these tests include limited coverage tests for which the ordering physician did not provide an appropriate diagnosis code and certain tests ordered on a patient at a frequency greater than covered by Medicare). If a Medicare beneficiary signs an ABN, we are also generally permitted to bill the beneficiary for clinical tests that Medicare does not cover due to “medical necessity” limitations. We do not have any direct contact with most of these patients and, in such cases, cannot control the proper use of the ABN by the physician or the physician’s office staff, who must obtain the ABN on our behalf. If the ABN is not timely provided to the beneficiary or is not completed properly, we may end up performing tests that we cannot subsequently bill to the patient if payment is denied by Medicare due to coverage limitations. CMS has issued manual changes requiring ABNs to include a specific price estimate for tests covered by ABNs. As a result, incorrectly completed forms could increase, resulting in more invalid ABNs and more tests that we cannot bill to the patient.

          Clinical laboratories that bill Medicare or Medicaid could be excluded from participation in any federal healthcare programs if it is determined that without good cause they have submitted bills or requests for payment for items or services substantially in excess of the laboratory’s usual charges for such items or services. The Department of Health and Human Services Office of Inspector General has periodically proposed to define the terms “substantially in excess” and “usual charges,” but has not finalized definitions of these terms.

          CMS is permitted to adjust statutorily prescribed fees for clinical test services if the standard rules by which those payments are calculated will result in fees that are “grossly excessive.” CMS rules set forth a process and factors for establishing a “realistic and equitable” payment amount for clinical test services under Medicare Part B (and services paid under a prospective payment system) if existing payment amounts are determined to be inherently unreasonable; payment amounts may be considered unreasonable if they are either grossly excessive or deficient. Under CMS rules, if CMS or a carrier determines that an overall payment adjustment of less than 15% is needed to produce a realistic and equitable payment amount, then the payment amount is not considered “grossly excessive or deficient.” However, if a determination is made that a payment adjustment of 15% or more is justified, CMS could provide an adjustment of less than 15%, but not more than 15%, in any given year. Fees payable by Medicare could be reduced prospectively as a result of the application of these rules.

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          Historically, most Medicare and Medicaid beneficiaries were covered under the traditional Medicare and Medicaid programs directly administered by the federal government. Over the last several years, the federal government has sponsored programs to expand private health insurance options for Medicare beneficiaries and has encouraged such beneficiaries to switch from the traditional programs to the private programs, called “Medicare Advantage” programs. There has been rapid growth of health insurance plans offering Medicare Advantage programs and of beneficiary enrollment in these plans. In recent years, in an effort to control costs, states also have increasingly mandated that Medicaid beneficiaries enroll in private managed care arrangements. If these efforts continue to be successful, we may experience a further shift of traditional Medicare and Medicaid beneficiaries to private health insurance options.

          Reduced Utilization of Clinical Testing. Government payers, such as Medicare and Medicaid, have taken steps and may continue to take steps to control the utilization and delivery of healthcare services, including clinical test services. Medicare carriers have adopted policies under which they do not pay for many commonly ordered clinical tests unless the ordering physician has provided an appropriate diagnosis code supporting the medical necessity of the test. Physicians are required by law to provide diagnostic information when they order clinical tests for Medicare and Medicaid patients.

          Medicare Administrative Contractors. Historically, many different local intermediaries administered Medicare Part A and many different local carriers administered Medicare Part B (which covers services provide by independent clinical laboratories). They often had inconsistent policies, increasing the complexity of the billing process for clinical laboratories. They are being replaced with contractors who will handle both Part A and Part B. It is expected that the revised system will reduce the administrative complexity of billing for services provided to Medicare beneficiaries.

REGULATION

          Our businesses are subject to or impacted by extensive and frequently changing laws and regulations, including inspections and audits by governmental agencies, in the United States (at both the federal and state levels) and the other jurisdictions in which we engage in these businesses. We also must comply with other laws and regulations that apply to conducting business generally (e.g., export controls laws, U.S. Foreign Corrupt Practices Act and similar laws of other jurisdictions), including in the United States and in the other jurisdictions in which we engage in business. Set forth below are highlights of the key regulatory areas applicable to our businesses.

          CLIA and State Clinical Laboratory Licensing Regulations. All of our laboratories and, where applicable, patient service centers are licensed and accredited as required by the appropriate federal and state agencies. CLIA regulates virtually all clinical laboratories by requiring that they be certified by the federal government and comply with various operational, personnel and quality requirements intended to ensure that the services provided are accurate, reliable and timely. The cost of compliance with CLIA makes it cost prohibitive for many physicians to operate clinical laboratories in their offices. However, manufacturers of laboratory equipment and test kits could seek to increase their sales by marketing point-of-care test equipment to physicians and by selling to both physicians and patients test kits approved by the FDA for home use. Diagnostic tests approved or cleared by the FDA for home use are automatically deemed to be “waived” tests under CLIA and may be performed in physician office laboratories with minimal regulatory oversight under CLIA as well as by patients in their homes.

          CLIA does not preempt state laws that are more stringent than federal law. State laws may require additional personnel qualifications, quality control, record maintenance and/or proficiency testing. State laws also may require detailed review of our scientific validations and technical procedures for each test before approval for use or marketing of services.

          Fraud and Abuse Rules. Federal anti-kickback laws and regulations prohibit making payments or furnishing other benefits to influence the referral of tests billed to Medicare, Medicaid or certain other federal or state healthcare programs. The penalties for violation of these laws and regulations may include monetary fines, criminal and civil penalties and/or suspension or exclusion from participation in Medicare, Medicaid and other federal healthcare programs. Several states have similar laws.

          In addition, federal anti-self-referral laws and the laws of some states generally prohibit Medicare and Medicaid payments for clinical tests referred by physicians who have a personal investment in, or a compensation arrangement with, the testing laboratory. Some states have similar anti-self-referral and other laws that are not limited to Medicare and Medicaid referrals and could also affect investment and compensation arrangements with physicians.

          Drug Testing. The Substance Abuse and Mental Health Services Administration (“SAMHSA”) regulates drug testing for public sector employees and employees of certain federally regulated businesses. All laboratories that perform such testing must be certified as meeting SAMHSA’s detailed performance and quality standards. All of our laboratories that perform such testing are so certified.

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          Medical Waste, Hazardous Waste and Radioactive Materials. Clinical laboratories in the United States are subject to federal, state and local regulations relating to the handling and disposal of regulated medical waste, hazardous waste and radioactive materials. We generally use outside vendors to dispose of such waste and contractually require them to comply with applicable laws and regulations.

          FDA. The FDA has regulatory responsibility, among other things, over instruments, test kits, reagents and other devices used to perform diagnostic testing by clinical laboratories in the United States. The FDA also regulates clinical trials (and, therefore, testing that we perform for sponsors of those trials), drugs-of-abuse testing for employers, testing for blood bank purposes and testing of donors of human cells for purposes such as in vitro fertilization. A number of esoteric tests that are developed internally are first offered as laboratory-developed tests (“LDTs”). In the past, the FDA has claimed regulatory authority over all LDTs, but stated that it is exercising enforcement discretion in not regulating most LDTs performed by high complexity CLIA-certified laboratories. However, the FDA has been petitioned to exercise regulatory authority over certain LDTs and to initiate enforcement action against companies that make effectiveness claims about LDTs that are without sufficient analytical and clinical support. In addition, the FDA has issued two drafts of a guidance document describing certain LTDs as “In Vitro Diagnostic Multivariate Index Assays.” The FDA could finalize this guidance document, clarifying its intention to regulate these tests as medical devices and the laboratories that offer this subset of LDTs. If FDA regulation of this subset of LDTs occurs or if regulation of the various medical devices used in laboratory-developed testing ensues, it would lead to an increased regulatory burden resulting in additional costs and delays in introducing new tests, including genetic tests; this may hinder us from developing and marketing certain new products or services.

          In September 2007, the FDA finalized its Guidance relating to Analyte Specific Reagents (“ASRs”), which laboratories use in their LDTs. As a result, manufacturers of certain products previously marketed as ASRs must file for FDA clearance of these products in order to market them in the United States. Failure to act diligently and to cooperate with the FDA may result in enforcement action against the manufacturer. The increased regulation of these products could result in increased product cost, a delay in obtaining them or, if a manufacturer withdraws its products from the market, an inability to obtain the product. These factors may hinder us from developing and marketing new products or services or cause us to have to increase the cost of our products or services.

          Our diagnostic product business is subject to regulation by the FDA, as well as by foreign governmental agencies, including countries within the European Union who have adopted the Directive on In Vitro Diagnostic Medical Devices (“IVDD”). These agencies enforce laws and regulations that govern the development, testing, manufacturing, labeling, advertising, marketing, distribution and market surveillance of diagnostic products. Prior to marketing or selling most diagnostic products, currently we are required to secure clearance or approval from the FDA and (when appropriate) counterpart non-U.S. regulatory agencies, although the IVDD allows us to market in Europe many products using a process in which the manufacturer certifies that the device conforms to the regulatory and quality requirements for the device. Following the introduction of a diagnostic product into the market, the FDA and non-U.S. agencies engage in periodic reviews of the manufacturing processes and product performance. Compliance with these regulatory controls can affect the time and cost associated with the development, introduction and continued availability of new products. These agencies possess the authority to take various administrative and legal actions against us for non-compliance, such as fines, product suspensions, submission of warning letters, recalls, product seizures, injunctions and other civil and criminal sanctions. Where appropriate, voluntary compliance actions, such as voluntary recalls, may be undertaken.

          Occupational Safety. The federal Occupational Safety and Health Administration (“OSHA”) has established extensive requirements relating specifically to workplace safety for healthcare employers in the United States. This includes requirements to develop and implement multi-faceted programs to protect workers from exposure to blood-borne pathogens, such as HIV and hepatitis B and C, including preventing or minimizing any exposure through sharps or needle stick injuries.

          Transportation. For purposes of transportation, some biological materials and laboratory supplies are classified as hazardous materials and are subject to regulation by one or more of the following agencies: the U.S. Department of Transportation, the U.S. Public Health Service, the United States Postal Service and the International Air Transport Association.

          Corporate Practice of Medicine. Many states, including some in which our businesses are located, prohibit business corporations from engaging in the practice of medicine. In certain states, business corporations are prohibited from employing licensed healthcare professionals to provide services on behalf of the corporation; these laws vary from state to state. The manner in which licensed physicians can be organized to perform medical services may be governed by the laws of the state in which medical services are provided and by the medical boards or other entities authorized by these states to oversee the practice of medicine. In some states, anatomic pathology services are delivered through physician-owned entities that employ the practicing pathologists.

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          Contracts and Relationships with Physicians. In our anatomic pathology business, we employ pathologists. Many of our pathologists enter into an employment agreement. These agreements have varying terms, but generally can be terminated at any time, upon advance notice. Most of the agreements contain covenants generally limiting the activities of the pathologist within a defined geographic area for a limited period of time after termination of employment. The agreements may be subject to limitations under state law that may limit the enforceability of these covenants.

          Our pathologists are required to hold a valid license to practice medicine in the jurisdiction in which they practice. If they provide inpatient services, they must become a member of the medical staff at the relevant hospital, with privileges in pathology.

          Fee-Splitting. Some states restrict the splitting or sharing of fees between physicians and non-physicians. These laws may apply to some of the arrangements that we have with pathologists; the laws vary from state to state.

          Privacy and Security of Health and Personal Information; Standard Transactions. Healthcare providers and others involved in providing healthcare services to patients are required to comply with the federal Health Insurance Portability and Accountability Act (HIPAA) regulations regarding protecting the security and privacy of certain healthcare information, as well as HIPAA standards for electronic healthcare transactions in the United States. The HIPAA regulations on adoption of national provider identifiers required healthcare providers to adopt new, unique identifiers for reporting on claims transactions. The security regulations establish requirements for safeguarding electronic patient information. The privacy regulations establish comprehensive federal standards regarding the uses and disclosures of protected health information. The regulations establish a complex regulatory framework on a variety of subjects. We have implemented practices to meet the requirements of the regulations.

          We also must comply with privacy and security laws and regulations adopted by states in the United States and jurisdictions outside the United States in which we conduct business, including the European Union. Some of these laws and regulations relate to the privacy and security of personal information, such as social security numbers. Some of the laws and regulations impose reporting and disclosure requirements in the event of certain security breaches. We have implemented practices to meet applicable requirements.

          Controlled Substances. The federal Drug Enforcement Administration (“DEA”) regulates access to controlled substances used to perform drugs-of-abuse testing in the United States. To obtain access to controlled substances, laboratories must be licensed by the DEA. All of our laboratories in the United States that use controlled substances are licensed by the DEA.

          Compliance. We seek to conduct our business in compliance with all applicable laws and regulations. Many of the laws and regulations applicable to us, however, including those relating to billing and reimbursement of tests and those relating to relationships with physicians and hospitals, are vague or indefinite and have not been interpreted by the courts. They may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our operations, including our pricing and/or billing practices. The applicability or interpretation of laws and regulations also may not be clear in light of emerging changes in clinical testing science and healthcare technology. Such occurrences, regardless of their outcome, could, among other things:

• increase our operating costs including, but not limited to, those costs associated with performing clinical or anatomic pathology tests or manufacturing or distributing products, and administrative requirements related to billing;

• decrease the amount of reimbursement related to testing services performed;

• damage our reputation; and/or

• adversely affect important business relationships with third parties.

          If we fail to comply with applicable laws and regulations, we could suffer civil and criminal penalties, fines, exclusion from participation in governmental healthcare programs and the loss of various licenses, certificates and authorizations necessary to operate our business, as well as incur additional liabilities from third party claims, all of which could have a material adverse effect on our business. Certain federal and state statues, regulations and other laws, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of government payers, private payers and/or patients alleging inappropriate billing practices.

          The federal or state governments may bring claims based on theories as to our current practices that we believe are lawful. The federal government has substantial leverage in negotiating settlements since the amount of potential damages far exceeds the rates at which we are reimbursed, and the government has the remedy of excluding a non-compliant provider from participation in the Medicare and Medicaid programs, which represented approximately 18% of our net revenues during 2008. We believe that, based on our experience with settlements and public announcements by

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various government officials, the federal government continues to strengthen its enforcement efforts against healthcare fraud. In addition, legislative provisions relating to healthcare fraud and abuse provide federal enforcement personnel substantially increased funding, powers and remedies to pursue suspected cases of fraud and abuse.

          We have a long-standing and well-established compliance program. The Quality, Safety & Compliance Committee of our Board of Directors oversees our compliance program and requires periodic management reports regarding our compliance program. Our program emphasizes the development of training programs intended to ensure the strict implementation and observance of all applicable laws, regulations and Company policies. Further, we conduct in-depth reviews of procedures and facilities to assure regulatory compliance throughout our operations. We conduct annual training of our employees on these compliance policies and procedures.

AVAILABLE INFORMATION

          We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy any document that we file with the SEC at the SEC’s public reference room at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for information regarding the public reference room. The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and information statements and other information that issuers (including Quest Diagnostics) file electronically with the SEC. Our electronic SEC filings are available to the public at the SEC’s internet site, www.sec.gov.

          Our internet site is www.questdiagnostics.com. You can access Quest Diagnostics’ Investor Relations webpage at www.questdiagnostics.com/investor. We make available free of charge, on or through our Investor Relations webpage, our proxy statements, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practical after such material is filed with, or furnished to, the SEC. We also make available, through our Investor Relations webpage, statements of beneficial ownership of our equity securities filed by our directors, officers, 10% or greater shareholders and others under Section 16 of the Exchange Act.

          We have a corporate governance webpage. You can access information regarding our corporate governance at www.questdiagnostics.com/governance. We post the following on our corporate governance webpage:

• Code of Business Ethics

• Integrity Commitment

• Values

• Corporate Governance Guidelines

• Charters for our Audit and Finance Committee, Compensation Committee, Executive Committee, Governance Committee and Quality, Safety and Compliance Committee

• Certificate of Incorporation

• Bylaws

          You can request a copy of these documents, including exhibits, at no cost, by contacting Investor Relations, 3 Giralda Farms, Madison, New Jersey 07940 (973-520-2700). The information on our website is not incorporated by reference into this Report.

EXECUTIVE OFFICERS OF THE COMPANY

The following persons serve as executive officers of the Company.

          Surya N. Mohapatra, Ph.D. (59) is Chairman of the Board, President and Chief Executive Officer. Prior to joining the Company in February 1999 as Senior Vice President and Chief Operating Officer, he was Senior Vice President of Picker International, a worldwide leader in advanced medical imaging technologies. Dr. Mohapatra was appointed President and Chief Operating Officer in June 1999, Chief Executive Officer in May 2004 and Chairman of the Board in December 2004. He is a director of ITT Corporation. Dr. Mohapatra has been a director of the Company since 2002.

          Robert A. Hagemann (52) is Senior Vice President and Chief Financial Officer. He joined Corning Life Sciences, Inc. in 1992, where he held a variety of senior financial positions before being named Vice President and Corporate Controller of the Company in 1996. Mr. Hagemann has served as Chief Financial Officer since August 1998. He is a director of Zimmer Holdings, Inc.

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          Joan E. Miller, Ph.D. (54) is Senior Vice President - Pathology and Hospital Services. Dr. Miller joined Corning Life Sciences, Inc. in 1992 and since has held positions of increasing responsibility. Dr. Miller was named Senior Managing Director, Nichols Institute in 2002 and Vice President, Hospital Business in 2003. Since June 2007, Dr. Miller has overseen the Company’s hospital services business, including its esoteric testing facilities, and its anatomic pathology services business, including AmeriPath.

          Michael E. Prevoznik (47) is Senior Vice President and General Counsel. Mr. Prevoznik joined the Company as Vice President and General Counsel in August 1999. In 2003, he assumed responsibility for governmental affairs. Prior to joining the Company, Mr. Prevoznik served in positions of increasing responsibility within the compliance organization at SmithKline Beecham, most recently as Vice President, Compliance, with responsibility for coordinating all SmithKline Beecham compliance activities worldwide.

          Wayne R. Simmons (53) is Vice President - Operations. Since July 2007, he has overseen the Company’s U.S. clinical testing operations. Mr. Simmons joined the Company in February 2004 as Vice President for our central region. Prior to joining the Company, Mr. Simmons served in positions of increasing responsibility with Philips Medical Systems, including, since 2002, as Vice President of Supply Chain, in which position he was responsible for operations at Philips Medical Systems CT Operations facilities globally.

Item 1A. Risk Factors

          You should carefully consider all of the information set forth in this Report, including the following risk factors, before deciding to invest in any of our securities. The risks below are not the only ones that we face. Additional risks not presently known to us, or that we presently deem immaterial, may also negatively impact us. Our business, financial condition, results of operations or cash flows could be materially impacted by any of these factors.

          This Report also includes forward-looking statements that involve risks or uncertainties. Our results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face described below and elsewhere. See “Cautionary Factors that May Affect Future Results” on page 28.

Recent changes in U.S., global, or regional economic conditions could have an adverse effect on our businesses.

          The recent unprecedented level of volatility and disruption in the financial markets has adversely affected economic activity in the United States and other regions of the world in which we do business. The continued decline in economic conditions may adversely affect demand for our services and products, thus reducing our revenue. These conditions could also impair the ability of those with whom we do business to satisfy their obligations to us.

          In addition, these conditions have increased uncertainty regarding the availability of, and terms of access to, external sources of capital. If we were unable to secure access to external capital over a sustained period of time or on reasonable terms, this could impair our ability to achieve our business objectives.

The clinical testing business is highly competitive, and if we fail to provide an appropriately priced level of service or otherwise fail to compete effectively it could have a material adverse effect on our net revenues and profitability.

          While there has been significant consolidation in recent years in the clinical testing business, it remains a fragmented and highly competitive industry.

          We primarily compete with three types of clinical test providers: hospital-affiliated laboratories, other independent clinical laboratories and physician-office laboratories. We also compete with anatomic pathology practices and large physician group practices. Hospitals generally maintain on-site laboratories to perform testing on their patients (inpatient or outpatient). In addition, many hospitals compete with independent clinical laboratories for outreach (non-hospital patients) testing. Most physicians have admitting privileges or other relationships with hospitals as part of their medical practice and hospitals may seek to leverage their relationships with community physicians and encourage the physicians to send their outreach testing to the hospital’s laboratory. In addition, hospitals that own physician practices generally require the physicians to refer tests to the hospital’s laboratory. As a result of this affiliation between hospitals and community physicians, we compete against hospital-affiliated laboratories primarily based on quality of service. Our failure to provide a broad test menu or service superior to hospital-affiliated laboratories and other laboratories could have a material adverse effect on our business.

          If we fail to compete effectively, our business could be adversely affected and our net revenues and profitability could be damaged.

Our business could be adversely impacted if healthcare reform focuses on reducing healthcare costs but does not recognize the value and importance of diagnostic testing.

          Government oversight of and attention to the healthcare industry in the United States is significant and may increase. There has been extensive public discussion of healthcare reform. While it is not possible to predict whether

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change in U.S. government regulation of healthcare will occur, or the nature or impact of any such change, our business could be adversely impacted if healthcare reform focuses on reducing healthcare costs but does not recognize the value and importance of diagnostic testing.

Government payers, such as Medicare and Medicaid, have taken steps to control the utilization and reimbursement of healthcare services, including clinical test services.

          We face efforts by government payers to reduce utilization and reimbursement for clinical testing services.

          From time to time, Congress has legislated reductions in, or frozen updates to, the Medicare Clinical Laboratory Fee Schedule. In addition, CMS has adopted policies limiting or excluding coverage for clinical tests that we perform. We also provide physician services which are reimbursed by Medicare under a physician fee schedule, which is subject to adjustment on an annual basis. CMS changes add to our costs by increasing complexity and administrative requirements. Medicaid reimbursement varies by state and is subject to administrative and billing requirements and budget pressures.

          In addition, over the last several years, the federal government has sponsored programs to expand private health insurance programs for Medicare beneficiaries, called “Medicare Advantage” programs, and has encouraged such beneficiaries to switch from the traditional programs to the private programs. There has been rapid growth of health insurance plans offering Medicare Advantage programs, and of beneficiary enrollment in these programs. Also in recent years, states have increasingly mandated that Medicaid beneficiaries enroll in private managed care arrangements. If these efforts continue to be successful, we may experience a further shift of traditional Medicare and Medicaid beneficiaries to private health insurance options. Recently, state budget pressures have encouraged states to consider several courses that may impact our business, such as delaying payments, reducing reimbursement, restricting coverage eligibility, service coverage restrictions and imposing taxes on our services.

          From time to time, the federal government has considered whether competitive bidding can be used to provide clinical testing services for Medicare beneficiaries at attractive rates while maintaining quality and access to care. In 2008, Congress enacted legislation that eliminated a proposed competitive bidding demonstration project for clinical testing services. State governments also have considered from time to time whether to apply competitive bidding to clinical testing services. The industry remains concerned about the potential use of competitive bidding for clinical testing services and believes that the quality of services and access to those services could be adversely impacted by implementation of competitive bidding. If competitive bidding were implemented on a regional or national basis for clinical testing, it could materially adversely affect us.

          We expect efforts to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of clinical test services will continue. These efforts, including changes in law or regulations, may have a material adverse impact on our business.

Healthcare plans have taken steps to control the utilization and reimbursement of healthcare services, including clinical test services.

          We also face efforts by non-governmental third party payers, including healthcare plans, to reduce utilization and reimbursement for clinical testing services.

          The healthcare industry has experienced a trend of consolidation among healthcare insurance plans, resulting in fewer but larger insurance plans with significant bargaining power to negotiate fee arrangements with healthcare providers, including clinical laboratories. These healthcare plans, and independent physician associations, may demand that clinical laboratories accept discounted fee structures or assume all or a portion of the financial risk associated with providing testing services to their members through capitated payment arrangements. In addition, some healthcare plans have been willing to limit the PPO or POS laboratory network to only a single national laboratory to obtain improved fee-for-service pricing. There are also an increasing number of patients enrolling in consumer driven products and high deductible plans that involve greater patient cost-sharing.

          The increased consolidation among healthcare plans also has increased the potential adverse impact of ceasing to be a contracted provider with any such insurer.

          We expect continuing efforts to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of clinical test services. These efforts, including future changes in third-party payer rules, practices and policies, or ceasing to be a contracted provider to a healthcare plan, may have a material adverse effect on our business.

Business development activities are inherently risky, and integrating our operations with businesses we acquire may be difficult and, if unsuccessfully executed, may have a material adverse effect on our business.

          We plan selectively to enhance our business from time to time through business development activities, such as strategic acquisitions, licensing, investments and alliances. However, these plans are subject to the availability of appropriate opportunities and competition from other companies seeking similar opportunities. Moreover, the success of

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any such effort may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity, and to integrate it into our business. The success of our strategic alliances depends not only on our contributions and capabilities, but also on the property, resources, efforts and skills contributed by our strategic partners. Further, disputes may arise with strategic partners, due to conflicting priorities or conflicts of interests.

          Each acquisition involves the integration of a separate company that was previously operated independently and has different systems, processes, policies and cultures. Integration of acquisitions involves a number of risks including the diversion of management’s attention to the assimilation of the operations of businesses we have acquired, difficulties in the integration of operations and systems and the realization of potential operating synergies, the assimilation and retention of the personnel of the acquired companies, challenges in retaining the customers of the combined businesses, and potential adverse effects on operating results. The process of combining companies may be disruptive to our businesses and may cause an interruption of, or a loss of momentum in, such businesses as a result of the following difficulties, among others:

• loss of key customers or employees;

• difficulty in standardizing information and other systems;

• difficulty in consolidating facilities and infrastructure;

• failure to maintain the quality of services that our Company has historically provided;

• diversion of management’s attention from the day-to-day business of our Company as a result of the need to deal with the foregoing disruptions and difficulties; and

• the added costs of dealing with such disruptions.

          If we are unable successfully to integrate strategic acquisitions in a timely manner, our business and our growth strategies could be negatively affected. Even if we are able to successfully complete the integration of the operations of other companies or businesses we may acquire in the future, we may not be able to realize all or any of the benefits that we expect to result from such integration, either in monetary terms or in a timely manner.

Our business could be negatively affected if we are unable successfully to continue to improve our efficiency.

          As noted above, government payers and healthcare insurers have taken steps to control the utilization and reimbursement of healthcare services, including clinical testing services; such steps may continue. If we are unable to continue to improve our efficiency to enable us to mitigate the impact on our profitability of these activities, our business could be negatively affected.

Adverse resolution of the investigation related to NID may cause us material losses and have an adverse impact on our business and reputation.

          NID and the Company each received a subpoena from the United States Attorney’s Office for the Eastern District of New York during the fourth quarter of 2004. The subpoenas requested a wide range of business records, including documents regarding parathyroid hormone (“PTH”) test kits manufactured by NID and PTH testing performed by the Company. The Company has voluntarily and actively cooperated with the investigation, providing information, witnesses and business records of NID and the Company, including documents related to PTH tests and test kits, as well as other tests and test kits. In the second and third quarters of 2005, the FDA conducted an inspection of NID and issued a Form 483 listing the observations made by the FDA during the course of the inspection. NID responded to the Form 483.

          During the third quarter of 2007, the government and the Company began settlement discussions. In the course of those discussions, the government disclosed to the Company certain of the government’s legal theories regarding the amount of damages allegedly incurred by the government, which include alleged violations of civil and criminal statutes including the False Claims Act and the Food, Drug and Cosmetics Act. Violations of these statutes and related regulations could lead to a warning letter, injunction, fines or penalties, exclusion from federal healthcare programs and/or criminal prosecution, as well as claims by third parties. During the third quarter of 2008, the Company and the United States Attorney’s Office reached an agreement in principle to resolve these claims. As part of the agreement, NID, which was closed in 2006, is expected to enter a guilty plea to a single count of felony misbranding. The terms of the settlement are subject to the final negotiation and execution of definitive agreements, which is expected to include a corporate integrity agreement, the approval by the United States Department of Justice and the United States Department of Health and Human Services and satisfactory resolution of related state claims. There can be no assurance, however, when or if a settlement may be finalized, or as to its terms. If a settlement is not finalized, the Company would defend itself and NID and could incur significant costs in doing so.

          Any settlement is expected to include a corporate integrity agreement which may adversely impact our business operations and increase our costs.

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          The Company has established a reserve reflected in discontinued operations of $316 million in connection with these claims. The reserve reflects the Company’s current estimate of the expected probable loss with respect to these matters, assuming the settlement is finalized. If a settlement is not finalized, the eventual losses related to these matters could be materially different than the amount reserved and could be material to the Company’s results of operations, cash flows and financial condition in the period that such matters are determined or paid.

We are subject to numerous legal and regulatory requirements governing our activities, and we may face substantial fines and penalties, and our business activities may be impacted, if we fail to comply.

          Our business is subject to or impacted by extensive and frequently changing laws and regulations in the United States (including at both the federal and state levels), and the other jurisdictions in which we engage in business. While we seek to conduct our business in compliance with all applicable laws, many of the laws and regulations applicable to us are vague or indefinite and have not been interpreted by the courts, including those relating to:

• billing and reimbursement of clinical tests;

• certification of clinical laboratories;

• the anti-self-referral and anti-kickback laws and regulations;

• the laws and regulations administered by the U.S. Food and Drug Administration;

• the corporate practice of medicine;

• operational, personnel and quality requirements intended to ensure that clinical testing services are accurate, reliable and timely;

• physician fee splitting;

• relationships with physicians and hospitals;

• safety and health of laboratory employees; and

• handling, transportation and disposal of medical specimens, infectious and hazardous waste and radioactive materials.

          These laws and regulations may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our operations, including our pricing and/or billing practices. We may not be able to maintain, renew or secure required permits, licenses or any other regulatory approvals needed to operate our business or commercialize our products. If we fail to comply with applicable laws and regulations, or if we fail to maintain, renew or obtain necessary permits, licenses and approvals, we could suffer civil and criminal penalties, fines, exclusion from participation in governmental healthcare programs and the loss of various licenses, certificates and authorizations necessary to operate our business, as well as incur additional liabilities from third party claims. If any of the foregoing were to occur, our reputation could be damaged, important business relationships with third parties could be adversely affected and it could have a material adverse effect on our business.

          We regularly receive requests for information, and occasionally subpoenas, from governmental authorities. We also are subject from time to time to qui tam claims brought by former employees or other “whistle blowers.” The federal and state governments continue to strengthen their position and scrutiny over healthcare fraud. In addition, legislative provisions relating to healthcare fraud and abuse provide federal enforcement personnel substantially increased funding, powers and remedies to pursue suspected fraud and abuse. The government has substantial leverage in negotiating settlements since the amount of potential damages far exceeds the rates at which we are reimbursed for our products and services, and the government has the remedy of excluding a non-compliant provider from participation in the Medicare and Medicaid programs, which represented approximately 18% of our net revenues for the year ended December 31, 2008. Regardless of merit or eventual outcome, these types of investigations and related litigation can result in:

• diversion of management time and attention;

• expenditure of large amounts of cash on legal fees, costs and payment of damages;

• limitations on our ability to continue some of our operations;

• enforcement actions, fines and penalties or the assertion of private litigation claims and damages;

• decreased demand for our services and products; and/or

• injury to our reputation.

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          Although we believe that we are in compliance, in all material respects, with applicable laws and regulations, there can be no assurance that a regulatory agency or tribunal would not reach a different conclusion. Any noncompliance by us with applicable laws and regulations could have a material adverse effect on our results of operations. Moreover, even when an investigation is resolved favorably, the process may be time-consuming and the legal costs and diversion of management focus may be extensive.

          Changes in applicable laws and regulations may result in existing practices becoming more restricted, or subject our existing or proposed services and products to additional costs, delay, modification, withdrawal or reconsideration. Such changes could require us to modify our business objectives and could have a material adverse effect on our business.

Failure to timely or accurately bill for our services could have a material adverse effect on our business.

          Billing for clinical testing services is extremely complicated and is subject to extensive and non-uniform rules and administrative requirements. Depending on the billing arrangement and applicable law, we bill various payers, such as patients, insurance companies, Medicare, Medicaid, physicians, hospitals and employer groups. Changes in laws and regulations could increase the complexity and cost of our billing process. Additionally, auditing for compliance with applicable laws and regulations as well as internal compliance policies and procedures adds further cost and complexity to the billing process. Further, our billing systems require significant technology investment and, as a result of marketplace demands, we need to continually invest in our billing systems.

          Missing or incorrect information on requisitions adds complexity to and slows the billing process, creates backlogs of unbilled requisitions, and generally increases the aging of accounts receivable and bad debt expense. We believe that much of our bad debt expense in recent years is attributable to the lack of, or inaccurate, billing information. Failure to timely or correctly bill may lead to our not being reimbursed for our services or an increase in the aging of our accounts receivable, which could adversely affect our results of operations and cash flows. Failure to comply with applicable laws relating to billing federal healthcare programs could lead to various penalties, including: (1) exclusion from participation in Medicare/Medicaid programs; (2) asset forfeitures; (3) civil and criminal fines and penalties; and (4) the loss of various licenses, certificates and authorizations necessary to operate our business, any of which could have a material adverse effect on our results of operations or cash flows.

Failure in our information technology systems, including failures resulting from our systems conversions, could disrupt our operations and cause the loss of customers or business opportunities.

          Information technology (IT) systems are used extensively in virtually all aspects of our business, including clinical testing, test reporting, billing, customer service, logistics and management of medical data. Our success depends, in part, on the continued and uninterrupted performance of our IT systems. IT systems may be vulnerable to damage from a variety of sources, including telecommunications or network failures, human acts and natural disasters. Moreover, despite the security measures we have implemented, our IT systems may be subject to physical or electronic break-ins, computer viruses and similar disruptive problems. We also have taken precautionary measures to prevent unanticipated problems that could affect our IT systems. Nevertheless, we may experience damages to our systems, and system failures and interruptions.

          In addition, we are in the process of implementing standard laboratory information and billing systems, which we expect will take several years to complete. Failure to properly implement this standardization process could materially adversely affect our business. During system conversions of this type, workflow is re-engineered to take advantage of best practices and enhanced system capabilities, which may cause temporary disruptions in service. In addition, the implementation process, including the transfer of databases and master files to new data centers, presents significant conversion risks that need to be managed carefully.

          If we experience systems problems, including with our implementation of standard laboratory or billing systems, they may interrupt our ability to operate. For example, the problems may impact our ability to process test orders, deliver test results or perform or bill for tests in a timely manner. If our operations are interrupted, it could adversely affect our reputation and result in a loss of customers and net revenues.

Failure to develop, or acquire licenses for, new tests, technology and services could negatively impact our testing volume and net revenues.

          The diagnostics testing industry is faced with changing technology and new product introductions. Other companies or individuals, including our competitors, may obtain patents or other property rights that would prevent, limit or interfere with our ability to develop, perform or sell our tests or operate our business or increase our costs. In addition, they could introduce new tests that may result in a decrease in the demand for our tests or cause us to reduce the prices of our tests. Our success in continuing to introduce new tests, technology and services will depend, in part, on our ability to license new and improved technologies on favorable terms. We may be unable to develop or introduce new tests. We also may be unable to continue to negotiate acceptable licensing arrangements, and arrangements that we do conclude may not yield commercially successful diagnostic tests. If we are unable to license these testing methods at competitive rates, our

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research and development costs may increase as a result. In addition, if we are unable to develop and introduce, or license, new tests, technology and services to expand our esoteric testing business, our testing methods may become outdated when compared with our competition and our testing volume and revenue may be materially and adversely affected.

We may be subject to intellectual property litigation that could adversely impact our business.

          We may be subject to intellectual property litigation and we may be found to infringe on the proprietary rights of others, which could force us to do one or more of the following:

• cease developing, performing or selling products or services that incorporate the challenged intellectual property;

• obtain and pay for licenses from the holder of the infringed intellectual property right;

• redesign or reengineer our tests;

• change our business processes; or

• pay substantial damages, court costs and attorneys’ fees, including potentially increased damages for any infringement held to be willful.

The development of new, more cost-effective tests that can be performed by our customers or by patients, or the internalization of testing by hospitals or physicians, could negatively impact our testing volume and net revenues.

          Advances in technology may lead to the development of more cost-effective tests that can be performed outside of an independent clinical laboratory such as (1) point-of-care tests that can be performed by physicians in their offices, (2) esoteric tests that can be performed by hospitals in their own laboratories or (3) home testing that can be performed by patients in their homes or by physicians in their offices. Although the CLIA compliance costs make it cost prohibitive for many physicians to operate clinical laboratories in their offices, manufacturers of laboratory equipment and test kits could seek to increase their sales by marketing point-of-care test equipment to physicians. Diagnostic tests approved or cleared by the FDA for home use are automatically deemed to be “waived” tests under CLIA and may be performed in physician office laboratories with minimal regulatory oversight under CLIA as well as by patients in their homes. Test kit manufacturers could seek to increase sales to both physicians and patients of test kits approved by the FDA for point-of-care testing or home use. Development of such technology and its use by our customers would reduce the demand for our laboratory-based testing services and negatively impact our net revenues.

          Our customers, such as hospitals and physicians, may internalize tests that we currently perform. If our customers were to internalize tests that we currently perform and we did not develop new or alternative tests attractive to our customers, the demand for our testing services may be reduced and our net revenues may be materially adversely impacted.

Our outstanding debt may impair our financial and operating flexibility.

          As of December 31, 2008, we had approximately $3.1 billion of long-term debt outstanding. Except for outstanding letters of credit and operating leases, we do not have any off-balance sheet financing arrangements in place or available. Our debt agreements contain various restrictive covenants. These restrictions could limit our ability to use operating cash flow in other areas of our business because we must use a portion of these funds to make principal and interest payments on our debt. We have obtained ratings on our debt from Standard and Poor’s and Moody’s Investor Services. There can be no assurance that any rating so assigned will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if in that rating agency’s judgment future circumstances relating to the basis of the rating, such as adverse changes in our Company or our industry, so warrant. If such ratings are lowered, the borrowing costs on our senior unsecured revolving credit facility, secured receivables facility and term loan would increase. Changes in our credit ratings, however, do not require repayment or acceleration of any of our debt.

          We or our subsidiaries may incur additional indebtedness in the future. Our ability to make principal and interest payments will depend on our ability to generate cash in the future. If we incur additional debt, a greater portion of our cash flows may be needed to satisfy our debt service obligations and if we do not generate sufficient cash to meet our debt service requirements, we may need to seek additional financing. In this case, it may be more difficult, or we may be unable, to obtain financing on terms that are acceptable to us. As a result, we would be more vulnerable to general adverse economic, industry and capital markets conditions as well as the other risks associated with indebtedness.

Our ability to attract and retain qualified employees is critical to the success of our business and the failure to do so may materially adversely affect our performance.

          Our people are a critical resource. The supply of qualified personnel may be limited and competition for qualified employees is strong. If we were to lose, or to fail to attract and retain, key management personnel or qualified

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skilled technical or professional employees at our clinical laboratories, research centers or manufacturing facilities, our earnings and revenues could be adversely affected. In addition, if we were to lose, or to fail to attract and retain, skilled pathologists with positive relationships with their respective local medical communities, particularly those with subspecialties, our earnings and revenues could be adversely affected.

Failure to establish, and perform to, appropriate quality standards to assure that the highest level of quality is observed in the performance of our testing services and in the design, manufacture and marketing of our products could adversely affect the results of our operations and adversely impact our reputation.

          The provision of clinical testing services, including anatomic pathology services, and related services, and the design, manufacture and marketing of diagnostic products involve certain inherent risks. The services that we provide and the products that we design, manufacture and market are intended to provide information for healthcare providers in providing patient care. Therefore, users of our services and products may have a greater sensitivity to errors than the users of services or products that are intended for other purposes.

          Manufacturing or design defects, unanticipated use of our products, or inadequate disclosure of risks relating to the use of the product can lead to injury or other adverse events. These events could lead to recalls or safety alerts relating to our products (either voluntary or required by governmental authorities) and could result, in certain cases, in the removal of a product from the market. Any recall could result in significant costs as well as negative publicity that could reduce demand for our products. Personal injuries relating to the use of our products can also result in product liability claims being brought against us. In some circumstances, such adverse events could also cause delays in new product approvals.

          Similarly, negligence in performing our services can lead to injury or other adverse events. We may be sued under physician liability or other liability law for acts or omissions by our pathologists, laboratory personnel and hospital employees who are under the supervision of our hospital-based pathologists. We are subject to the attendant risk of substantial damages awards and risk to our reputation.

The failure of our IT systems to keep pace with technological advances may significantly reduce our revenues or increase our expenses.

          Public and private initiatives to create healthcare information technology (HCIT) standards and to mandate standardized clinical coding systems for the electronic exchange of clinical information, including test results, could require costly modifications to our existing HCIT systems. While we do not expect HCIT standards to be adopted or implemented without adequate time to comply, if we fail to adopt or delay in implementing HCIT standards, we could lose customers and business opportunities.

Our operations and reputation may be impaired if we do not comply with privacy laws or information security policies.

          In our business, we generate or maintain sensitive information, such as patient data. If we do not adequately safeguard that information and it were to become available to persons or entities that should not have access to it, our business could be impaired and our reputation could suffer.

We are subject to numerous political, legal, operational and other risks as a result of our international operations which could impact our business in many ways.

          Although we conduct most of our business in the United States, our expanding international operations increase our exposure to the inherent risks of doing business in international markets. Depending on the market, these risks include, without limitation:

• changes in the local economic environment;

• political instability;

• social changes;

• intellectual property legal protections and remedies;

• trade regulations;

• procedures and actions affecting approval, production, pricing, reimbursement and marketing of products and services;

• exchange controls;

• weak legal systems which may affect our ability to enforce contractual rights;

• changes in local laws or regulations; and

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• potentially longer payment and collection cycles.

          International operations also require us to devote significant management resources to implement our controls and systems in new markets, to comply with the U.S. Foreign Corrupt Practices Act and similar laws in local jurisdictions and to overcome challenges based on differing languages and cultures.

          We expect to expand further our international operations, through acquisition or otherwise, which would increase these risks. As a result of these risks, our financial condition or results of operations could be materially adversely affected.

Our medical diagnostic products business is subject to numerous governmental regulations and it can be costly to comply with these regulations and to develop compliant diagnostics products.

          Our medical diagnostic products are subject to extensive regulation by numerous governmental authorities in the United States, including the FDA, and by regulatory authorities outside the United States, including the European Commission. The process of obtaining regulatory clearance or approval to market a medical diagnostic product can be costly and time-consuming, and clearance or approval for future products is never certain. Even when additional indications or uses of existing products are sought, securing clearance or approval is never certain. Delays in the receipt of, or failure to obtain clearance or approval for, future products, or new indications or uses, could result in delayed realization of product revenues and in substantial additional costs.

          In addition, no assurance can be given that we will remain in compliance with applicable regulations once clearance or approval has been obtained for a product. These requirements include, among other things, regulations regarding manufacturing practices, product labeling and advertising and postmarketing reporting, including adverse event reports and field alerts due to manufacturing quality concerns. Our diagnostic product facilities and procedures and those of our suppliers are subject to ongoing regulation, including periodic inspection by the FDA and other regulatory authorities. Failure to comply with applicable rules could result in, among other things, substantial modifications to our business practices and operations; refunds, recalls or seizures of our products; a total or partial shutdown of production in one or more of our facilities while we or our suppliers remedy the alleged violation; the inability to obtain future pre-market clearances or approvals; and withdrawals or suspensions of current products from the market. Any of these events could disrupt our business and have a material adverse effect on our revenues, profitability or financial condition.

Our efforts to develop commercially successful medical diagnostic products may not succeed.

          We may commit substantial efforts, funds and other resources to developing commercially successful medical diagnostic products. A high rate of failure is inherent in the development of new medical diagnostic products. There is no assurance that our efforts to develop these products will be commercially successful. Failure can occur at any point in the development process, including after significant funds have been invested.

          Promising new product candidates may fail to reach the market or may have only limited commercial success because of efficacy or safety concerns, failure to achieve positive clinical outcomes, inability to obtain necessary regulatory approvals, limited scope of approved uses, excessive costs to manufacture, the failure to establish or maintain intellectual property rights, or the infringement of intellectual property rights of others. Even if we successfully develop new products or enhancements or new generations of our existing products, they may be quickly rendered obsolete by changing customer preferences or changing industry standards. Innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third party reimbursement. We cannot state with certainty when or whether any of our medical diagnostic products under development will be launched, whether we will be able to develop, license or otherwise acquire products, or whether any diagnostic products will be commercially successful. Failure to launch successful new products or new indications for existing products may cause our products to become obsolete.

Our operations may be adversely impacted by the effects of natural disasters such as hurricanes and earthquakes, hostilities or acts of terrorism and other criminal activities.

          Our operations may be adversely impacted by the effects of natural disasters such as hurricanes and earthquakes, hostilities or acts of terrorism or other criminal activities. Such events may result in a temporary decline in the number of patients who seek clinical testing services. In addition, such events may temporarily interrupt our ability to transport specimens, to receive materials from our suppliers or otherwise to provide our services.

Our business could be adversely impacted by CMS’ adoption of the new coding set for diagnoses.

          CMS has adopted a new coding set for diagnosis, commonly known as ICD-10, which significantly expands the coding set for diagnoses. The new coding set is currently required to be implemented by October 1, 2013. We may be required to incur significant expense in implementing the new coding set, and if we do not adequately implement it, our business could be adversely impacted. In addition, if as a result of the new coding set physicians fail to provide appropriate codes for desired tests, we may not be reimbursed for such tests.

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Adverse results in material litigation could have an adverse financial impact and an adverse impact on our client base and reputation.

          We are involved in various legal proceedings arising in the ordinary course of business including, among other things, disputes as to intellectual property, professional liability and employee-related matters, as well as inquiries from governmental agencies and Medicare or Medicaid carriers regarding billing issues. Some of the proceedings against us involve claims that are substantial in amount and could divert management’s attention from operations. The proceedings also may result in substantial monetary damages, as well as damage to our reputation, and decrease the demand for our services and products, all of which could have a material adverse effect on our business. We do not have insurance or are substantially self-insured for a significant portion of any liability with respect to such claims. The ultimate outcome of the various proceedings or claims could have a material adverse effect on our financial condition, results of operations or cash flows in the period in which the impact of such matters is determined or paid.

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CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

          Some statements and disclosures in this document are forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may”, “believe”, “will”, “expect”, “project”, “estimate”, “anticipate”, “plan” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ materially from the forward-looking statements. Investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this document. The following important factors could cause our actual financial results to differ materially from those projected, forecasted or estimated by us in forward-looking statements:

(a)	Heightened competition from independent clinical testing companies, and from hospitals with respect to testing for non-patients and from physicians.
(b)	Increased pricing pressure from customers and payers.
(c)	A sustained decline in economic conditions, or turmoil in financial markets leading to lack of access to external capital over a sustained period of time or on reasonable terms.
(d)	Impact of changes in payer mix, including any shift from fee-for-service to discounted or capitated fee arrangements.
(e)	Adverse actions by government or other third-party payers, including healthcare reform that focuses on reducing healthcare costs but does not recognize the value and importance to healthcare of diagnostic testing, unilateral reduction of fee schedules payable to us, competitive bidding, and an increase in the practice of negotiating for exclusive arrangements that involve aggressively priced capitated or fee-for-service payments by health insurers or other payers.
(f)	The impact upon our testing volume and collected revenue or general or administrative expenses resulting from our compliance with Medicare and Medicaid administrative policies and requirements of third party payers. These include:
	(1)	the requirements of Medicare carriers to provide diagnosis codes for many commonly ordered tests and the possibility that third party payers will increasingly adopt similar requirements;
	(2)	the policy of CMS to limit Medicare reimbursement for tests contained in automated chemistry panels to the amount that would have been paid if only the covered tests, determined on the basis of demonstrable “medical necessity,” had been ordered;
	(3)	continued inconsistent practices among the different local carriers administering Medicare;
	(4)	inability to obtain from patients a valid advance beneficiary notice form for tests that cannot be billed without prior receipt of the form; and
	(5)	increased challenges in operating as a non-contracted provider with respect to health plans.
(g)	Adverse results from pending or future government investigations, lawsuits or private actions. These include, in particular, monetary damages, loss or suspension of licenses, and/or suspension or exclusion from the Medicare and Medicaid programs and/or criminal penalties.
(h)	Failure to efficiently integrate acquired businesses and to manage the costs related to any such integration, or to retain key technical, professional or management personnel.
(i)	Denial of CLIA certification or other licenses for any of our clinical laboratories under the CLIA standards, revocation or suspension of the right to bill the Medicare and Medicaid programs or other adverse regulatory actions by federal, state and local agencies.
(j)	Changes in federal, state or local laws or regulations, including changes that result in new or increased federal or state regulation of commercial clinical laboratories or tests developed by commercial clinical laboratories, including regulation by the FDA.
(k)	Inability to achieve expected benefits from our acquisitions of other businesses.
(l)	Inability to achieve additional benefits from our Six Sigma and efficiency initiatives.
(m)	Adverse publicity and news coverage about the clinical testing industry or us.
(n)	Computer or other IT system failures that affect our ability to perform tests, report test results or properly

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	bill customers, including potential failures resulting from the standardization of our IT systems and other system conversions, telecommunications failures, malicious human acts (such as electronic break-ins or computer viruses) or natural disasters.
(o)	Development of technologies that substantially alter the practice of clinical test medicine, including technology changes that lead to the development of more cost-effective tests such as (1) point-of-care tests that can be performed by physicians in their offices, (2) esoteric tests that can be performed by hospitals in their own laboratories or (3) home testing that can be carried out without requiring the services of clinical laboratories.
(p)	Issuance of patents or other property rights to our competitors or others that could prevent, limit or interfere with our ability to develop, perform or sell our tests or operate our business.
(q)	Development of tests by our competitors or others which we may not be able to license, or usage of our technology or similar technologies or our trade secrets by competitors, any of which could negatively affect our competitive position.
(r)	Regulatory delay or inability to commercialize newly developed or licensed products, tests or technologies or to obtain appropriate reimbursements for such tests.
(s)	Inability to obtain or maintain adequate patent and other proprietary rights protections of our products and services or to successfully enforce our proprietary rights.
(t)	Impact of any national healthcare information network and the adoption of standards for health information technology interoperability that are incompatible with existing software and hardware infrastructure requiring widespread replacement of systems and/or software.
(u)	Inability to promptly or properly bill for our services or to obtain appropriate payments for services that we do bill.
(v)	Changes in interest rates and changes in our credit ratings from Standard & Poor’s and Moody’s Investor Services causing an unfavorable impact on our cost of and access to capital.
(w)	Inability to hire and retain qualified personnel or the loss of the services of one or more of our key senior management personnel.
(x)	Terrorist and other criminal activities, hurricanes, earthquakes or other natural disasters, which could affect our customers, transportation or systems, or our facilities, and for which insurance may not adequately reimburse us.
(y)	Difficulties and uncertainties in the discovery, development, regulatory environment and/or marketing of new products or new uses of existing products.

Item 1B. Unresolved Staff Comments

          There are no unresolved SEC comments that require disclosure.

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Item 2. Properties

          Our executive offices are located in Madison, New Jersey. We maintain clinical testing laboratories in major metropolitan areas and elsewhere throughout the continental United States; in several instances a joint venture of which we are a partner maintains the laboratory. We also maintain offices, data centers, billing centers, call centers, an assembly center, distribution centers, and a clinical trials testing laboratory at locations throughout the United States. In addition, we maintain offices, manufacturing facilities and clinical laboratories in locations outside the United States, including in Sweden, Puerto Rico, Mexico, the United Kingdom, India and Australia. Our properties that are not owned are leased on terms and for durations that are reflective of commercial standards in the communities where these properties are located. We believe that, in general, our facilities are suitable and adequate for our current and anticipated future levels of operation and are adequately maintained. We believe that if we were unable to renew a lease on any of our facilities, we could find alternative space at competitive market rates and relocate our operations to such new location without material disruption to our business. Several of our principal facilities are highlighted below.

Location	Leased or Owned
Cypress, California	Leased
Los Angeles, California	Leased
San Juan Capistrano, California	Owned
Tampa, Florida	Owned
Atlanta, Georgia	Owned
Chicago, Illinois (2)	One owned, one leased
Baltimore, Maryland	Owned
Teterboro, New Jersey	Owned
Horsham, Pennsylvania	Leased
Norristown, Pennsylvania	Leased
Dallas, Texas	Leased
Chantilly, Virginia	Leased

Item 3. Legal Proceedings

          In addition to the matters described below, in the normal course of business, we have been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with our activities as a provider of diagnostic testing, information and services. These legal actions may include lawsuits alleging negligence or other similar legal claims. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages, and could have an adverse impact on our client base and reputation.

          The Company is also involved, from time to time, in other reviews, investigations and proceedings by governmental agencies regarding our business, including, among other matters, operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. The number of these reviews, investigations and proceedings has increased in recent years with regard to many firms in the healthcare services industry, including our Company.

          We maintain various liability insurance coverages for claims that could result from providing or failing to provide clinical testing services, including inaccurate testing results and other exposures. Our insurance coverage limits our maximum exposure on individual claims; however, we are essentially self-insured for a significant portion of these claims.

          The Company contests liability or the amount of damages as appropriate in each pending matter. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases where claimants seek substantial or indeterminate damages or where investigations or proceedings are in the early stages, we cannot predict with certainty the loss or range of loss, if any, related to such matters, how or if such matters will be resolved, when they ultimately will be resolved, or what the eventual settlement, fine, penalty or other relief, if any, might be. Subject to the foregoing, and except for the NID Matter which is discussed further below and in Note 14 in “Notes to Consolidated Financial Statements” in Part II, Item 8, we believe, based on current knowledge, that the outcome of all other pending matters will not have a material adverse effect on our consolidated financial condition, although the outcome of such matters could be material to our results of operations and cash flows in the period that such matters are determined or paid, depending on, among other things, the levels of our revenues or income for such period.

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NID Matter.

          NID, a test kit manufacturing subsidiary, and the Company each received a subpoena from the United States Attorney’s Office for the Eastern District of New York during the fourth quarter of 2004. The subpoenas requested a wide range of business records, including documents regarding parathyroid hormone (“PTH”) test kits manufactured by NID and PTH testing performed by the Company. The Company has voluntarily and actively cooperated with the investigation, providing information, witnesses and business records of NID and the Company, including documents related to PTH tests and test kits, as well as other tests and test kits. In the second and third quarters of 2005, the FDA conducted an inspection of NID and issued a Form 483 listing the observations made by the FDA during the course of the inspection. NID responded to the Form 483.

          During the fourth quarter of 2005, NID instituted its second voluntary product hold within a six-month period, due to quality issues, which adversely impacted the operating performance of NID. As a result, the Company evaluated a number of strategic options for NID, and on April 19, 2006, decided to cease operations at NID. Upon completion of the wind down of operations in the third quarter of 2006, the operations of NID were classified as discontinued operations. During the third quarter of 2006, the government issued two additional subpoenas, one to NID and one to the Company. The subpoenas covered various records, including records related to tests and test kits in addition to PTH.

          During the third quarter of 2007, the government and the Company began settlement discussions. In the course of those discussions, the government disclosed to the Company certain of the government’s legal theories regarding the amount of damages allegedly incurred by the government, which include alleged violations of civil and criminal statutes including the False Claims Act and the Food, Drug and Cosmetics Act. Violations of these statutes and related regulations could lead to a warning letter, injunction, fines or penalties, exclusion from federal healthcare programs and/or criminal prosecution, as well as claims by third parties. During the third quarter of 2008, the Company and the United States Attorney’s Office reached an agreement in principle to resolve these claims. As part of the agreement, NID, which was closed in 2006, is expected to enter a guilty plea to a single count of felony misbranding. The terms of the settlement are subject to the final negotiation and execution of definitive agreements, which is expected to include a corporate integrity agreement, the approval by the United States Department of Justice and the United States Department of Health and Human Services and satisfactory resolution of related state claims. There can be no assurance, however, when or whether a settlement may be finalized, or as to its terms. If a settlement is not finalized, the Company would defend itself and NID and could incur significant costs in doing so.

          The Company has established a reserve of $316 million in connection with these claims through charges reflected in discontinued operations. The reserve reflects the Company’s current estimate of the expected probable loss with respect to these matters, assuming the settlement is finalized. If a settlement is not finalized, the eventual losses related to these matters could be materially different than the amount reserved and could be material to the Company’s results of operations, cash flows and financial condition in the period that such matters are determined or paid.

Other Matters.

          During the second quarter of 2005, the Company received a subpoena from the United States Attorney’s Office for the District of New Jersey. The subpoena seeks the production of business and financial records regarding capitation and risk sharing arrangements with government and private payers for the years 1993 through 1999. Also, during the third quarter of 2005, the Company received a subpoena from the U.S. Department of Health and Human Services, Office of the Inspector General. The subpoena seeks the production of various business records including records regarding our relationship with health maintenance organizations, independent physician associations, group purchasing organizations, and preferred provider organizations relating back to as early as 1995. The Company is cooperating with the United States Attorney’s Office and the Office of the Inspector General.

          During the second quarter of 2006, each of the Company and its subsidiary, Specialty Laboratories, Inc. (“Specialty”), received a subpoena from the California Attorney General’s Office. The subpoenas seek various documents including documents relating to billings to MediCal, the California Medicaid program. The subpoenas seek documents from various time frames ranging from three to ten years. During the third quarter of 2008, the Company received a request for additional information. The Company and Specialty are cooperating with the California Attorney General’s Office.

          In the first quarter of 2008, the United States Department of Justice informally requested records from the Company regarding AmeriPath’s billing practices for flow cytometry testing panels performed on blood, bone marrow and lymph node specimens. The inquiry sought to determine whether AmeriPath may have billed for laboratory tests that were not medically necessary. The Company cooperated fully with the inquiry. In December 2008, the government declined to intervene in the underlying qui tam complaint that led to the inquiry. Following the government’s declination, the qui tam relator voluntarily dismissed his complaint.

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          We understand that there may be pending qui tam claims brought by former employees or other “whistle blowers” as to which we cannot determine the extent of any potential liability. We also are aware of certain pending individual or class action lawsuits related to billing practices filed under the qui tam provisions of the civil False Claims Act and/or other federal and state statutes, regulations or other laws.

Item 4. Submission of Matters to a Vote of Security Holders

          None.

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PART II

Item 5. Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities

          Our common stock is listed and traded on the New York Stock Exchange under the symbol “DGX.” As of February 2, 2009, we had approximately 5,700 record holders of our common stock; we believe that the number of beneficial holders of our common stock exceeds the number of record holders. The following table sets forth, for the periods indicated, the high and low sales price per share as reported on the New York Stock Exchange Consolidated Tape and dividend information.

	Common Stock Market Price
					Dividends Declared
	High		Low
2007
First Quarter	$	54.29	$	48.07		$	0.10
Second Quarter		54.75		47.98			0.10
Third Quarter		58.63		51.36			0.10
Fourth Quarter		58.23		51.91			0.10
2008
First Quarter	$	54.50	$	43.65		$	0.10
Second Quarter		51.65		45.08			0.10
Third Quarter		59.95		47.30			0.10
Fourth Quarter		52.11		38.66			0.10

          We expect to fund future dividend payments with cash flows from operations, and do not expect the dividend to have a material impact on our ability to finance future growth.

          The table below sets forth the information with respect to purchases made by or on behalf of the Company of its common stock during the fourth quarter of 2008.

ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
October 1, 2008 – October 31, 2008
Share Repurchase Program (A)		—		N/A		—		$	104,038
Employee Transactions (B)		3,246	$	40.80		N/A			N/A
November 1, 2008 - November 30, 2008
Share Repurchase Program (A)		2,437,297	$	45.04		2,437,297		$	144,257
Employee Transactions (B)		249	$	45.14		N/A			N/A
December 1, 2008 - December 31, 2008
Share Repurchase Program (A)		3,073,155	$	46.93		3,073,155		$	41	(C)
Employee Transactions (B)		1,038	$	47.49		N/A			N/A
Total
Share Repurchase Program (A)		5,510,452	$	46.09		5,510,452		$	41	(C)
Employee Transactions (B)		4,533	$	42.57		N/A			N/A

(A) In November 2008, our Board of Directors expanded our common stock share repurchase authorization by an additional $150 million. Since the share repurchase program’s inception in May 2003, our Board of Directors has authorized $2.3 billion of share repurchases of our common stock through December 31, 2008.

33

(B)

Includes: (1) shares delivered or attested to in satisfaction of the exercise price and/or tax withholding obligations by holders of employee stock options (granted under the Company’s Amended and Restated Employee Long-Term Incentive Plan and its Amended and Restated Director Long-Term Incentive Plan, collectively the “Stock Compensation Plans”) who exercised options; (2) restricted common shares withheld (under the terms of grants under the Stock Compensation Plans) to offset tax withholding obligations that occur upon vesting and release of the restricted common shares; and (3) shares withheld (under the terms of grants under the Stock Compensation Plans) to offset tax withholding obligations that occur upon the delivery of outstanding common shares underlying restricted stock units and performance share units.

(C)

In January 2009, our Board of Directors authorized the Company to repurchase an additional $500 million of the Company’s common stock. The share repurchase authorization has no set expiration or termination date.

Performance Graph

          Set forth below is a line graph comparing the cumulative total shareholder return on Quest Diagnostics’ common stock since December 31, 2003, based on the market price of the Company’s common stock and assuming reinvestment of dividends, with the cumulative total shareholder return of companies on the Standard & Poor’s 500 Stock Index and the S&P 500 Healthcare Equipment & Services Index.

			Total Shareholder Return									Performance Graph Values
Date	Closing DGX Price(1)		DGX			S&P 500			S&P 500 H.C.			DGX		S&P 500		S&P 500 H.C.
12/31/2004	$	47.78		31.62	%		10.88	%		17.75	%	$	131.62	$	110.88	$	117.75
12/31/2005	$	51.48		8.51	%		4.91	%		17.81	%	$	142.82	$	116.33	$	138.72
12/31/2006	$	53.00		3.71	%		15.79	%		0.25	%	$	148.11	$	134.70	$	139.07
12/31/2007	$	52.90		0.58	%		5.49	%		13.37	%	$	148.96	$	142.70	$	157.66
12/31/2008	$	51.91		(1.08	)%		(37.00	)%		(37.27	)%	$	147.35	$	89.53	$	98.90

(1) All values are adjusted to reflect the Company’s two-for-one stock split that occurred on June 20, 2005.

34

Item 6. Selected Financial Data

          See page 39.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

          See page 41.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

          See Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 8. Financial Statements and Supplementary Data

          See Item 15(a)1 and Item 15(a)2.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

          None.

Item 9A. Controls and Procedures

Conclusion Regarding Effectiveness of Disclosure Controls and Procedures

          Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

Management’s Report on Internal Control Over Financial Reporting

          See page 57.

Changes in Internal Control

          During the fourth quarter of 2008, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

          None.

35

PART III

Item 10. Directors, Executive Officers and Corporate Governance

          Our Code of Business Ethics applies to all employees, executive officers and directors, including our Chief Executive Officer, Chief Financial Officer and Controller. You can find our Code of Business Ethics on our internet site, www.questdiagnostics.com. We will post any amendments to the Code of Business Ethics, and any waivers that are required to be disclosed by the rules of either the SEC or the New York Stock Exchange, on our internet site. You can request a copy of our Code of Business Ethics, at no cost, by contacting Investor Relations, 3 Giralda Farms, Madison, New Jersey 07940 (973-520-2700).

          Because our common stock is listed for trading on the New York Stock Exchange, in 2008 our Chief Executive Officer was required to make, and he made, an annual certification to the New York Stock Exchange stating that he was not aware of any violation by Quest Diagnostics of the corporate governance listing standards of the Exchange. Our Chief Executive Officer made his certification to that effect to the New York Stock Exchange on approximately June 13, 2008. In addition, we have filed, as exhibits to this Annual Report on Form 10-K, the certifications of our Chief Executive Officer and our Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act of 2002 to be filed with the SEC regarding the quality of our Company’s public disclosure.

          Information regarding the Company’s executive officers is contained in Part I, Item 1 of this Report under “Executive Officers of the Company.”

          Information regarding the directors and executive officers of the Company appearing in our Proxy Statement to be filed by April 28, 2009 (“Proxy Statement”) under the captions “Matters to be Considered at the Meeting - Election of Directors,” “Information about our Corporate Governance – Director Independence,” “Information about our Corporate Governance – Audit and Finance Committee,” and “Additional Information Regarding Executive Compensation - Section 16(a) Beneficial Ownership Reporting Compliance” is incorporated by reference herein.

Item 11. Executive Compensation

          Information appearing in our Proxy Statement under the captions “Compensation Discussion and Analysis,” “Additional Information Regarding Executive Compensation” and “Report of the Compensation Committee” is incorporated by reference herein.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders’ Matters

          Information regarding equity compensation plans and security ownership of certain beneficial owners and management appearing in our Proxy Statement under the captions “Information about our Corporate Governance – Stock Ownership Information” and “Additional Information Regarding Executive Compensation – Equity Compensation Plan Information” is incorporated by reference herein.

Item 13. Certain Relationships and Related Transactions, and Director Independence

          Information regarding certain relationships and related transactions appearing in our Proxy Statement under the captions “Information about our Corporate Governance – Related Person Transactions” and “Information about our Corporate Governance – Director Independence” is incorporated by reference herein.

Item 14. Principal Accounting Fees and Services

          Information regarding principal accountant fees and services appearing in our Proxy Statement under the captions “Fees and Services of PricewaterhouseCoopers LLP” and “Audit and Finance Committee Pre-Approval Policies and Procedures” is incorporated by reference herein.

36

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) Documents filed as part of this Report.

          1. Index to financial statements and supplementary data filed as part of this Report.

Item	Page
Financial Statements
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations	F-3
Consolidated Statements of Cash Flows	F-4
Consolidated Statements of Stockholders’ Equity	F-5
Notes to Consolidated Financial Statements	F-6
Supplementary Data: Quarterly Operating Results (unaudited)	F-46

          2. Financial Statement Schedule.

Item	Page
Schedule II – Valuation Accounts and Reserves	F-47

          3. Exhibits

	An exhibit index has been filed as part of this Report beginning on page E-1 and is incorporated herein by reference.
(b)	Exhibits filed as part of this Report.
	An exhibit index has been filed as part of this Report beginning on page E-1 and is incorporated herein by reference.
(c)	None.

37

Signatures

          Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 17, 2009.

QUEST DIAGNOSTICS INCORPORATED
(Registrant)
By:	/s/ Surya N. Mohapatra, Ph.D.
	Surya N. Mohapatra, Ph.D.
	Chairman of the Board,
	President and Chief Executive Officer

          Each individual whose signature appears below constitutes and appoints Michael E. Prevoznik and William J. O’Shaughnessy, Jr., and each of them singly, his or her true and lawful attorneys-in-fact and agents with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

          Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on February 17, 2009.

Signature	Capacity
/s/ Surya N. Mohapatra, Ph.D.	Chairman of the Board,
	President and Chief Executive Officer
Surya N. Mohapatra, Ph.D.	(Principal Executive Officer)
/s/ Robert A. Hagemann	Senior Vice President
	and Chief Financial Officer
Robert A. Hagemann	(Principal Financial Officer)
/s/ Thomas F. Bongiorno	Vice President, Corporate Controller
	and Chief Accounting Officer
Thomas F. Bongiorno	(Principal Accounting Officer)
/s/ John C. Baldwin, M.D.	Director
John C. Baldwin, M.D.
/s/ Jenne K. Britell, Ph.D.	Director
Jenne K. Britell, Ph.D.
/s/ William F. Buehler	Director
William F. Buehler
/s/ Rosanne Haggerty	Director
Rosanne Haggerty
/s/ Gary M. Pfeiffer	Director
Gary M. Pfeiffer
/s/ Daniel C. Stanzione, Ph.D.	Director
Daniel C. Stanzione, Ph.D.
/s/ Gail R. Wilensky, Ph.D.	Director
Gail R. Wilensky, Ph.D.
/s/ John B. Ziegler	Director
John B. Ziegler

38

SELECTED HISTORICAL FINANCIAL DATA OF OUR COMPANY

          The following table summarizes selected historical financial data of our Company and our subsidiaries at the dates and for each of the periods presented. We derived the selected historical financial data for the years 2004 through 2008 from the audited consolidated financial statements of our Company. Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards, or SFAS, No. 123, revised 2004, “Share-Based Payment” (“SFAS 123R”), using the modified prospective approach and therefore has not restated results for prior periods. Under this approach, awards that are granted, modified or settled after January 1, 2006 will be measured and accounted for in accordance with SFAS 123R. Unvested awards that were granted prior to January 1, 2006 will continue to be accounted for in accordance SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS 148, “Accounting for Stock-Based Compensation-Transition and Disclosure – an amendment to SFAS No. 123,” except that compensation cost will be recognized in the Company’s results of operations. During the third quarter of 2006, the Company completed its wind down of NID, a test kit manufacturing subsidiary, and classified the operations of NID as discontinued operations. The selected historical financial data presented below has been restated to report the results of NID as discontinued operations for all periods presented. The selected historical financial data is only a summary and should be read together with the audited consolidated financial statements and related notes of our Company and management’s discussion and analysis of financial condition and results of operations included elsewhere in this Annual Report on Form 10-K.

	Year Ended December 31,
	2008			2007 (a)			2006 (b)			2005 (c)			2004
	(in thousands, except per share data)
Operations Data:
Net revenues	$	7,249,447		$	6,704,907		$	6,268,659		$	5,456,726		$	5,066,986
Operating income		1,222,376	(d)		1,091,336	(e)		1,128,077	(f)		1,007,548	(g)		880,854	(h)
Income from continuing operations		632,184	(i) (j)		553,828	(k)		625,692	(l)		573,196	(m)		492,415	(n)
(Loss) / income from discontinued operations		(50,694	)  (o)		(213,889	)  (p)		(39,271	)  (q)		(26,919	)  (r)		6,780
Net income		581,490			339,939			586,421			546,277			499,195
Earnings per common share - basic: (s)
Income from continuing operations	$	3.25		$	2.87		$	3.18		$	2.84		$	2.42
(Loss) / income from discontinued operations		(0.26	)		(1.11	)		(0.20	)		(0.13	)		0.03
Net income	$	2.99		$	1.76		$	2.98		$	2.71		$	2.45
Earnings per common share – diluted: (s) (t)
Income from continuing operations	$	3.23		$	2.84		$	3.14		$	2.79		$	2.32
(Loss) / income from discontinued operations		(0.26	)		(1.10	)		(0.20	)		(0.13	)		0.03
Net income	$	2.97		$	1.74		$	2.94		$	2.66		$	2.35
Dividends per common share (s)	$	0.40		$	0.40		$	0.40		$	0.36		$	0.30
Balance Sheet Data (at end of year):
Cash and cash equivalents	$	253,946		$	167,594		$	149,640		$	92,130		$	73,302
Accounts receivable, net		832,873			881,967			774,414			732,907			649,281
Goodwill, net		5,054,926			5,220,104			3,391,046			3,197,227			2,506,950
Total assets		8,403,830			8,565,693			5,661,482			5,306,115			4,203,788
Long-term debt		3,078,089			3,377,212			1,239,105			1,255,386			724,021
Total debt		3,083,231			3,540,793			1,555,979			1,592,225			1,098,822
Total stockholders’ equity		3,604,896			3,324,242			3,019,171			2,762,984			2,288,651
Other Data:
Net cash provided by operating activities	$	1,063,049		$	926,924		$	951,896		$	851,583		$	798,780
Net cash used in investing activities		(198,883	)		(1,759,193	)		(414,402	)		(1,079,793	)		(173,700	)
Net cash (used in) provided by financing activities		(777,814	)		850,223			(479,984	)		247,038			(706,736	)
Provision for doubtful accounts		326,228			300,226			243,443			233,628			226,310
Rent expense		190,706			170,788			153,185			139,660			132,883
Capital expenditures		212,681			219,101			193,422			224,270			176,125
Depreciation and amortization		264,593			237,879			197,398			176,124			168,726

39

(a)	On January 31, 2007, we completed the acquisition of POCT Holding AB, (“HemoCue”). On May 31, 2007, we completed the acquisition of AmeriPath Group Holdings, Inc., (“AmeriPath”). Consolidated operating results for 2007 include the results of operations of HemoCue and AmeriPath subsequent to the closing of the applicable acquisition. See Note 3 to the Consolidated Financial Statements.
(b)	On July 3, 2006, we completed the acquisition of Focus Technologies Holding Company, (“Focus Diagnostics”). On August 31, 2006, we completed the acquisition of Enterix Inc., (“Enterix”). Consolidated operating results for 2006 include the results of operations of Focus Diagnostics and Enterix subsequent to the closing of the applicable acquisition. See Note 3 to the Consolidated Financial Statements.
(c)	On November 1, 2005, we completed the acquisition of LabOne, Inc., (“LabOne”). Consolidated operating results for 2005 include the results of operations of LabOne subsequent to the closing of the acquisition.
(d)	For 2008, operating income includes $71 million of stock-based compensation expense recorded in accordance with SFAS 123R and $16.2 million of costs, primarily associated with workforce reductions recorded during the fourth quarter of 2008.
(e)	For 2007, operating income includes $57 million of stock-based compensation expense recorded in accordance with SFAS 123R, $10.7 million of costs associated with workforce reductions in response to reduced volume levels and a pre-tax charge of $4 million related to in-process research and development expense associated with the HemoCue acquisition.
(f)	For 2006, operating income includes $55 million of stock-based compensation expense recorded in accordance with SFAS 123R and $27 million of special charges, primarily associated with integration activities.
(g)	For 2005, operating income includes a $6.2 million charge primarily related to forgiveness of amounts owed by patients and physicians, and related property damage as a result of hurricanes in the Gulf Coast.
(h)	For 2004, operating income includes a $10.3 million charge associated with the acceleration of certain pension obligations in connection with the succession of our prior CEO.
(i)	Includes an $8.9 million charge associated with the write-down of an equity investment recorded during 2008.
(j)	Includes income tax benefits of $16.5 million primarily associated with favorable resolutions of certain tax contingencies in 2008.
(k)	Includes a $4.0 million charge associated with the write-down of an equity investment recorded during 2007.
(l)	Includes net charges of $10 million related to net investment losses recorded during 2006.
(m)	Includes a $7.1 million charge associated with the write-down of an investment during 2005.
(n)	Includes a $2.9 million charge during 2004 representing the write-off of deferred financing costs associated with the refinancing of our then existing bank debt and credit facility.
(o)	During 2008, we recorded charges of $75 million related to the government investigation of NID. See Note 14 and Note 15 to the Consolidated Financial Statements.
(p)	During 2007, we recorded charges of $241 million related to the government investigation of NID. See Note 14 and Note 15 to the Consolidated Financial Statements.
(q)	During 2006, we recorded $32 million in charges related to the wind down of NID’s operations. See Note 15 to the Consolidated Financial Statements.
(r)	During 2005, we recorded a $16 million charge to write-off certain assets in connection with a product hold at NID.
(s)	Previously reported basic and diluted earnings per share have been restated to give retroactive effect of our two-for-one stock split effected on June 20, 2005.
(t)	Potentially dilutive common shares primarily include the dilutive effect of our 1¾% contingent convertible debentures issued November 26, 2001, which were redeemed principally through a conversion into common shares as of January 18, 2005, and outstanding stock options, performance share units, restricted common shares and restricted stock units granted under our Amended and Restated Employee Long-Term Incentive Plan and our Amended and Restated Director Long-Term Incentive Plan.

40

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Overview

          The Clinical Testing Industry

          Clinical testing is an essential element in the delivery of healthcare services. Physicians use laboratory tests to assist in the detection, diagnosis, evaluation, monitoring and treatment of diseases and other medical conditions.

          Most laboratory tests are performed by one of three types of laboratories: commercial clinical laboratories; hospital-affiliated laboratories; and physician-office laboratories. In 2008, we estimate that hospital-affiliated laboratories accounted for approximately 60% of the market, commercial clinical laboratories approximately one-third and physician-office laboratories the balance.

          Orders for laboratory testing are generated from physician offices, hospitals and employers and can be affected by a number of factors. For example, changes in the United States economy can affect the number of unemployed and uninsured, and design changes in healthcare plans can affect the number of physician office and hospital visits, and can impact the utilization of laboratory testing.

          While the recent economic slow down in the United States may temporarily reduce industry growth rates, we believe the clinical testing industry will continue to grow over the long term because clinical testing is an essential healthcare service and because of the following key trends:

• the growing and aging population;

• continuing research and development in the area of genomics (the study of DNA, genes and chromosomes) and proteomics (the analysis of individual proteins and collections of proteins), which is expected to yield new, more sophisticated and specialized diagnostic tests;

• increasing recognition by consumers and payers of the value of laboratory testing as a means to improve health and reduce the overall cost of healthcare through early detection and prevention;

• increasing affordability of, and access to, tests due to advances in technology and cost efficiencies; and

• the growing demand for healthcare services in emerging markets and global demographic changes.

          The diagnostic testing industry is subject to seasonal fluctuations in operating results and cash flows. Typically, testing volume declines during the summer months, year-end holiday periods and other major holidays, reducing net revenues and operating cash flows below annual averages. Testing volume is also subject to declines due to severe weather or other events, which can deter patients from having testing performed and which can vary in duration and severity from year to year.

          Reimbursement for Services

          Payments for clinical testing services are made by physicians, hospitals, employers, healthcare plans, patients and the government. Physicians, hospitals and employers are typically billed on a fee-for-service basis based on negotiated fee schedules. Fees billed to healthcare plans and patients are based on the laboratory’s patient fee schedule, subject to any limitations on fees negotiated with the healthcare plans or with physicians on behalf of their patients. Medicare and Medicaid reimbursements are based on fee schedules set by governmental authorities.

          Government payers, such as Medicare and Medicaid, as well as healthcare plans and larger employers, have taken steps and may continue to take steps to control the cost, utilization and delivery of healthcare services, including clinical testing services. Despite the added cost and complexity of participating in the Medicare and Medicaid programs, we continue to participate in such programs because we believe that our other business may depend, in part, on continued participation in these programs, since certain customers may want a single laboratory capable of performing all of their clinical testing services, regardless of who pays for such services.

          Healthcare plans, which typically negotiate directly or indirectly on behalf of their members, represent approximately one-half of our clinical testing volumes and one-half of our net revenues from our clinical testing business. Larger healthcare plans typically prefer to use large commercial clinical laboratories because they can provide services to their members on a national or regional basis. In addition, larger clinical laboratories are better able to achieve the low-cost structures necessary to profitably service the members of large healthcare plans and can provide test utilization data across various products in a consistent format. In certain markets, such as California, healthcare plans may delegate their covered members to independent physician associations (“IPAs”), which in turn negotiate with laboratories for clinical testing services on behalf of their members.

41

          The trend of consolidation among physicians, hospitals, employers, healthcare plans, pharmaceutical companies and other intermediaries has continued, resulting in fewer but larger customers and payers with significant bargaining power to negotiate fee arrangements with healthcare providers, including clinical laboratories. Healthcare plans often require that clinical testing service providers accept discounted fee structures or assume all or a portion of the utilization risk associated with providing testing services to their members enrolled in highly-restricted plans through capitated payment arrangements. Under these capitated payment arrangements, we and the healthcare plans agree to a predetermined monthly reimbursement rate for each member enrolled in the healthcare plan’s restricted plan, generally regardless of the number or cost of services provided by us. Our cost to perform work reimbursed under capitated payment arrangements is not materially different from our cost to perform work reimbursed under other arrangements with healthcare plans. Since average reimbursement rates under capitated payment arrangements are typically less than our overall average reimbursement rate, the testing services reimbursed under capitated payment arrangements are generally less profitable. In 2008, we derived approximately 14% of our testing volume and 5% of our net revenues from capitated payment arrangements.

          Most healthcare plans also offer programs such as preferred provider organizations (“PPOs”) and consumer driven health plans that offer a greater choice of healthcare providers. Pricing for these programs is typically negotiated on a fee-for-service basis, which generally results in higher revenue per requisition than under capitation arrangements. Most of our agreements with major healthcare plans are non-exclusive arrangements. As a result, under these non-exclusive arrangements, physicians and patients have more freedom of choice in selecting laboratories, and laboratories are likely to compete more on the basis of service and quality than they may otherwise. If consumer driven plans and PPO plans continue to increase in popularity, it will be increasingly important for healthcare providers to differentiate themselves based on quality, service and convenience to avoid competing on price alone.

          Despite the general trend of increased choice for patients in selecting a healthcare provider, recent experience indicates that some healthcare plans may actively seek to limit the choice of patients and physicians if they feel it will give them increased leverage to negotiate lower fees, by consolidating services with a single or limited network of contracted providers. Historically, healthcare plans, which had limited their network of laboratory service providers, encouraged their members, and sometimes offered incentives, to utilize only contracted providers. Patients who use a non-contracted provider may have a higher co-insurance responsibility, which may result in physicians referring testing to contracted providers to minimize the expense to their patients. In cases where members choose to use a non-contracted provider due to service quality or convenience, the non-contracted provider would be reimbursed at rates considered “reasonable and customary.” Contracted rates are generally lower than “reasonable and customary” rates because of the potential for greater volume as a contracted provider. A non-contracted laboratory service provider with quality and service preferred by physicians and patients to that of contracted providers, could potentially realize greater profits than if it was a contracted provider, provided that physicians and patients continue to have choice in selecting their provider, and any potential additional cost to the patient of using a non-contracted provider is not considered prohibitive. Physicians requiring testing for patients are the primary referral source of our clinical testing volume, and often refer work to us as a non-contracted provider.

          We expect that reimbursements for the diagnostic testing industry will continue to remain under pressure. Today, the federal and many state governments face serious budget deficits and healthcare spending is subject to reductions, and efforts to reduce reimbursements and stringent cost controls by government and other payers for existing tests may continue. However, we believe that as new tests are developed which either improve on the effectiveness of existing tests or provide new diagnostic capabilities, government and other payers will add these tests as covered services, because of the importance of laboratory testing in assessing and managing the health of patients. We continue to emphasize the importance and the high value of laboratory testing with healthcare plans and government payers at the federal and state level.

          Our Company

          Quest Diagnostics is the world’s leading provider of diagnostic testing, information and services, providing insights that enable patients, physicians and others to make decisions to improve health. Quest Diagnostics, with a leading position in most of its domestic geographic markets and service offerings, is well positioned to benefit from the long-term growth expected in the industry. Over 90% of our revenues are derived from clinical testing with the balance derived from insurer services, clinical trials testing, diagnostic products and healthcare information technology. Clinical testing is generally categorized as clinical laboratory testing and anatomic pathology services. Clinical laboratory testing is performed on blood and body fluids, such as urine. Anatomic pathology services are performed on tissues, such as biopsies, and other samples, such as human cells. With the acquisition of AmeriPath Group Holdings, Inc. (“AmeriPath”) in May 2007, we have become the world’s premier cancer diagnostics company, focused on anatomic pathology including dermatopathology and molecular diagnostics and are now able to provide interpretive consultation through the largest medical and scientific staff in the industry, with approximately 900 M.D.s and Ph.D.s primarily located in the United

42

States. In addition, we are the leading provider of gene-based testing and other esoteric testing, risk assessment services for the life insurance industry and testing for drugs-of-abuse. We are also a leading provider of testing for clinical trials. The Company’s diagnostics products business, which includes the operations of HemoCue, Enterix and certain of Focus Diagnostics’ operations, manufactures and markets diagnostic test kits and specialized point-of-care testing. Through our MedPlus subsidiary, we empower healthcare organizations and clinicians with state-of-the-art information technology solutions that can improve patient care and medical practice.

          We have established operations in Gurgaon, India, where we will offer many of our services. The diagnostic testing business in India is poised for rapid expansion. We see significant opportunities for us to strengthen the delivery of healthcare services in India utilizing our quality diagnostics and technology expertise.

          Six Sigma and Standardization Initiatives/Efforts to Improve Operating Efficiency

          The diagnostic testing industry is labor intensive. Employee compensation and benefits constitute approximately one-half of our total costs and expenses. Cost of services consists principally of costs for obtaining, transporting and testing specimens. Selling, general and administrative expenses consist principally of the costs associated with our sales and marketing efforts, billing operations (including bad debt expense), and general management and administrative support. In addition, performing diagnostic testing involves significant fixed costs for facilities and other infrastructure required to obtain, transport and test specimens. Therefore, relatively small changes in volume can have a significant impact on profitability in the short-term.

          A large portion of our costs are fixed, making it more challenging to fully mitigate the profit impact of lost volume in the short term. In July 2007, we announced a program to adjust our cost structure while maintaining and, in some cases improving, service levels. During 2008, we continued to take actions which have enabled us to improve margins as a percentage of revenues over the course of the year and achieve a level which exceeded that of the prior year. As we exited 2008, we estimate that our program has resulted in over $300 million of annualized cost reductions, and we expect that our program will result in $500 million of annualized cost reductions as we exit 2009.

          We intend to become recognized as the quality leader in the healthcare services industry through utilizing the Six Sigma approach and Lean Six Sigma principles. Six Sigma is a management approach that enhances quality and requires a thorough understanding of customer needs and experience, root cause analysis, process improvements and rigorous tracking and measuring of key metrics. Lean Six Sigma streamlines processes and eliminates waste. We utilize the Six Sigma approach and Lean Six Sigma principles to increase the efficiency of our operations and to reduce operating cost. We have utilized Six Sigma to implement the initiatives which are part of our cost reduction program and provide a better customer experience. These initiatives relate to standardizing our operations and processes, and adopting identified company best practices. One of these key initiatives is to deploy Lean Six Sigma in our laboratories to realize productivity gains. Additionally, we expect to realize efficiencies in other areas by better aligning our service capacity with patient and sample flows. We are driving more of our purchasing through master contracts to take better advantage of our scale. We are expanding the use of customer connectivity which reduces costs in specimen data entry and billing, and helps lower our bad debt. We are improving the efficiency of our logistics routes using advanced route optimization tools and we have streamlined our management structure and administrative functions to improve efficiency and increase focus. As additional detailed plans to implement these opportunities are approved and executed, some will result in charges to earnings associated with the implementation. These charges may be material to the results of operations and cash flows in the periods recorded or paid.

Recent Acquisitions

          The clinical testing industry in the United States remains fragmented and highly competitive. Our growth will be comprised of a combination of organic and acquired growth. We expect to continue to selectively evaluate potential acquisitions of domestic clinical laboratories that can be integrated into our existing laboratories, thereby increasing access for patients and enabling us to reduce costs and improve efficiencies. While over the long term we believe positive industry factors in the United States diagnostic testing industry and the differentiated services we offer to our customers will enable us to grow organically, we believe there will continue to be opportunities to grow beyond our current principal business of offering clinical testing in the United States. Technology is enabling testing to be performed closer to the patient, whether in the physician’s office or at the hospital bedside, in the form of point-of-care testing. Given that physicians and hospitals are primary sources for both point-of-care testing and laboratory performed tests, we believe providing both services will strengthen our relationships with customers and accelerate our growth.

          Additionally, diagnostic testing in international markets, particularly developing countries, is highly fragmented and less mature. Continued expansion into point-of-care testing and international markets will diversify our revenue base, and add businesses in markets which are growing faster and are more profitable than our principal business of United States based clinical testing.

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          Acquisition of AmeriPath

          On May 31, 2007, we completed the acquisition of AmeriPath, in an all-cash transaction valued at approximately $2 billion, including approximately $780 million of assumed debt and related accrued interest. AmeriPath is a leading provider of anatomic pathology, including dermatopathology, and esoteric testing which generated annual revenues of approximately $800 million.

          Through the acquisition, we acquired all of AmeriPath’s operations. AmeriPath, with its team of approximately 400 board certified pathologists, operates 40 outpatient anatomic pathology testing locations and provides inpatient anatomic pathology and medical director services for approximately 200 hospitals throughout the United States. We financed the all-cash purchase price and related transaction costs, together with the repayment of approximately $780 million of principal and related accrued interest representing substantially all of AmeriPath’s debt, as well as the refinancing of the $450 million term loan used to finance the acquisition of HemoCue, with $1.6 billion of borrowings under a five-year term loan facility, $780 million of borrowings under a one-year bridge loan, and cash on-hand. In June 2007, we completed an $800 million senior notes offering. The net proceeds of the senior notes offering were used to repay the $780 million bridge loan. The acquisition was accounted for under the purchase method of accounting.

          Acquisition of HemoCue

          On January 31, 2007, we acquired HemoCue, a Sweden-based company specializing in point-of-care testing, in an all-cash transaction valued at approximately $450 million, including $113 million of assumed debt of HemoCue. The transaction was financed through an interim credit facility, which was refinanced during the second quarter of 2007 in connection with the financing of the AmeriPath acquisition.

          HemoCue is the leading international provider in point-of-care testing for hemoglobin, with a growing share in professional glucose and microalbumin testing.

Critical Accounting Policies

          The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions and select accounting policies that affect our reported financial results and the disclosure of contingent assets and liabilities.

          While many operational aspects of our business are subject to complex federal, state and local regulations, the accounting for most of our business is generally straightforward with net revenues primarily recognized upon completion of the testing process. Our revenues are primarily comprised of a high volume of relatively low dollar transactions, and about one-half of our total costs and expenses consist of employee compensation and benefits. Due to the nature of our business, several of our accounting policies involve significant estimates and judgments:

• revenues and accounts receivable associated with clinical testing;

• reserves for general and professional liability claims;

• reserves for other legal proceedings;

• accounting for and recoverability of goodwill; and

• accounting for stock-based compensation expense.

          Revenues and accounts receivable associated with clinical testing

          The process for estimating the ultimate collection of receivables associated with our clinical testing business involves significant assumptions and judgments. Billings for services reimbursed by third-party payers, including Medicare and Medicaid, are recorded as revenues net of allowances for differences between amounts billed and the estimated receipts from such payers. Adjustments to the estimated receipts, based on final settlement with the third-party payers, are recorded upon settlement as an adjustment to net revenues.

          We have a standardized approach to estimate and review the collectibility of our receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for doubtful accounts. In addition, we regularly assess the state of our billing operations in order to identify issues, which may impact the collectibility of receivables or allowance estimates. We believe that the collectibility of our receivables is directly linked to the quality of our billing processes, most notably those related to obtaining the correct information in order to bill effectively for the services we provide. As such, we have implemented “best practices” to reduce the number of requisitions that we receive from healthcare providers with missing or incorrect billing information. Revisions to the allowances for doubtful accounts estimates are recorded as an adjustment to bad debt expense within selling, general and administrative expenses. We believe that our

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collection and allowance estimation processes, along with our close monitoring of our billing operations, help to reduce the risk associated with material revisions to reserve estimates. Less than 5% of our net accounts receivable as of December 31, 2008 were outstanding more than 150 days.

          Healthcare insurers

          Healthcare insurers reimburse us for approximately one-half of our net revenues. Reimbursements from healthcare insurers are based on negotiated fee-for-service schedules and on capitated payment rates.

          Receivables due from healthcare insurers represent approximately 28% of our net accounts receivable. Substantially all of the accounts receivable due from healthcare insurers represent amounts billed under negotiated fee-for-service arrangements. We utilize a standard approach to establish allowances for doubtful accounts for such receivables, which considers the aging of the receivables and results in increased allowance requirements as the aging of the related receivables increases. Our approach also considers historical collection experience and other factors. Collection of such receivables is normally a function of providing complete and correct billing information to the healthcare insurers within the various filing deadlines. For healthcare insurers, collection typically occurs within 30 to 60 days of billing. Provided healthcare insurers have been billed accurately with complete information prior to the established filing deadline, there has historically been little to no collection risk. If there has been a delay in billing, we determine if the amounts in question will likely go past the filing deadline, and if so, we will reserve accordingly for the billing.

          Approximately 5% of our net revenues are reimbursed under capitated payment arrangements in which case the healthcare insurers typically reimburse us in the same month services are performed, essentially giving rise to no outstanding accounts receivable at month-end. If any capitated payments are not received on a timely basis, we determine the cause and make a separate determination as to whether or not the collection of the amount from the healthcare insurer is at risk and if so, would reserve accordingly.

          Government payers

          Payments for clinical testing services made by the government are based on fee schedules set by governmental authorities. Receivables due from government payers under the Medicare and Medicaid programs represent approximately 15% of our net accounts receivable. Collection of such receivables is normally a function of providing the complete and correct billing information within the various filing deadlines. Collection typically occurs within 30 days of billing. Our processes for billing, collecting and estimating uncollectible amounts for receivables due from government payers, as well as the risk of non-collection, are substantially the same as those noted above for healthcare insurers under negotiated fee-for-service arrangements.

          Client payers

          Client payers include physicians, hospitals, employers and other commercial laboratories, and are billed based on a negotiated fee schedule. Receivables due from client payers represent approximately 34% of our net accounts receivable. Credit risk and ability to pay are more of a consideration for these payers than healthcare insurers and government payers. We utilize a standard approach to establish allowances for doubtful accounts for such receivables, which considers the aging of the receivables and results in increased allowance requirements as the aging of the related receivables increase. Our approach also considers specific account reviews, historical collection experience and other factors.

          Patient receivables

          Patients are billed based on established patient fee schedules, subject to any limitations on fees negotiated with healthcare insurers or physicians on behalf of the patient. Receivables due from patients represent approximately 23% of our net accounts receivable. Collection of receivables due from patients is subject to credit risk and ability of the patients to pay. We utilize a standard approach to establish allowances for doubtful accounts for such receivables, which considers the aging of the receivables and results in increased allowance requirements as the aging of the related receivables increases. Our approach also considers historical collection experience and other factors. Patient receivables are generally fully reserved for when the related billing reaches 210 days outstanding. Balances are automatically written off when they are sent to collection agencies. Reserves are adjusted for estimated recoveries of amounts sent to collection agencies based on historical collection experience, which is regularly monitored.

          Reserves for general and professional liability claims

          As a general matter, providers of clinical testing services may be subject to lawsuits alleging negligence or other similar legal claims. These suits could involve claims for substantial damages. Any professional liability litigation could also have an adverse impact on our client base and reputation. We maintain various liability insurance coverages for claims that could result from providing or failing to provide clinical testing services including inaccurate testing results

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and other exposures. Our insurance coverage limits our maximum exposure on individual claims; however, we are essentially self-insured for a significant portion of these claims. While the basis for claims reserves considers actuarially determined losses based upon our historical and projected loss experience, the process of analyzing, assessing and establishing reserve estimates relative to these types of claims involves a high degree of judgment. Changes in the facts and circumstances associated with claims could have a material impact on our results of operations, principally costs of services, and cash flows in the period that reserve estimates are revised or paid. Although we believe that our present insurance coverage and reserves are sufficient to cover currently estimated exposures, it is possible that we may incur liabilities in excess of our insurance coverage or recorded reserves.

          Reserves for other legal proceedings

          Our business is subject to extensive and frequently changing federal, state and local laws and regulations. In addition, we are aware of certain pending lawsuits related to billing practices filed under the qui tam provisions of the False Claims Act and other federal and state statutes. See Notes 14 and 15 to the Consolidated Financial Statements for a discussion of the various legal proceedings that involve the Company. We have a comprehensive compliance program that is intended to ensure the strict implementation and observance of all applicable laws, regulations and Company policies. Management periodically reports to the Quality, Safety & Compliance Committee of our Board of Directors regarding compliance operations. As an integral part of our compliance program, we investigate all reported or suspected failures to comply with federal and state healthcare reimbursement requirements. Any non-compliance that results in Medicare or Medicaid overpayments is reported to the government and reimbursed by us. As a result of these efforts, we have periodically identified and reported overpayments. Upon becoming aware of potential overpayments, we consider all available facts and circumstances to estimate and record the amounts to be reimbursed. While we have reimbursed these overpayments and have taken corrective action where appropriate, the government may not in each instance accept these actions as sufficient.

          The process of analyzing, assessing and establishing reserve estimates relative to legal proceedings involves a high degree of judgment. Management has established reserves for legal proceedings in accordance with generally accepted accounting principles. Changes in facts and circumstances related to such proceedings could lead to significant revisions to reserve estimates for such matters and could have a material impact on our results of operations, cash flows and financial condition in the period that reserve estimates are revised or paid.

          Accounting for and recoverability of goodwill

          Goodwill is our single largest asset. We evaluate the recoverability and measure the potential impairment of our goodwill under Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” The annual impairment test is a two-step process that begins with the estimation of the fair value of the reporting unit. The first step screens for potential impairment and the second step measures the amount of the impairment, if any. Our estimate of fair value considers publicly available information regarding the market capitalization of our Company, as well as (i) the financial projections and future prospects of our business, including its growth opportunities and likely operational improvements, and (ii) comparable sales prices, if available. As part of the first step to assess potential impairment, we compare our estimate of fair value for the reporting unit to the book value of the reporting unit. If the book value is greater than our estimate of fair value, we would then proceed to the second step to measure the impairment, if any. The second step compares the implied fair value of goodwill with its carrying value. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying amount of the reporting unit’s goodwill is greater than its implied fair value, an impairment loss will be recognized in the amount of the excess. We believe our estimation methods are reasonable and reflect common valuation practices.

          On a quarterly basis, we perform a review of our business to determine if events or changes in circumstances have occurred which could have a material adverse effect on the fair value of the Company and its goodwill. If such events or changes in circumstances were deemed to have occurred, we would perform an impairment test of goodwill as of the end of the quarter, consistent with the annual impairment test performed at the end of our fiscal year on December 31st, and record any noted impairment loss.

          Accounting for stock-based compensation expense

          Effective January 1, 2006, we adopted SFAS No. 123, revised 2004, “Share-Based Payment” (“SFAS 123R”), using the modified prospective approach and therefore have not restated results for prior periods. Pursuant to the provisions of SFAS 123R, we record stock-based compensation as a charge to earnings net of the estimated impact of forfeited awards. As such, we recognize stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants.

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          The process of estimating the fair value of stock-based compensation awards and recognizing stock-based compensation cost over their requisite service periods involves significant assumptions and judgments. We estimate the fair value of stock option awards on the date of grant using a lattice-based option-valuation model which requires management to make certain assumptions regarding: (i) the expected volatility in the market price of the Company’s common stock; (ii) dividend yield; (iii) risk-free interest rates; and (iv) the period of time employees are expected to hold the award prior to exercise (referred to as the expected holding period). The expected volatility under the lattice-based option-valuation model is based on the current and historical implied volatilities from traded options of our common stock. The dividend yield is based on the approved annual dividend rate in effect and current market price of the underlying common stock at the time of grant. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for bonds with maturities ranging from one month to seven years. The expected holding period of the awards granted is estimated using the historical exercise behavior of employees. In addition, SFAS 123R requires us to estimate the expected impact of forfeited awards and recognize stock-based compensation cost only for those awards expected to vest. We use historical experience to estimate projected forfeitures. If actual forfeiture rates are materially different from our estimates, stock-based compensation expense could be significantly different from what we have recorded in the current period. We periodically review actual forfeiture experience and revise our estimates, as considered necessary. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the revision.

          Finally, the terms of our performance share unit grants allow the recipients of such awards to earn a variable number of shares based on the achievement of the performance goals specified in the awards. For performance share unit awards granted prior to 2008, the actual amount of any stock award earned is based on the Company’s earnings per share growth as measured in accordance with its Amended and Restated Employee Long-Term Incentive Plan for the performance period compared to that of a peer group of companies. Beginning with performance share unit awards granted in 2008, the performance measure for these awards will be based on the cumulative annual growth rate of the Company’s earnings per share from continuing operations over a three year period. Stock-based compensation expense associated with performance share units is recognized based on management’s best estimates of the achievement of the performance goals specified in such awards and the resulting number of shares that will be earned. If the actual number of performance share units earned is different from our estimates, stock-based compensation could be significantly different from what we have recorded in the current period. We periodically obtain and review publicly available financial information for the members of the peer group and compare that to actual and estimated future performance of the Company, including historical earnings per share growth as well as published estimates of projected earnings per share growth. This information is used to evaluate our progress towards achieving the performance criteria and our estimate of the number of performance share units expected to be earned at the end of the performance period. The cumulative effect on current and prior periods of a change in the estimated number of performance share units expected to be earned is recognized as compensation cost in earnings in the period of the revision. While the assumptions used to calculate and account for stock-based compensation awards represent management’s best estimates, these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if revisions are made to our assumptions and estimates, our stock-based compensation expense could vary significantly from period to period. In addition, the number of awards made under our equity compensation plans, changes in the design of those plans, the price of our shares and the performance of our Company can all cause stock-based compensation expense to vary from period to period.

Results of Operations

          Our clinical testing business currently represents our one reportable business segment. The clinical testing business for each of the three years in the period ended December 31, 2008 accounted for more than 90% of net revenues from continuing operations. Our other operating segments consist of our risk assessment services business, our clinical trials testing business, our healthcare information technology business, MedPlus, and our diagnostic products business. On April 19, 2006, we decided to discontinue the operations of a test kit manufacturing subsidiary, NID. During the third quarter of 2006, we completed the wind down of NID and classified the operations of NID as discontinued operations for all periods presented. Our business segment information is disclosed in Note 16 to the Consolidated Financial Statements.

          Year Ended December 31, 2008 Compared with Year Ended December 31, 2007

          Continuing Operations

          Income from continuing operations for the year ended December 31, 2008 was $632 million, or $3.23 per diluted share, compared to $554 million, or $2.84 per diluted share, in 2007. The increase in income from continuing operations was principally driven by revenue growth and actions we have taken to reduce our cost structure.

          Results for the year ended December 31, 2008 include charges totaling $25.1 million, or $0.08 per diluted share consisting of: a third quarter charge of $8.9 million, or $0.03 per diluted share, associated with the write-down of an equity investment; and a fourth quarter charge of $16.2 million, or $0.05 per diluted share, principally associated with workforce reductions. These charges were offset in part by favorable resolutions of certain tax contingencies in 2008, which increased diluted earnings per share by $0.08.

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          In addition, for 2008 we estimate the impact of hurricanes in the third quarter of 2008 reduced the increase in operating income for the year ended December 31, 2008 by approximately $8 million or $0.02 per diluted share, compared to the prior year.

          During the first quarter of 2007, we became a non-contracted provider to United Healthcare Group Inc., (“UNH”). As a result of the change in status, our revenues and earnings were significantly impacted for the first quarter and full year 2007. However, the ongoing profit impact was successfully mitigated by the end of 2007 as a result of our actions to reduce costs, and higher reimbursement for the testing we continued to perform for UNH members as a non-contracted provider.

          Results for the year ended December 31, 2007 include first quarter pre-tax charges of $10.7 million, or $0.03 per diluted share, associated with workforce reductions in response to reduced volume levels, and a first quarter pre-tax charge of $4.0 million, or $0.01 per diluted share, related to in-process research and development expense associated with the HemoCue acquisition.

          Net Revenues

          Net revenues for the year ended December 31, 2008 grew by 8.1% over the prior year level to $7.2 billion, with the carry-over impact from the 2007 acquisition of AmeriPath contributing approximately 5.0% to revenue growth in 2008.

          For 2008, revenues of our clinical testing business, which accounts for over 90% of our net revenues, grew 8.3% above the prior year level, with AmeriPath contributing 5.5% growth. Volume, measured by the number of requisitions, increased 2.7% for the year ended December 31, 2008, with 2.4% due to the impact of the AmeriPath acquisition. Our pre-employment drug testing volume, which accounted for approximately 7% of our total volume in 2008, declined approximately 11% and reduced consolidated volume by approximately 1%. We believe the volume decrease in pre-employment drug testing is principally due to slower hiring by employers served by this business. Revenue per requisition increased 5.5% for the year ended December 31, 2008, with AmeriPath contributing 2.9% to the improvement. The balance of the increase was primarily driven by a positive mix, partially offset by price reductions on various health plan contracts.

          Our businesses other than clinical testing accounted for approximately 9% of our net revenues in 2008. These businesses include our risk assessment services business, our clinical trials testing business, our healthcare information technology business, MedPlus, and our diagnostic products business. The revenues for these businesses as a group grew 6% for the year ended December 31, 2008 with the increase primarily driven by our healthcare information technology and point-of-care businesses.

          Operating Costs and Expenses

          Total operating costs and expenses for the year ended December 31, 2008 increased $414 million from the prior year period. These increases were primarily due to the full year effect of costs associated with the acquired operations of AmeriPath, and increased costs associated with annual compensation adjustments, partially offset by actions taken to improve our operating efficiency and reduce the size of our workforce. Results for the year ended December 31, 2008 also include fourth quarter charges of $16.2 million primarily associated with workforce reductions ($7.7 million recorded in costs of services and $8.5 million included in selling, general and administrative).

          Results for the year ended December 31, 2007 reflect first quarter costs of $10.7 million associated with workforce reductions ($3.9 million included in cost of services and $6.8 million included in selling, general and administrative), $4 million of in-process research and development costs associated with the acquisition of HemoCue, which was recorded in “other operating (income) expense, net”, and costs associated with efforts to retain business and clarify for patients, physicians and employers misinformation regarding the UNH contract change.

          Cost of services, which includes the costs of obtaining, transporting and testing specimens, was 58.7% of net revenues for the year ended December 31, 2008, compared to 59.2% of net revenues in 2007. The improvement over the prior year reflects actions taken to reduce our cost structure and higher revenue per requisition.

          Selling, general and administrative expenses, which include the costs of the sales force, billing operations, bad debt expense, and general management and administrative support, were 24.0% of net revenues for the year ended December 31, 2008, compared to 24.1% in the prior year period. The improvement was primarily due to actions taken to reduce our cost structure and higher revenue per requisition, partially offset by the full year impact of the acquired operations of AmeriPath and costs associated with workforce reductions.

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          Selling, general and administrative expenses for the year ended December 31, 2007 included costs associated with workforce reductions and costs associated with efforts to retain business and clarify for patients, physicians and employers misinformation regarding the UNH contract change.

          For the year ended December 31, 2008, bad debt expense was 4.5% of net revenues similar to 2007. For 2008, the full year inclusion of AmeriPath, which carries a higher bad debt rate than the rest of our business, primarily due to its revenue and customer mix, increased the consolidated bad debt rate by approximately half a percent for 2008. The impact was principally offset by progress in our billing and collection processes, resulting in improvements in bad debt, days sales outstanding and the cost of our billing operation. With our disciplined approach, we expect to see continued strong performance in our billing and collection metrics, despite a slowing economy.

          Amortization of intangible assets for the year ended December 31, 2008 increased $9.4 million over the prior year period. This increase was primarily due to the amortization of intangible assets acquired in conjunction with the acquisition of AmeriPath.

          Other operating (income) expense, net represents miscellaneous income and expense items related to operating activities, including gains and losses associated with the disposal of operating assets and provisions for restructurings and other special charges. For the year ended December 31, 2007, other operating (income) expense, net includes a $4.0 million first quarter charge related to in-process research and development expense recorded in connection with the acquisition of HemoCue.

          Operating Income

          Operating income for the year ended December 31, 2008 was $1.2 billion, or 16.9% of net revenues, compared to $1.1 billion, or 16.3% of net revenues, in the prior year period. The increase in operating income, as a percentage of net revenues, was primarily due to revenue growth and the actions we have taken to reduce our cost structure, partially offset by the full year impact of the acquired operations of AmeriPath. In addition, we estimate the impact of hurricanes in the third quarter of 2008 reduced the increase in operating income for the year ended December 31, 2008 by approximately $8 million, compared to the prior year.

          In addition, the operating income percentage for the year ended December 31, 2008, reflects the impact of a fourth quarter charge of $16.2 million, principally associated with workforce reductions and the impact of the various items which affected cost of services and selling, general and administrative expenses as a percentage of net revenues.

          Other (Income) Expense

          Other expense, net represents miscellaneous income and expense items related to non-operating activities such as gains and losses associated with investments and other non-operating assets. For the year ended December 31, 2008, other expense, net includes a third quarter charge of $8.9 million associated with the write-down of an equity investment and losses of $9.9 million associated with investments held in a trust pursuant to our supplemental deferred compensation plan. For the year ended December 31, 2007, other expense, net includes a $4 million charge related to the write-down of an investment.

          Income Tax Expense

          The effective income tax rate for the year ended December 31, 2008 decreased 1.3 percentage points, compared to the prior year period. This decrease was primarily due to the favorable resolution of certain tax contingencies in 2008.

          Discontinued Operations

          During the third quarter of 2008, the Company and NID, a former test kit manufacturing subsidiary of the Company, reached an agreement in principle with the United States Attorney’s Office to settle the previously disclosed federal government investigation involving NID and the Company regarding NID test kits and tests performed using those test kits.

          The agreement in principle provides for a comprehensive settlement of federal claims. As part of the agreement, NID, which was closed in 2006, is expected to enter a guilty plea to a single count of felony misbranding. The terms of the settlement are subject to the final negotiation and execution of definitive agreements, which is expected to include a corporate integrity agreement, and the approval by the United States Department of Justice and the United States Department of Health and Human Services and satisfactory resolution of related state claims. There can be no assurance, however, when or whether a settlement may be finalized, or as to its terms. If a settlement is not finalized, the Company would defend itself and NID and could incur significant costs in doing so.

          As a result of the agreement in principle in 2008, the Company recorded charges of $75 million in discontinued operations to increase its reserve for the settlement and related matters. As of December 31, 2008, the total reserve was $316 million. The Company has recorded deferred tax benefits of $58 million on the reserve, reflecting the Company’s

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current estimate of the portion of the reserve expected to be deductible for tax purposes. The reserve reflects the Company’s current estimate of the expected probable loss with respect to these matters, assuming the settlement is finalized. If a settlement is not finalized, the eventual losses related to these matters could be materially different than the amount reserved and could be material to the Company’s results of operations, cash flows and financial condition in the period that such matters are determined or paid.

          Loss from discontinued operations, net of taxes, for the year ended December 31, 2008 was $51 million, or $0.26 per diluted share, compared to $214 million, or $1.10 per diluted share in 2007. Results for the year ended December 31, 2008 and 2007 reflect charges of $75 million and $241 million, respectively, to reserve for the settlement and related matters in connection with various government claims, which is more fully described in Note 14 and Note 15 to the Consolidated Financial Statements.

          Year Ended December 31, 2007 Compared with Year Ended December 31, 2006

          Continuing Operations

          Income from continuing operations for the year ended December 31, 2007 was $554 million, or $2.84 per diluted share, compared to $626 million, or $3.14 per diluted share in 2006. The decrease in income from continuing operations was principally due to the impact of the change in contract status with UNH. However, we successfully mitigated the ongoing impact during the third quarter of 2007 as a result of actions taken to reduce costs, and higher reimbursement for the testing we continue to perform for UNH members. During the second half of the year our profits, before considering the acquisition of AmeriPath, exceeded those of the prior year, when we were a contracted provider to UNH. The acquisition of AmeriPath, which was completed in May 2007, also served to reduce income from continuing operations compared to the prior year. We expect the acquisition of AmeriPath to improve our revenue growth and earnings once the anticipated growth opportunities and cost synergies associated with the acquisition are realized. Results for the year ended December 31, 2007 include first quarter pre-tax charges of $10.7 million, or $0.03 per diluted share, associated with workforce reductions in response to reduced volume levels and $4.0 million, or $0.01 per diluted share, related to in-process research and development expense associated with the HemoCue acquisition.

          Net Revenues

          Net revenues for the year ended December 31, 2007 grew by 7.0% over the prior year level to $6.7 billion. The acquisition of AmeriPath contributed approximately 8% to revenue growth. Our acquisitions of Focus Diagnostics, Enterix and HemoCue contributed approximately 1.7% to revenue growth. We estimate the impact of our change in status with UNH reduced revenue growth by approximately 5%.

          Our clinical testing business, which accounted for over 90% of our 2007 net revenues, grew approximately 5.6% for the year, with AmeriPath contributing 8.3% growth and the change in status with UNH reducing revenues by approximately 5%. Volume, measured by the number of requisitions, declined 4.1% for the year ended December 31, 2007, primarily due to our change in status with UNH, which reduced volume by an estimated 7%, partially offset by the impact of the AmeriPath acquisition, which increased volume by about 3%. Revenue per requisition increased 10.2% for the year ended December 31, 2007 and was impacted by the results of AmeriPath, which contributed 5.1% to the improvement, and a 2% increase due to higher reimbursement on the retained business with UNH, which was reimbursed at a higher rate as a non-contracted provider, with the balance of the increase primarily driven by a positive test mix.

          Our businesses other than clinical testing accounted for approximately 9% of net revenues in 2007. These businesses include our risk assessment services business, our clinical trials testing business, our healthcare information technology business, MedPlus, and our diagnostics products business. The revenues for these businesses as a group grew 23% for the year ended December 31, 2007 as compared to the prior year period, with the increase primarily driven by our acquisitions of HemoCue, Focus Diagnostics and Enterix.

          Operating Costs and Expenses

          Total operating costs and expenses for the year ended December 31, 2007 increased $473 million from the prior year period. Costs associated with the acquired operations of AmeriPath, Focus Diagnostics, Enterix and HemoCue increased costs by approximately $552 million for the year ended December 31, 2007. This increase was offset in part by actions taken to improve our operating efficiency and reduce the size of our workforce. Results for the year ended December 31, 2007 include first quarter charges of $10.7 million associated with workforce reductions ($3.9 million included in costs of services and $6.8 million in selling, general and administrative) and $4.0 million of in-process research and development costs associated with the acquisition of HemoCue, which was recorded in other operating (income) expense, net.

          Cost of services, which includes the costs of obtaining, transporting and testing specimens, was 59.2% of net revenues for the year ended December 31, 2007, compared to 59.0% of net revenues in 2006. The increase in cost of services as a percentage of revenues was primarily due to lower volumes in our clinical testing business and costs

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associated with workforce reductions. Partially offsetting these increases were improvements related to the increase in average revenue per requisition and actions taken to reduce costs.

          Selling, general and administrative expenses, which include the costs of the sales force, billing operations, bad debt expense and general management and administrative support, were 24.1% of net revenues during the year ended December 31, 2007, compared to 22.5% in the prior year period. This increase was primarily due to lower volume levels in our clinical testing business; costs associated with workforce reductions; costs associated with efforts to retain business and clarify for patients, physicians and employers misinformation regarding the UNH contract change; and the impact of the acquired operations of AmeriPath and HemoCue.

          For the year ended December 31, 2007, bad debt expense was 4.5% of net revenues, compared to 3.9% in the prior year period. The increase was principally driven by the inclusion of AmeriPath, which carries a higher bad debt rate than the rest of our business, primarily due to its revenue and customer mix, and by higher bad debt expense associated with billing patients directly for a portion of the UNH volume.

          Other operating (income) expense, net represents miscellaneous income and expense items related to operating activities, including gains and losses associated with the disposal of operating assets and provisions for restructurings and other special charges. For the year ended December 31, 2007, other operating (income) expense, net included a $4.0 million charge related to in-process research and development expense recorded in connection with the acquisition of HemoCue. For the year ended December 31, 2006, other operating (income) expense, net included pre-tax charges of $27 million, principally associated with integration activities related to LabOne and our operations in California.

          Operating Income

          Operating income for the year ended December 31, 2007 was $1.1 billion, or 16.3% of net revenues, compared to $1.1 billion, or 18.0% of net revenues, in the prior year period. The decrease in operating income as a percentage of net revenues was principally due to lower volume levels in our clinical testing business, the various items which served to increase cost of services and selling, general and administrative expenses as a percentage of revenues, and the impact of the acquired operations of AmeriPath and HemoCue. These decreases were offset in part by actions we have taken to reduce our cost structure and higher revenue per requisition.

          Other Income (Expense)

          Interest expense, net for the year ended December 31, 2007 increased $87 million over the prior year. The increase in interest expense, net was primarily due to additional interest expense associated with borrowings to fund acquisitions, as described more fully in Note 9 to the Consolidated Financial Statements.

          Other expense, net represents miscellaneous income and expense items related to non-operating activities such as gains and losses associated with investments and other non-operating assets. For the year ended December 31, 2007, other expense, net includes a $4 million charge related to the write-down of an investment. For the year ended December 31, 2006, other expense, net includes $26 million of charges related to the write-downs of investments partially offset by a gain of $16 million on the sale of an investment.

          Discontinued Operations

          In connection with the investigation of NID, which is described earlier, during the third quarter of 2007, the government and the Company began settlement discussions. In the course of those discussions, the government disclosed to the Company certain of the government’s legal theories regarding the amount of damages allegedly incurred by the government, which include alleged violations of civil and criminal statutes including the False Claims Act and the Food, Drug and Cosmetics Act. Violations of these statutes and related regulations could lead to a warning letter, injunction, fines or penalties, exclusion from federal healthcare programs and/or criminal prosecution, as well as claims by third parties. The Company analyzed the government’s position and presented its own analysis which argued against many of the government’s claims. In light of that analysis and based on the status of settlement discussions, the Company established a reserve, in accordance with generally accepted accounting principles, reflected in discontinued operations, of $241 million in connection with these claims. See Note 14 and Note 15 to the Consolidated Financial Statements for a further description of these matters.

          Loss from discontinued operations, net of tax, for the year ended December 31, 2007 was $214 million, or $1.10 per diluted share, compared to $39 million, or $0.20 per diluted share in 2006. Results for the year ended December 31, 2007 reflect a charge of $241 million to establish a reserve as described above. Results for the year ended December 31, 2006 reflect pre-tax charges of $32 million, primarily related to the wind down of NID’s operations.

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Quantitative and Qualitative Disclosures About Market Risk

          We address our exposure to market risks, principally the market risk of changes in interest rates, through a controlled program of risk management that may include the use of derivative financial instruments. We do not hold or issue derivative financial instruments for trading purposes. We believe that our exposures to foreign exchange impacts and changes in commodities prices are not material to our consolidated financial condition or results of operations. See Note 10 to the Consolidated Financial Statements for additional discussion of our financial instruments and hedging activities.

          At December 31, 2008 and 2007, the fair value of our debt was estimated at approximately $2.9 billion and $3.6 billion, respectively, using quoted market prices and yields for the same or similar types of borrowings, taking into account the underlying terms of the debt instruments. At December 31, 2008, the carrying value exceeded the estimated fair value of the debt by $155 million and at December 31, 2007, the estimated fair value exceeded the carrying value of the debt by $59 million. A hypothetical 10% increase in interest rates on our total debt portfolio (representing approximately 53 and 61 basis points at December 31, 2008 and 2007, respectively) would potentially reduce the estimated fair value of our debt by approximately $75 million and $78 million at December 31, 2008 and 2007, respectively.

          Borrowings under our senior unsecured revolving credit facility, our secured receivables credit facility and our term loan due May 2012 are subject to variable interest rates. Interest on our secured receivables credit facility is based on rates that are intended to approximate commercial paper rates for highly-rated issuers. Interest rates on our senior unsecured revolving credit facility and term loan due May 2012 are subject to a pricing schedule that can fluctuate based on changes in our credit ratings. As such, our borrowing cost under these credit arrangements will be subject to both fluctuations in interest rates and changes in our credit ratings. As of December 31, 2008, the borrowing rates under these credit facilities were: for our secured receivables credit facility 3.6%; for our senior unsecured credit facility, LIBOR plus 0.40%; and for our term loan due May 2012, LIBOR plus 0.50%. At December 31, 2008, the weighted average LIBOR rate was 2.2%. At December 31, 2008, there was $1.1 billion outstanding under our term loan due May 2012, and no borrowings outstanding under our $500 million secured receivables credit facility and our $750 million senior unsecured revolving credit facility.

          We have entered into various variable-to-fixed interest rate swap agreements, whereby we fixed the interest rates on $500 million of our term loan due May 2012 for periods through October 2009. As of December 31, 2008, variable-to-fixed interest rate swap agreements on $200 million of the term loan due May 2012 remain in place through October 2009 with fixed interest rates ranging from 5.13% to 5.27%. Based on our net exposure to interest rate changes, a hypothetical 10% change in interest rates on our variable rate indebtedness (representing approximately 25 basis points) would impact annual net interest expense by approximately $2.8 million, assuming no changes to the debt outstanding at December 31, 2008.

          The fair value of the interest rate swap agreements at December 31, 2008 was a liability of $5.9 million. A hypothetical 10% decrease in interest rates (representing approximately 18 basis points) would potentially increase the fair value of the liability of these instruments by approximately $0.4 million at December 31, 2008. A hypothetical 10% increase in interest rates would potentially decrease the fair value of the liability of these instruments by approximately $0.4 million at December 31, 2008. For details regarding our outstanding debt and our financial instruments, see Notes 9 and 10 to the Consolidated Financial Statements.

          Risk Associated with Investment Portfolio

          Our investment portfolio includes equity investments in publicly held companies that are classified as available-for-sale securities and other strategic equity holdings in privately held companies. These securities are exposed to price fluctuations and are generally concentrated in the life sciences industry. The carrying values of our available-for-sale equity securities and privately held securities were $16 million at December 31, 2008.

          We regularly evaluate the fair value measurements of our equity investments to determine if losses in value are other than temporary and if an impairment loss has been incurred. The evaluation considers if the security has the ability to recover and, if so, the estimated recovery period. Other factors that are considered in this evaluation include the amount of the other-than-temporary decline and its duration, the issuer’s financial condition and short-term prospects and whether the market decline was caused by overall economic conditions or conditions specific to the individual security.

          We do not hedge our equity price risk. The impact of an adverse movement in equity prices on our holdings in privately held companies cannot be easily quantified, as our ability to realize returns on investments depends on, among other things, the enterprises’ ability to raise additional capital or derive cash inflows from continuing operations or through liquidity events such as initial public offerings, mergers or private sales.

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          Fair Value Measurements

          On January 1, 2008, we adopted SFAS No. 157, “Fair Value Measurements.” Adoption of this accounting standard did not have a material effect on our financial position, results of operations or cash flows. See Note 2 to the Consolidated Financial Statements for further details.

          SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”) became effective for the Company on January 1, 2008. As of January 1, 2008 and for the year ended December 31, 2008, the Company has elected not to apply the fair value option to any of its financial assets or financial liabilities on-hand, which were not already measured at fair value, because the Company does not believe that application of SFAS 159’s fair value option is appropriate given the nature of its business operations. See Note 2 to the Consolidated Financial Statements for further details.

Liquidity and Capital Resources

          Cash and Cash Equivalents

          Cash and cash equivalents at December 31, 2008 totaled $254 million, compared to $168 million at December 31, 2007. Cash and cash equivalents consist of highly liquid short-term investments, including time deposits with highly-rated banks, and various insured money market funds, including those that invest in U.S. Treasury securities. The Company has not suffered any losses associated with its cash and cash equivalents. Cash flows from operating activities in 2008 were $1.1 billion, which were used to fund investing and financing activities of $199 million and $778 million, respectively. Cash and cash equivalents at December 31, 2007 totaled $168 million, compared to $150 million at December 31, 2006. Cash flows from operating activities in 2007 were $927 million which, together with $850 million of cash flows from financing activities, were used to fund investing activities of $1.8 billion.

          Cash Flows from Operating Activities

          Net cash provided by operating activities for 2008 was $1.1 billion compared to $927 million in 2007. This increase was primarily due to higher earnings in the current year. Net cash provided by operating activities for the year ended December 31, 2007 was reduced by $57 million of fees and other expenses paid in connection with the acquisition of AmeriPath. Days sales outstanding, a measure of billing and collection efficiency, were 44 days at December 31, 2008 compared to 48 days at December 31, 2007.

          Net cash provided by operating activities for 2007 was $927 million compared to $952 million in 2006. This decrease was primarily due to lower earnings in 2007 and increased payments associated with variable compensation earned in the prior year, coupled with the payment of $57 million of fees and other expenses associated with the acquisition of AmeriPath. Partially offsetting these items was a net source of funds from reductions in net accounts receivable in the current year compared to a net use of funds in the prior year.

          Cash Flows from Investing Activities

          Net cash used in investing activities in 2008 was $199 million, consisting principally of capital expenditures of $213 million, partially offset by $23 million related to the receipt of a payment from an escrow fund established at the time of the acquisition of HemoCue.

          Net cash used in investing activities in 2007 was $1.8 billion, consisting primarily of $1.2 billion related to the acquisition of AmeriPath, $309 million related to the acquisition of HemoCue and capital expenditures of $219 million.

          Cash Flows from Financing Activities

          Net cash used in financing activities in 2008 was $778 million, consisting primarily of net reductions of debt of $459 million. Debt repayments of $482 million, consisting primarily of the repayment of $120 million on our Secured Receivables Credit Facility, $60 million on our term loan due December 31, 2008 and $293 million on our term loan due May 31, 2012, were partially offset by borrowings of $20 million under our Secured Receivables Credit Facility. Since the completion of the AmeriPath acquisition in May 2007, we have reduced our total debt by $876 million.

          Net cash used by financing activities for the year ended December 31, 2008 also included $33 million in proceeds from the exercise of stock options, including related tax benefits, offset by purchases of treasury stock totaling $254 million and dividend payments of $78 million. The $254 million of treasury stock purchases represents 5.5 million shares of our common stock purchased at an average price of $46.09 per share.

          Net cash provided by financing activities in 2007 was $850 million, primarily associated with new borrowings and repayments related to the acquisitions of AmeriPath and HemoCue.

          During the first quarter of 2007, we entered into an interim credit facility (the “Interim Credit Facility”) and borrowed $450 million to finance the acquisition of HemoCue and to repay substantially all of HemoCue’s outstanding debt.

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          During the second quarter of 2007, we borrowed $1.6 billion under a five-year term loan facility and $780 million under a bridge loan facility to finance the acquisition of AmeriPath and repay the Interim Credit Facility used to finance the HemoCue acquisition.

          In connection with the acquisition of AmeriPath, we repaid substantially all of AmeriPath’s outstanding debt and related accrued interest. On May 21, 2007, we commenced a cash tender offer and consent solicitation for the $350 million aggregate principal amount of 10.5% Senior Subordinated Notes of AmeriPath, Inc. due 2013 (the “AmeriPath senior subordinated notes”). In conjunction with the cash tender offer, approximately $348 million in aggregate principal amount, or 99.4% of the $350 million outstanding under the AmeriPath senior subordinated notes, was tendered. We made payments of $386 million to holders with respect to the cash tender offer and consent solicitation, including tender premium and related solicitation fees and accrued interest.

          We completed an $800 million senior notes offering in June 2007 (the “2007 Senior Notes”). The 2007 Senior Notes were sold in two tranches: (a) $375 million of 6.40% senior notes due 2017; and (b) $425 million of 6.95% senior notes due 2037. We used the net proceeds from the 2007 Senior Notes offering to repay the $780 million of borrowings under the bridge loan facility. The 2007 Senior Notes, term loans and the bridge loan are further described in Note 9 to the Consolidated Financial Statements.

          Net cash provided by financing activities for the year ended December 31, 2007 also included $95 million in proceeds from the exercise of stock options, including related tax benefits, offset by purchases of treasury stock totaling $146 million and dividend payments of $77 million. The $146 million of treasury stock purchases represents 2.8 million shares of our common stock purchased at an average price of $52.14 per share.

          Dividend Program

          During each of the quarters of 2008 and 2007, our Board of Directors declared a quarterly cash dividend of $0.10 per common share. We expect to fund future dividend payments with cash flows from operations, and do not expect the dividend to have a material impact on our ability to finance future growth.

          Share Repurchase Plan

          For the year ended December 31, 2008, we repurchased 5.5 million shares of our common stock at an average price of $46.09 per share for $254 million. Through December 31, 2008, we have repurchased 49.6 million shares of our common stock at an average price of $45.43 for $2 billion under our share repurchase program. During the fourth quarter of 2008, our Board of Directors expanded our share repurchase authorization by an additional $150 million, which together with the amounts remaining from previous authorizations, was fully utilized prior to December 31, 2008. In January 2009, our Board of Directors authorized $500 million of additional share repurchases.

          Contractual Obligations and Commitments

          The following table summarizes certain of our contractual obligations as of December 31, 2008. See Notes 9 and 14 to the Consolidated Financial Statements for further details.

	Payments due by period
	(in thousands)
Contractual Obligations	Total		Less than 1 year		1–3 years		3–5 years		After 5 years
Long-term debt	$	3,065,070	$	1,800	$	1,206,449	$	560,000	$	1,296,821
Capital lease obligations		18,161		3,342		3,173		2,067		9,579
Interest payments on outstanding debt		1,446,716		159,887		280,256		169,488		837,085
Operating leases		634,579		174,025		245,683		108,745		106,126
Purchase obligations		82,088		42,849		32,831		5,939		469
Total contractual obligations	$	5,246,614	$	381,903	$	1,768,392	$	846,239	$	2,250,080

          Interest payments on our long-term debt have been calculated after giving effect to our interest rate swap agreements, using the interest rates as of December 31, 2008 applied to the December 31, 2008 balances, which are assumed to remain outstanding through their maturity dates.

          As of December 31, 2008, our total liabilities for unrecognized tax benefits were approximately $71 million, which were excluded from the table above. Based upon the expiration of statutes of limitations, settlements and/or the conclusion of tax examinations, we believe it is reasonably possible that this amount may decrease by up to $34 million within the next twelve months. For the remainder, we cannot make reasonably reliable estimates of the timing of the

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future payments of these liabilities. See Note 4 to the Consolidated Financial Statements for information regarding our contingent tax liability reserves.

          As of December 31, 2008, the reserve for the settlement and related matters in connection with the investigation of NID of $316 million has been excluded from the table above. See Note 14 to the Consolidated Financial Statements for additional information.

          Our credit agreements relating to our senior unsecured revolving credit facility and our term loan due May 2012 contain various covenants and conditions, including the maintenance of certain financial ratios, that could impact our ability to, among other things, incur additional indebtedness. We do not expect these covenants to adversely impact our ability to execute our growth strategy or conduct normal business operations.

          Unconsolidated Joint Ventures

          We have investments in unconsolidated joint ventures in Phoenix, Arizona; Indianapolis, Indiana; and Dayton, Ohio, which are accounted for under the equity method of accounting. We believe that our transactions with our joint ventures are conducted at arm’s length, reflecting current market conditions and pricing. Total net revenues of our unconsolidated joint ventures equal less than 6% of our consolidated net revenues. Total assets associated with our unconsolidated joint ventures are less than 2% of our consolidated total assets. We have no material unconditional obligations or guarantees to, or in support of, our unconsolidated joint ventures and their operations.

          Requirements and Capital Resources

          We estimate that we will invest approximately $200 million during 2009 for capital expenditures to support and expand our existing operations, principally related to investments in information technology, equipment, and facility upgrades. During 2008, we continued to make investments in support of our plans to develop and deploy standard systems across both the AmeriPath practices and our clinical laboratories. We have completed the enhancements to the AmeriPath laboratory and billing systems and began deployment of the enhanced systems during the second quarter of 2008. These investments will enable significant productivity gains and improved customer service.

          In June 2008, we amended our existing receivables securitization facility and increased it from $375 million to $400 million. The secured receivables credit facility was supported by back-up facilities provided on a committed basis by two banks: (a) $125 million, which matured on December 13, 2008 and (b) $275 million, which originally matured on June 10, 2009.

          In December 2008, we replaced the $125 million portion of our secured receivables credit facility and amended the existing receivables securitization facility to increase it from $400 million to $500 million. The secured receivables credit facility continues to be supported by back-up facilities provided on a committed basis by two banks: (a) $225 million, which matures on December 11, 2009 and (b) $275 million, which also matures on December 11, 2009. Interest on the secured receivables credit facility is based on rates that are intended to approximate commercial paper rates for highly-rated issuers.

          As of December 31, 2008, $1.3 billion of borrowing capacity was available under our existing credit facilities, consisting of $500 million available under our secured receivables credit facility and $750 million available under our senior unsecured revolving credit facility. No borrowings are currently outstanding under either facility.

          We believe the banks participating in our various credit facilities are predominantly highly-rated banks, and that the entire amounts under the credit facilities are currently available to us. Should one or several banks no longer participate in either of our credit facilities, we would not expect it to impact our ability to fund operations. We expect to continue to generate positive cash flow despite a slowing economy, and have only $5 million of debt maturing over the next twelve months. We expect to be able to fund payments associated with the agreement in principle related to NID, out of cash on-hand and available credit facilities.

          We believe that cash and cash equivalents on-hand and cash from operations, together with our borrowing capacity under our credit facilities, will provide sufficient financial flexibility to meet seasonal working capital requirements and to fund capital expenditures, debt service requirements, cash dividends on common shares, share repurchases and additional growth opportunities for the foreseeable future. We believe that our credit profile should provide us with access to additional financing, if necessary, to fund growth opportunities that cannot be funded from existing sources.

Outlook

          As discussed in the Overview, despite the continued consolidation among healthcare insurers, and their continued efforts to reduce reimbursement for providers of diagnostic testing, and the general economic conditions, we believe that the underlying fundamentals of the diagnostic testing industry will continue to improve and that over the long

55

term the industry will continue to grow. As the world’s leading provider of diagnostic testing, information and services, we believe we are well positioned to benefit from the growth expected in our industry.

          We believe our focus on delivering a superior patient experience and Six Sigma quality as well as the investments we are continuing to make in our distribution network, our industry leading test menu and our information technology solutions will further differentiate us over the long-term and strengthen our industry leadership position. In addition, we plan to leverage our knowledge and expertise in diagnostic testing to further expand into international markets and point-of-care testing.

          Our strong cash generation, balance sheet and credit profile position us well to take advantage of these growth opportunities.

Inflation

          We believe that inflation generally does not have a material adverse effect on our results of operations or financial condition because the majority of our contracts are short term.

Impact of New Accounting Standards

          In September 2007, the Financial Accounting Standards Board (“FASB”) ratified Emerging Issues Task Force (“EITF”) Issue No. 07-1 “Accounting for Collaborative Agreements.” In December 2007, the FASB issued SFAS No. 141(R) “Business Combinations” and SFAS No. 160 “Noncontrolling interests in Consolidated Financial Statements, an Amendment of ARB No. 51.” In February 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 157-2 “Effective Date of FASB Statement No. 157.” In March 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133.” In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” In October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active.” In November 2008, the FASB ratified the consensus reached under EITF Issue No. 08-7, “Accounting for Defensive Intangible Assets.” In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.” The impact of these accounting standards is discussed in Note 2 to the Consolidated Financial Statements.

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REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

          The management of Quest Diagnostics Incorporated (the “Company”), including its Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008 based on criteria for effective internal control over financial reporting described in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 31, 2008 is effective.

          The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.

          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

          PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the financial statements included in this annual report, audited the Company’s internal control over financial reporting as of December 31, 2008 and issued their audit report expressing an unqualified opinion on the Company’s internal control over financial reporting.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
Of Quest Diagnostics Incorporated

          In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a) (1) present fairly, in all material respects, the financial position of Quest Diagnostics Incorporated and its subsidiaries at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and the financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

          As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for uncertain tax positions in 2007.

          A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
	PricewaterhouseCoopers LLP
	Florham Park, New Jersey
	February 17, 2009

F-1

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2008 AND 2007
(in thousands, except per share data)

	2008			2007
Assets
Current assets:
Cash and cash equivalents	$	253,946		$	167,594
Accounts receivable, net of allowance for doubtful accounts of $261,334 and $250,067 at December 31, 2008 and 2007, respectively		832,873			881,967
Inventories		102,125			95,234
Deferred income taxes		218,419			149,841
Prepaid expenses and other current assets		89,456			79,721
Total current assets		1,496,819			1,374,357
Property, plant and equipment, net		879,687			911,998
Goodwill, net		5,054,926			5,220,104
Intangible assets, net		827,403			886,733
Other assets		144,995			172,501
Total assets	$	8,403,830		$	8,565,693
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	1,219,619		$	1,124,716
Short-term borrowings and current portion of long-term debt		5,142			163,581
Total current liabilities		1,224,761			1,288,297
Long-term debt		3,078,089			3,377,212
Other liabilities		496,084			575,942
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01 per share; 600,000 shares authorized at both December 31, 2008 and 2007; 214,113 shares and 213,745 shares issued at December 31, 2008 and 2007, respectively		2,141			2,137
Additional paid-in capital		2,262,065			2,210,825
Retained earnings		2,561,679			2,057,744
Accumulated other comprehensive (loss) income		(68,068	)		25,279
Treasury stock, at cost; 23,739 shares and 19,705 shares at December 31, 2008 and 2007, respectively		(1,152,921	)		(971,743	)
Total stockholders’ equity		3,604,896			3,324,242
Total liabilities and stockholders’ equity	$	8,403,830		$	8,565,693

The accompanying notes are an integral part of these statements.

F-2

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(in thousands, except per share data)

	2008			2007			2006
Net revenues	$	7,249,447		$	6,704,907		$	6,268,659
Operating costs and expenses:
Cost of services		4,256,156			3,969,848			3,696,006
Selling, general and administrative		1,736,934			1,612,858			1,410,716
Amortization of intangible assets		37,293			27,904			10,843
Other operating (income) expense, net		(3,312	)		2,961			23,017
Total operating costs and expenses		6,027,071			5,613,571			5,140,582
Operating income		1,222,376			1,091,336			1,128,077
Other income (expense):
Interest expense, net		(179,764	)		(178,314	)		(91,425	)
Minority share of income		(31,705	)		(26,510	)		(23,900	)
Equity earnings in unconsolidated joint ventures		29,736			26,969			28,469
Other expense, net		(21,691	)		(1,079	)		(7,948	)
Total non-operating expenses, net		(203,424	)		(178,934	)		(94,804	)
Income from continuing operations before taxes		1,018,952			912,402			1,033,273
Income tax expense		386,768			358,574			407,581
Income from continuing operations		632,184			553,828			625,692
Loss from discontinued operations, net of taxes		(50,694	)		(213,889	)		(39,271	)
Net income	$	581,490		$	339,939		$	586,421
Earnings per common share - basic:
Income from continuing operations	$	3.25		$	2.87		$	3.18
Loss from discontinued operations		(0.26	)		(1.11	)		(0.20	)
Net income	$	2.99		$	1.76		$	2.98
Earnings per common share - diluted:
Income from continuing operations	$	3.23		$	2.84		$	3.14
Loss from discontinued operations		(0.26	)		(1.10	)		(0.20	)
Net income	$	2.97		$	1.74		$	2.94
Dividends per common share	$	0.40		$	0.40		$	0.40

The accompanying notes are an integral part of these statements.

F-3

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(in thousands)

	2008			2007			2006
Cash flows from operating activities:
Net income	$	581,490		$	339,939		$	586,421
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		264,593			237,879			197,398
Provision for doubtful accounts		326,228			300,226			243,443
Provision for restructuring and other special charges		72,650			238,781			55,788
Deferred income tax provision (benefit)		549			(1,575	)		(46,280	)
Minority share of income		31,705			26,510			23,900
Stock compensation expense		70,581			56,853			55,478
Excess tax benefits from stock-based compensation arrangements		(2,420	)		(13,981	)		(32,693	)
Other, net		13,772			8,310			20,172
Changes in operating assets and liabilities:
Accounts receivable		(282,634	)		(265,347	)		(273,232	)
Accounts payable and accrued expenses		(4,342	)		(5,431	)		81,347
Integration, settlement and other special charges		(8,223	)		(14,013	)		(4,247	)
Income taxes payable		24,653			3,213			45,330
Other assets and liabilities, net		(25,553	)		15,560			(929	)
Net cash provided by operating activities		1,063,049			926,924			951,896
Cash flows from investing activities:
Business acquisitions, net of cash acquired		8,066			(1,535,826	)		(236,543	)
Capital expenditures		(212,681	)		(219,101	)		(193,422	)
Decrease (increase) in investments and other assets		5,732			(4,266	)		15,563
Net cash used in investing activities		(198,883	)		(1,759,193	)		(414,402	)
Cash flows from financing activities:
Proceeds from borrowings		22,929			3,754,490			375,000
Repayments of debt		(481,870	)		(2,705,369	)		(416,208	)
Increase (decrease) in book overdrafts		14,201			(24,950	)		(1,705	)
Purchases of treasury stock		(253,997	)		(145,660	)		(472,325	)
Exercise of stock options		30,511			80,928			102,324
Excess tax benefits from stock-based compensation arrangements		2,420			13,981			32,693
Dividends paid		(77,964	)		(77,327	)		(77,135	)
Distributions to minority partners		(32,931	)		(24,678	)		(21,900	)
Financing costs paid		(1,113	)		(21,192	)		(728	)
Net cash (used in) provided by financing activities		(777,814	)		850,223			(479,984	)
Net change in cash and cash equivalents		86,352			17,954			57,510
Cash and cash equivalents, beginning of year		167,594			149,640			92,130
Cash and cash equivalents, end of year	$	253,946		$	167,594		$	149,640

The accompanying notes are an integral part of these statements.

F-4

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(in thousands)

	Shares of Common Stock Outstanding			Common Stock			Additional Paid-In Capital			Retained Earnings			Unearned Compen- sation			Accumulated Other Compre- hensive (Loss) Income			Treasury Stock			Compre- hensive Income
Balance, December 31, 2005		198,455		$	2,137		$	2,175,533		$	1,292,510		$	(3,321	)	$	(6,205	)	$	(697,670	)
Net income											586,421											$	586,421
Currency translation																	2,460						2,460
Market valuation, net of tax benefit of $2,501																	(3,815	)					(3,815	)
Reversal of market adjustment, net of tax expense of $(5,053)																	7,707						7,707
Deferred gain reclassifications																	(212	)					(212	)
Comprehensive income																						$	592,561
Dividends declared											(78,676	)
Reclassification upon adoption of SFAS123R								(3,321	)					3,321
Issuance of common stock under benefit plans		598			1			(2,158	)											23,838
Stock-based compensation expense								55,478
Exercise of stock options		3,782						(75,603	)											177,927
Shares to cover employee payroll tax withholdings on stock issued under benefit plans		(13	)					(672	)
Tax benefits associated with stock-based compensation plans								35,816
Purchases of treasury stock		(8,873	)																	(472,325	)
Balance, December 31, 2006		193,949			2,138			2,185,073			1,800,255			—			(65	)		(968,230	)
Net income											339,939											$	339,939
Currency translation																	30,820						30,820
Market valuation, net of tax benefit of $24																	(36	)					(36	)
Reversal of market adjustment, net of tax expense of $(510)																	802						802
Deferred loss, less reclassifications																	(6,242	)					(6,242	)
Comprehensive income																						$	365,283
Dividends declared											(77,304	)
Issuance of common stock under benefit plans		462						(1,974	)											21,989
Stock-based compensation expense								56,853
Exercise of stock options		2,447						(39,230	)											120,158
Shares to cover employee payroll tax withholdings on stock issued under benefit plans		(24	)		(1	)		(1,229	)
Tax benefits associated with stock-based compensation plans								16,703
Purchases of treasury stock		(2,794	)																	(145,660	)
Adjustments upon adoption of FASB Interpretation No. 48								(10,441	)		(5,146	)
Reimbursement from Corning Incorporated								2,345
Other								2,725
Balance, December 31, 2007		194,040			2,137			2,210,825			2,057,744			—			25,279			(971,743	)
Net income											581,490											$	581,490
Currency translation																	(94,326	)					(94,326	)
Market valuation, net of tax benefit of $261																	(398	)					(398	)
Reversal of market adjustment, net of tax expense of $(1,257)																	2,161						2,161
Deferred loss, less reclassifications																	(784	)					(784	)
Comprehensive income																						$	488,143
Dividends declared											(77,555	)
Issuance of common stock under benefit plans		913			4			81												18,248
Stock-based compensation expense								63,055												7,526
Exercise of stock options		987						(18,148	)											48,659
Shares to cover employee payroll tax withholdings on stock issued under benefit plans		(56	)					(962	)											(1,614	)
Tax benefits associated with stock-based compensation plans								6,881
Purchases of treasury stock		(5,510	)																	(253,997	)
Other								333
Balance, December 31, 2008		190,374		$	2,141		$	2,262,065		$	2,561,679		$	—		$	(68,068	)	$	(1,152,921	)

The accompanying notes are an integral part of these statements.

F-5

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands unless otherwise indicated)

1. DESCRIPTION OF BUSINESS

          Quest Diagnostics Incorporated and its subsidiaries (“Quest Diagnostics” or the “Company”) is the world’s leading provider of diagnostic testing, information and services, providing insights that enable patients, physicians and others to make decisions to improve health. Quest Diagnostics offers patients and physicians the broadest access to diagnostic laboratory services through the Company’s nationwide network of laboratories and owned patient service centers. The Company provides interpretive consultation through the largest medical and scientific staff in the industry, with approximately 900 M.D.s and Ph.D.s primarily located in the United States. Quest Diagnostics is the leading provider of clinical testing, including gene-based testing and other esoteric testing, anatomic pathology services and testing for drugs-of-abuse, and the leading provider of risk assessment services for the life insurance industry. The Company is also a leading provider of testing for clinical trials. The Company’s diagnostics products business manufactures and markets diagnostic test kits and specialized point-of-care testing. Quest Diagnostics empowers healthcare organizations and clinicians with state-of-the-art information technology solutions that can improve patient care and medical practice.

          During 2008, Quest Diagnostics processed approximately 150 million requisitions through its extensive network of laboratories in virtually every major metropolitan area throughout the United States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Principles of Consolidation

          The consolidated financial statements include the accounts of all entities controlled by the Company through its direct or indirect ownership of a majority voting interest and the accounts of any variable interest entities, as defined in Financial Accounting Standards Board (“FASB”) Interpretation No. 46 “Consolidation of Variable Interest Entities,” where the Company is subject to a majority of the risk of loss from the variable interest entity’s activities, or entitled to receive a majority of the entity’s residual returns or both. The Company’s relationships with variable interest entities were not material at both December 31, 2008 and 2007. Investments in entities which the Company does not control, but in which it has a substantial ownership interest (generally between 20% and 49%) and can exercise significant influence, are accounted for using the equity method of accounting. As of December 31, 2008 and 2007, the Company’s investments in affiliates accounted for under the equity method of accounting totaled $38.4 million and $37.5 million, respectively. The Company’s share of equity earnings from investments in affiliates, accounted for under the equity method, totaled $29.7 million, $27.0 million and $28.5 million, respectively, for 2008, 2007 and 2006. All significant intercompany accounts and transactions are eliminated in consolidation.

          Basis of Presentation

          During the third quarter of 2006, the Company completed its wind-down of NID, a test kit manufacturing subsidiary, and classified the operations of NID as discontinued operations. The accompanying consolidated statements of operations and related disclosures have been prepared to report the results of NID as discontinued operations for all periods presented. See Note 15 for a further discussion of discontinued operations.

          In addition, certain reclassifications have been made to conform to the current year presentation.

          Use of Estimates

          The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-6

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Revenue Recognition

          The Company primarily recognizes revenue for services rendered upon completion of the testing process. Billings for services reimbursed by third-party payers, including Medicare and Medicaid, are recorded as revenues net of allowances for differences between amounts billed and the estimated receipts from such payers. Adjustments to the estimated receipts, based on final settlement with the third-party payers, are recorded upon settlement. In 2008, 2007 and 2006, approximately 18%, 17% and 17%, respectively, of the Company’s net revenues were generated by Medicare and Medicaid programs. Under capitated arrangements with healthcare plans, the Company recognizes revenue based on a predetermined monthly reimbursement rate for each member of an insurer’s health plan regardless of the number or cost of services provided by the Company.

          Taxes on Income

          The Company uses the asset and liability approach to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted.

          On January 1, 2007, the Company adopted FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109 “Accounting for Income Taxes.” FIN 48 provides guidance on recognizing, measuring, presenting and disclosing in the financial statements uncertain tax positions that a company has taken or expects to take on a tax return. See Note 4 for further information related to FIN 48.

          Earnings Per Share

          Basic earnings per common share is calculated by dividing net income by the weighted average common shares outstanding. Diluted earnings per common share is calculated by dividing net income by the weighted average common shares outstanding after giving effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the dilutive effect of outstanding stock options, performance share units, restricted common shares and restricted stock units granted under the Company’s Amended and Restated Employee Long-Term Incentive Plan and its Amended and Restated Director Long-Term Incentive Plan.

F-7

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          The computation of basic and diluted earnings per common share was as follows (in thousands, except per share data):

	2008			2007			2006
Income from continuing operations	$	632,184		$	553,828		$	625,692
Loss from discontinued operations		(50,694	)		(213,889	)		(39,271	)
Net income available to common stockholders	$	581,490		$	339,939		$	586,421
Weighted average common shares outstanding – basic		194,283			193,241			196,985
Effect of dilutive securities:
Stock options		1,675			2,019			2,535
Restricted common shares, restricted stock units and performance share units		1			2			22
Weighted average common shares outstanding – diluted		195,959			195,262			199,542
Earnings per common share – basic:
Income from continuing operations	$	3.25		$	2.87		$	3.18
Loss from discontinued operations		(0.26	)		(1.11	)		(0.20	)
Net income	$	2.99		$	1.76		$	2.98
Earnings per common share – diluted:
Income from continuing operations	$	3.23		$	2.84		$	3.14
Loss from discontinued operations		(0.26	)		(1.10	)		(0.20	)
Net income	$	2.97		$	1.74		$	2.94

          The following securities were not included in the diluted earnings per share calculation due to their antidilutive effect (in thousands):

	2008		2007		2006
Stock options		2,676		3,114		2,443
Restricted common shares, restricted stock units and performance share units		1,339		731		786

          Stock-Based Compensation

          SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of FASB Statement No. 123” (“SFAS 148”) encouraged, but did not require, companies to record compensation cost for stock-based compensation plans at fair value. In addition, SFAS 148 provided alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation, and amended the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.

          In December 2004, the FASB issued SFAS No. 123, revised 2004, “Share-Based Payment” (“SFAS 123R”). SFAS 123R requires that companies recognize compensation cost relating to share-based payment transactions based on the fair value of the equity or liability instruments issued. The Company adopted SFAS 123R effective January 1, 2006 using the modified prospective approach and therefore has not restated results for prior periods. Under this

F-8

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

approach, awards that are granted, modified or settled after January 1, 2006 will be measured and accounted for in accordance with SFAS 123R. Unvested awards that were granted prior to January 1, 2006 will continue to be accounted for in accordance with SFAS 123, as amended by SFAS 148, except that compensation cost will be recognized in the Company’s results of operations.

          Pursuant to the provisions of SFAS 123R, the Company records stock-based compensation as a charge to earnings net of the estimated impact of forfeited awards. As such, the Company recognizes stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the revision. The terms of the Company’s performance share unit grants allow the recipients of such awards to earn a variable number of shares based on the achievement of the performance goals specified in the awards. For performance share unit awards granted prior to 2008, the actual amount of any stock award earned is based on the Company’s earnings per share growth as measured in accordance with its Amended and Restated Employee Long-Term Incentive Plan (“ELTIP”) for the performance period compared to that of a peer group of companies. Beginning with performance share unit awards granted in 2008, the performance measure for these awards will be based on the cumulative annual growth rate of the Company’s earnings per share from continuing operations over a three year period. Stock-based compensation expense associated with performance share units is recognized based on management’s best estimates of the achievement of the performance goals specified in such awards and the resulting number of shares that will be earned. The cumulative effect on current and prior periods of a change in the estimated number of performance share units expected to be earned is recognized as compensation cost in earnings in the period of the revision. The Company recognizes stock-based compensation expense related to the Company’s Amended Employee Stock Purchase Plan (“ESPP”) based on the 15% discount at purchase. See Note 12 for a further discussion of stock-based compensation.

          Fair Value Measurements

          On January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 provides a single definition of fair value and a common framework for measuring fair value as well as new disclosure requirements for fair value measurements used in financial statements. Fair value measurements are based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs, and are determined by either the principal market or the most advantageous market. The principal market is the market with the greatest level of activity and volume for the asset or liability. Absent a principal market to measure fair value, the Company would use the most advantageous market, which is the market that the Company would receive the highest selling price for the asset or pay the lowest price to settle the liability, after considering transaction costs. However, when using the most advantageous market, transaction costs are only considered to determine which market is the most advantageous and these costs are then excluded when applying a fair value measurement. The adoption of SFAS 157 did not have a material effect on the Company’s financial position, results of operations or cash flows.

          In February 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” (“FSP FAS 157-1”). FSP FAS 157-1 amended SFAS 157 to exclude from its scope SFAS No. 13, “Accounting for Leases,” and its related interpretive accounting pronouncements that address leasing transactions. However, this exclusion does not apply to the Company’s impairment of long-lived assets under a capital lease pursuant to SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets,” the Company’s cost to terminate an operating lease under SFAS No. 146, “Accounting for Costs Associated with Exit and Disposal Activities,” and the measurement of acquired leases in a business combination pursuant to SFAS No. 141 or 141(R), “Business Combinations.” Also in February 2008, the FASB issued FSP FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). FSP FAS 157-2 amended SFAS 157 to defer the effective date of SFAS 157 for one year for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis, at least annually. The impact of SFAS 157 on the Company’s non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis is not expected to have a material effect on the Company’s financial position, results of operations or cash flows.

F-9

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          SFAS 157 creates a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest.

Level 1:	Quoted prices in active markets for identical assets or liabilities.
Level 2:	Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
Level 3:	Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

          The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis.

			Basis of Fair Value Measurements
			Quoted Prices in Active Markets for Identical Assets / Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	December 31, 2008		Level 1		Level 2		Level 3
Assets:
Trading securities	$	25,383	$	25,383	$	—	$	—
Cash surrender value of life insurance policies		11,767		—		11,767		—
Foreign currency forward contracts		2,617		—		2,617		—
Available-for-sale securities		255		233		22		—
Total	$	40,022	$	25,616	$	14,406	$	—
Liabilities:
Interest rate swaps	$	5,888	$	—	$	5,888	$	—
Foreign currency forward contracts		4,142		—		4,142		—
Deferred compensation liabilities		39,304		—		39,304		—
Total	$	49,334	$	—	$	49,334	$	—

          The Company offers certain employees the opportunity to participate in a supplemental deferred compensation plan. A participant’s deferrals, together with Company matching credits, are invested in a variety of participant-directed stock and bond mutual funds as well as Company common stock and are classified as trading securities. Changes in the fair value of these securities are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the trading securities is also reflected in the changes in fair value of the deferred compensation obligation. The deferred compensation liabilities are classified within Level 2 because their inputs are derived principally from observable market data by correlation to the trading securities.

          In connection with the acquisition of AmeriPath Group Holdings, Inc. (“AmeriPath”) in May 2007, the Company assumed a non-qualified deferred compensation program AmeriPath offers to certain employees. A participant’s deferrals, together with Company matching credits, are “invested” at the direction of the employee in a hypothetical portfolio of investments which are tracked by an administrator. The Company purchases life insurance policies, with the Company named as beneficiary of the policies, for the purpose of funding the program’s liability.

F-10

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Changes in the cash surrender value of the life insurance policies are based upon earnings and changes in the value of the underlying investments. Changes in the fair value of the deferred compensation obligation are derived using quoted prices in active markets based on the market price per unit multiplied by the number of units. The cash surrender value and the deferred compensation obligations are classified within Level 2 because their inputs are derived principally from observable market data by correlation to the hypothetical investments.

          The fair value measurements for available-for-sale securities are based upon the quoted price in active markets multiplied by the number of shares owned exclusive of any transaction costs and without any adjustments to reflect discounts that may be applied to selling a large block of the securities at one time. The Company does not believe that the changes in fair value of these assets will materially differ from the amounts that could be realized upon settlement or that the changes in fair value will have a material effect on the Company’s results of operations, liquidity and capital resources.

          The fair value measurements of foreign currency forward contracts are obtained from a third-party pricing service. The fair value measurements of the Company’s interest rate swaps are model-derived valuations as of a given date in which all significant inputs are observable in active markets including certain financial information and certain assumptions regarding past, present and future market conditions. The Company does not believe that the changes in the fair values of its foreign currency forward contracts and interest rate swaps will materially differ from the amounts that could be realized upon settlement or maturity or that the changes in fair value will have a material effect on its results of operations, liquidity and capital resources.

          SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”) became effective for the Company on January 1, 2008. SFAS 159 provides companies with an option to irrevocably elect to measure certain financial assets and financial liabilities at fair value on an instrument-by-instrument basis with the resulting changes in fair value recorded in earnings. The objective of SFAS 159 is to reduce both the complexity in accounting for financial instruments and the volatility in earnings caused by using different measurement attributes for financial assets and financial liabilities. As of January 1, 2008 and for the period ended December 31, 2008, the Company has elected not to apply the fair value option to any of its financial assets or financial liabilities on-hand, which were not already measured at fair value, because the Company does not believe that application of SFAS 159’s fair value option is appropriate, given the nature of its business operations.

          The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable and accrued expenses approximate fair value based on the short maturities of these instruments. In accordance with the provisions of SFAS No. 107, “Disclosures About Fair Value of Financial Instruments” at December 31, 2008 and December 31, 2007, the fair value of the Company’s debt was estimated at $2.9 billion and $3.6 billion, respectively, using quoted market prices and yields for the same or similar types of borrowings, taking into account the underlying terms of the debt instruments. At December 31, 2008, the carrying value exceeded the estimated fair value of the debt by $155 million and at December 31, 2007, the estimated fair value exceeded the carrying value of the debt by $59 million.

          Foreign Currency

          The Company predominately uses the U.S. dollar as its functional currency. The functional currency of the Company’s foreign subsidiaries is the applicable local currency. Assets and liabilities denominated in non-U.S. dollars are translated into U.S. dollars at exchange rates as of the end of the reporting period. Income and expense items are translated at average exchange rates prevailing during the year. The translation adjustments are recorded as a component of “accumulated other comprehensive (loss) income” within stockholders’ equity. Gains and losses from foreign currency transactions are included within “other operating (income) expense, net” in the consolidated statements of operations. Transaction gains and losses have not been material.

          Cash and Cash Equivalents

          Cash and cash equivalents include all highly-liquid investments with original maturities, at the time acquired by the Company, of three months or less.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Concentration of Credit Risk

          Financial instruments that potentially subject the Company to concentrations of credit risk are principally cash, cash equivalents, short-term investments and accounts receivable. The Company’s policy is to place its cash, cash equivalents and short-term investments in highly-rated financial instruments and institutions. Concentration of credit risk with respect to accounts receivable is mitigated by the diversity of the Company’s payers and their dispersion across many different geographic regions, and is limited to certain payers who are large buyers of the Company’s services. To reduce risk, the Company routinely assesses the financial strength of these payers and, consequently, believes that its accounts receivable credit risk exposure, with respect to these payers, is limited. While the Company has receivables due from federal and state governmental agencies, the Company does not believe that such receivables represent a credit risk since the related healthcare programs are funded by federal and state governments, and payment is primarily dependent on submitting appropriate documentation.

          Accounts Receivable and Allowance for Doubtful Accounts

          Accounts receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimate and review the collectibility of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues which may impact the collectibility of these receivables or reserve estimates. Revisions to the allowances for doubtful accounts estimates are recorded as an adjustment to bad debt expense within selling, general and administrative expenses. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts.

          Inventories

          Inventories, which consist principally of testing supplies and reagents, are valued at the lower of cost (first in, first out method) or market.

          Property, Plant and Equipment

          Property, plant and equipment is recorded at cost. Major renewals and improvements are capitalized, while maintenance and repairs are expensed as incurred. Costs incurred for computer software developed or obtained for internal use are capitalized for application development activities and expensed as incurred for preliminary project activities and post-implementation activities. Capitalized costs include external direct costs of materials and services consumed in developing or obtaining internal-use software, payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, and interest costs incurred, when material, while developing internal-use software. Capitalization of such costs ceases when the project is substantially complete and ready for its intended purpose. Certain costs, such as maintenance and training, are expensed as incurred. The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying assets and is amortized over the expected useful lives of the assets. Depreciation and amortization are provided on the straight-line method over expected useful asset lives as follows: buildings and improvements, ranging from ten to thirty years; laboratory equipment and furniture and fixtures, ranging from three to seven years; leasehold improvements, the lesser of the useful life of the improvement or the remaining life of the building or lease, as applicable; and computer software developed or obtained for internal use, ranging from three to seven years.

          Goodwill

          Goodwill represents the cost of acquired businesses in excess of the fair value of assets acquired, including separately recognized intangible assets, less the fair value of liabilities assumed in a business combination. The Company uses a nonamortization approach to account for purchased goodwill. Under a nonamortization approach, goodwill is not amortized, but instead is periodically reviewed for impairment.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Intangible Assets

          Intangible assets are recognized as an asset apart from goodwill if the asset arises from contractual or other legal rights, or if it is separable. Intangible assets, principally representing the cost of customer relationships, customer lists and non-competition agreements acquired, are capitalized and amortized on the straight-line method over their expected useful life, which generally ranges from five to twenty years. Intangible assets with indefinite useful lives, consisting principally of acquired tradenames, are not amortized, but instead are periodically reviewed for impairment.

          Recoverability and Impairment of Goodwill

          Under the nonamortization provisions of SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), goodwill and certain intangibles are periodically reviewed for impairment and an impairment charge is recorded in the periods in which the recorded carrying value of goodwill and certain intangibles is more than its estimated fair value. The provisions of SFAS 142 require that a goodwill impairment test be performed annually or in the case of other events that indicate a potential impairment. The annual impairment tests of goodwill were performed at the end of each of the Company’s fiscal years on December 31^st and indicated that there was no impairment of goodwill as of December 31, 2008 or 2007.

          The Company evaluates the recoverability and measures the potential impairment of its goodwill under SFAS 142. The annual impairment test is a two-step process that begins with the estimation of the fair value of the reporting unit. The first step screens for potential impairment and the second step measures the amount of the impairment, if any. Management’s estimate of fair value considers publicly available information regarding the market capitalization of the Company as well as (i) the financial projections and future prospects of the Company’s business, including its growth opportunities and likely operational improvements, and (ii) comparable sales prices, if available. As part of the first step to assess potential impairment, management compares the estimate of fair value for the reporting unit to the book value of the reporting unit. If the book value is greater than the estimate of fair value, the Company would then proceed to the second step to measure the impairment, if any. The second step compares the implied fair value of goodwill with its carrying value. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying amount of the reporting unit’s goodwill is greater than its implied fair value, an impairment loss will be recognized in the amount of the excess. Management believes its estimation methods are reasonable and reflective of common valuation practices.

          On a quarterly basis, management performs a review of the Company’s business to determine if events or changes in circumstances have occurred which could have a material adverse effect on the fair value of the Company and its goodwill. If such events or changes in circumstances were deemed to have occurred, the Company would perform an impairment test of goodwill as of the end of the quarter, consistent with the annual impairment test, and record any noted impairment loss.

          Recoverability and Impairment of Intangible Assets and Other Long-Lived Assets

          The Company evaluates the possible impairment of its long-lived assets, including intangible assets which are amortized pursuant to the provisions of SFAS 142, under SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.” The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. Evaluation of possible impairment is based on the Company’s ability to recover the asset from the expected future pretax cash flows (undiscounted and without interest charges) of the related operations. If the expected undiscounted pretax cash flows are less than the carrying amount of such asset, an impairment loss is recognized for the difference between the estimated fair value and carrying amount of the asset.

          Investments

          The Company accounts for investments in equity securities, which are included in “other assets” in the consolidated balance sheet, in conformity with SFAS No. 115, “Accounting for Certain Investments in Debt and

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Equity Securities,” which requires the use of fair value accounting for trading or available-for-sale securities. Both realized and unrealized gains and losses for trading securities are recorded currently in earnings as a component of non-operating expenses within “other expense, net” in the consolidated statements of operations. Unrealized gains and losses, net of tax, for available-for-sale securities are recorded as a component of “accumulated other comprehensive (loss) income” within stockholders’ equity. Recognized gains and losses for available-for-sale securities are recorded in “other expense, net” in the consolidated statements of operations. Gains and losses on securities sold are based on the average cost method.

          The Company periodically reviews its investments to determine whether a decline in fair value below the cost basis is other than temporary. The primary factors considered in the determination are: the length of time that the fair value of the investment is below carrying value; the financial condition, operating performance and near term prospects of the investee; and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for a recovery in fair value. If the decline in fair value is deemed to be other than temporary, the cost basis of the security is written down to fair value.

          Investments at December 31, 2008 and 2007 consisted of the following:

	2008		2007
Available-for-sale equity securities	$	255	$	9,690
Trading equity securities		25,383		33,903
Other investments		15,539		16,460
Total	$	41,177	$	60,053

          Investments in available-for-sale equity securities consist of equity securities in public corporations. Investments in trading equity securities represent participant-directed investments of deferred employee compensation and related Company matching contributions held in a trust pursuant to the Company’s supplemental deferred compensation plan (see Note 12). Other investments do not have readily determinable fair values and consist of investments in preferred and common shares of privately held companies and are accounted for under the cost method.

          As of December 31, 2008 and 2007, the Company had gross unrealized losses from available-for-sale equity securities of $0.6 million and $3.5 million, respectively. For the year ended December 31, 2008 and 2007, “other expense, net,” within the consolidated statements of operations, includes $8.9 million and $4.0 million, respectively, of charges associated with the write-down of available-for-sale equity securities. For the year ended December 31, 2006, “other expense, net,” within the consolidated statements of operations, includes $16.2 million of charges associated with the write-down of available-for-sale equity securities, $10.0 million of charges associated with the write-down of other investments and a $15.8 million gain associated with the sale of an investment. For the years ended December 31, 2008, 2007 and 2006, (losses) gains from trading equity securities totaled $(9.9) million, $2.7 million and $3.2 million, respectively, and are included in “other expense, net.”

          Derivative Financial Instruments

          The Company uses derivative financial instruments to manage its market risks. This includes the use of interest rate swap agreements to manage its exposure to movements in interest rates and foreign currency forward contracts to manage its exposure to foreign exchange rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These policies prohibit holding or issuing derivative financial instruments for speculative purposes.

          Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net payments are recognized as an adjustment to interest expense. When the swaps are terminated, unrealized gains or losses are deferred in stockholders’ equity, as a component of “accumulated other comprehensive (loss) income,” and are amortized as an adjustment to interest expense over the shorter of the remaining original term of the hedging instrument or the remaining life of the underlying debt instrument.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          The Company formally documents its hedge relationships, including identifying the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. On the date the derivative is entered into, the Company designates the type of derivative as a fair value hedge or cash flow hedge, and accounts for the derivative in accordance with its designation as prescribed by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), as amended. The Company currently holds only cash flow hedges, designated as a hedge of the variability of cash outflows related to the Company’s long-term debt due to changes in interest rates. Both at inception and at least quarterly thereafter, the Company also formally assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged item. All components of each derivative financial instrument’s gain or loss are included in the assessment of hedge effectiveness.

          The Company accounts for derivatives in conformity with SFAS No. 133, as amended, and records derivatives as either an asset or liability measured at its fair value. The fair value is based upon quoted market prices obtained from third-party institutions. For derivatives that have been formally designated as a cash flow hedge (interest rate swap agreements), the effective portion of changes in the fair value of the derivatives is recorded in “accumulated other comprehensive (loss) income.” Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction based on the specific qualifying conditions in SFAS 133. Amounts in “accumulated other comprehensive (loss) income” are reclassified into earnings in “interest expense, net” during the same period in which the hedged item affects earnings. If it is determined that a derivative ceases to be a highly effective hedge, the Company discontinues hedge accounting, and any deferred gains or losses are recorded in the consolidated statement of operations.

          Comprehensive Income (Loss)

          Comprehensive income (loss) encompasses all changes in stockholders’ equity (except those arising from transactions with stockholders) and includes net income, net unrealized capital gains or losses on available-for-sale securities, foreign currency translation adjustments and deferred gains related to the settlement of certain treasury lock agreements (see Note 10).

          New Accounting Standards

          In September 2007, the FASB ratified Emerging Issues Task Force Issue No. 07-1 “Accounting for Collaborative Agreements,” (“EITF 07-1”). EITF 07-1 defines collaborative agreements as contractual arrangements that involve a joint operating activity. These arrangements involve two (or more) parties that are both active participants in the activity and are exposed to significant risks and rewards dependent on the commercial success of the activity. EITF 07-1 provides guidance that revenues generated and costs incurred by participants from transactions with parties outside the collaborative agreement should be reported either on a gross basis or a net basis depending on whether the participant is a principal or agent to the transaction. EITF 07-1 also provides that a company should report the effects of adoption as a change in accounting principle through retrospective application to all periods and requires additional disclosures about a company’s collaborative arrangements. EITF 07-1 is effective for the Company as of January 1, 2009. The adoption of EITF 07-1 is not expected to have a material impact on the Company’s consolidated financial statements.

          In December 2007, the FASB issued SFAS No. 141(R) “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) changes several underlying principles in applying the purchase method of accounting. Among the significant changes, SFAS 141(R) requires a redefining of the measurement date of a business combination, expensing direct transaction costs as incurred, capitalizing in-process research and development costs as an intangible asset and recording a liability for contingent consideration at the measurement date with subsequent re-measurements recorded in the results of operations. SFAS 141(R) also requires that costs for business restructuring and exit activities related to the acquired company will be included in the post-combination financial results of operations and also provides new guidance for the recognition and measurement of contingent assets and liabilities in a business combination. In addition, adjustments to acquisition-related tax contingencies and deferred tax valuation allowances for both past and prospective business combinations will no longer be an adjustment to goodwill, but rather reflected in earnings in the period of adjustment. SFAS 141(R) requires several new disclosures, including the reasons for the business combination, the factors that contribute to the recognition of goodwill, the amount of acquisition related third-party

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

expenses incurred, the nature and amount of contingent consideration, and a discussion of pre-existing relationships between the parties. SFAS 141(R) is effective for the Company as of January 1, 2009. The Company expects that the adoption of SFAS 141(R) is likely to have a significant impact on how the Company allocates the purchase price of an acquired business, including the expensing of direct transaction costs and costs to integrate the acquired business. Transaction costs for potential business combinations that had not closed by December 31, 2008 were written off on January 1, 2009 and were not material.

          In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51,” (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 requires noncontrolling interests in subsidiaries initially to be measured at fair value and classified as a separate component of equity. SFAS 160 also requires a new presentation on the face of the consolidated financial statements to separately report the amounts attributable to controlling and non-controlling interests. SFAS 160 is effective for the Company as of January 1, 2009. The adoption of SFAS 160 is not expected to have a material impact on the Company’s consolidated financial statements.

          In March 2008, the FASB issued SFAS No. 161 “Disclosures About Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” by requiring expanded disclosures about an entity’s derivative instruments and hedging activities. SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. SFAS 161 is effective for the Company as of January 1, 2009. The adoption of SFAS 161 is not expected to have a material impact on the Company’s consolidated financial statements.

          In May 2008, the FASB issued SFAS No. 162 “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (the GAAP hierarchy). SFAS 162 will become effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AICPA Professional Standards AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The adoption of SFAS 162 is not expected to have a material impact on the Company’s consolidated financial statements.

          In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in computing earnings per share under the two-class method described in SFAS No. 128, “Earnings Per Share.” FSP EITF 03-6-1 is effective for the Company as of January 1, 2009 and in accordance with its requirements it will be applied retrospectively. The Company does not expect the adoption of FSP EITF 03-6-1 to have a material impact on its consolidated financial statements.

          In October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP FAS 157-3”). FSP FAS 157-3 clarifies the application of SFAS 157 in a market that is not active and illustrates how an entity would determine fair value when the market for a financial asset is not active. FSP FAS 157-3 provides guidance on how an entity’s own assumptions about cash flows and discount rates should be considered when measuring fair value when relevant market data does not exist, how observable market information in an inactive or dislocated market affects fair value measurements and how the use of broker and pricing service quotes should be considered when applying fair value measurements. FSP FAS 157-3 was effective immediately as of September 30, 2008 and for all interim and annual periods thereafter. The adoption of FSP FAS 157-3 did not have a material impact on the Company’s consolidated financial statements.

          In November 2008, the FASB ratified the consensus reached under EITF Issue No. 08-7, “Accounting for Defensive Intangible Assets” (“EITF 08-7”). EITF 08-7 requires that certain intangible assets acquired in a business

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

combination that will be held for defensive purposes shall be measured at their fair value when they are obtained. The useful life of a defensive intangible asset will be based on the period in which the asset is expected to directly or indirectly contribute to future cash flows up through the date it is effectively abandoned. EITF 08-7 is effective for the Company as of January 1, 2009. The purchase price allocations in prospective business combinations will require the Company to ascribe a fair value to intangible assets it intends to hold for defensive purposes and to amortize such assets over their estimated useful lives.

          In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities” (“FSP FAS 140-4 and FIN 46(R)-8”). FSP FAS 140-4 and FIN 46(R)-8 changes the accounting and reporting for transfers and securitizations of financial assets and the use of qualified special purpose entities (QSPEs) and other variable interest entities (VIEs) by modifying the rules for de-recognition of transferred financial assets, eliminating the concept QSPEs and modifying the consolidation model for VIEs to require a continual reassessment of consolidation conclusions. The consolidation model will include a two-step approach that will consider qualitative attributes of the relationship with a VIE as well as a quantitative approach that analyzes the expected losses and expected residual returns of the VIE. FSP FAS 140-4 and FIN 46(R)-8 is effective for the Company as of December 31, 2008. The Company currently does not securitize any of its financial assets through QSPEs and its relationship with VIEs has not been material.

3.	BUSINESS ACQUISITIONS
	2007 Acquisitions
	Acquisition of HemoCue

          On January 31, 2007, the Company completed its acquisition of POCT Holding AB (“HemoCue”), a Sweden-based company specializing in point-of-care testing, in an all-cash transaction valued at approximately $450 million, including $113 million of assumed debt. HemoCue is the leading international provider in point-of-care for hemoglobin, with a growing share in professional glucose and microalbumin testing.

          In conjunction with the acquisition of HemoCue, the Company repaid approximately $113 million of debt, representing substantially all of HemoCue’s existing outstanding debt as of January 31, 2007.

          The Company financed the aggregate purchase price of $344 million, which includes transaction costs of approximately $7 million, of which $2 million was paid in 2006, and the repayment of substantially all of HemoCue’s outstanding debt with the proceeds from a $450 million term loan and cash on-hand. On May 31, 2007, the Company refinanced this term loan. In January 2008, the Company received a payment of approximately $23 million from an escrow fund established at the time of the acquisition which reduced the aggregate purchase price to $321 million.

          The acquisition of HemoCue was accounted for under the purchase method of accounting. As such, the cost to acquire HemoCue was allocated to the respective assets and liabilities acquired based on their estimated fair values as of the closing date. The consolidated financial statements include the results of operations of HemoCue subsequent to the closing of the acquisition.

          Of the aggregate purchase price of $321 million, $298 million was allocated to goodwill, $38 million was allocated to customer relationships that are being amortized over 20 years and $39 million was allocated to technology that is being amortized over 14 years.

          In addition to the amortizable intangibles noted above, $53.8 million was allocated to tradenames, which is not subject to amortization, and $4.0 million was allocated to in-process research and development (“IPR&D”). The IPR&D was expensed in the Company’s results of operations during the first quarter of 2007, in accordance with FASB Interpretation No. 4, “Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method,” and is included in “other operating (income) expense, net” within the consolidated statements of operations.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Supplemental pro forma combined financial information has not been presented as the acquisition is not material to the Company’s consolidated results of operations.

          Acquisition of AmeriPath

          On May 31, 2007, the Company completed its acquisition of AmeriPath, in an all-cash transaction valued at approximately $2.0 billion, including approximately $780 million of assumed debt and related accrued interest. AmeriPath is a leading provider of anatomic pathology, including dermatopathology, and esoteric testing and generated annual revenues of approximately $800 million.

          Through the acquisition, the Company acquired all of AmeriPath’s operations. AmeriPath, with its team of approximately 400 board certified pathologists, operates 40 outpatient anatomic pathology testing locations and provides inpatient anatomic pathology and medical director services for approximately 200 hospitals throughout the United States. The Company financed the all-cash purchase price and related transaction costs, together with the repayment of approximately $780 million of principal and related accrued interest representing substantially all of AmeriPath’s debt, as well as the refinancing of the term loan used to finance the acquisition of HemoCue, with $1.6 billion of borrowings under a five-year term loan facility, $780 million of borrowings under a one-year bridge loan, and cash on-hand. In June 2007, the Company completed an $800 million senior notes offering. The net proceeds of the senior notes offering were used to repay the $780 million bridge loan. See Note 9 for further descriptions of the Company’s debt outstanding.

          The acquisition of AmeriPath was accounted for under the purchase method of accounting. As such, the cost to acquire AmeriPath was allocated to the respective assets and liabilities acquired based on their estimated fair values as of the closing date. The consolidated financial statements include the results of operations of AmeriPath subsequent to the closing of the acquisition.

          The following table summarizes the Company’s purchase price allocation of the cost to acquire AmeriPath:

	Estimated Fair Values as of May 31, 2007
Current assets	$	200,930
Property and equipment		125,817
Intangible assets		561,300
Goodwill		1,415,193
Other assets		67,685
Total assets acquired		2,370,925
Current liabilities		141,435
Long-term liabilities		213,044
Long-term debt		801,424
Total liabilities assumed		1,155,903
Net assets acquired	$	1,215,022
The acquired amortizable intangibles are being amortized over their estimated useful lives as follows:

	Estimated Fair Value		Weighted Average Useful Life
Customer relationships	$	327,500	20 years
Non-compete agreement		5,800	5 years
Tradename		2,500	2 years

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          In addition to the amortizable intangibles noted above, $226 million was allocated to certain tradenames, which are not subject to amortization.

          Of the amount allocated to goodwill and intangible assets, approximately $100 million is expected to be deductible for tax purposes.

          During 2008, the Company decreased the amount of goodwill recorded in connection with the acquisition of AmeriPath by approximately $45 million, primarily as a result of changes in judgments regarding the realization of certain pre-acquisition net operating loss carryforwards.

          2006 Acquisitions

          Acquisition of Focus Diagnostics

          On July 3, 2006, the Company completed its acquisition of Focus Technologies Holding Company (“Focus Diagnostics”) in an all-cash transaction valued at $208 million, including approximately $3 million of assumed debt. Focus Diagnostics is a leading provider of infectious and immunologic disease testing and develops and markets diagnostic products. It offers its reference testing services and diagnostic products to large academic medical centers, hospitals and commercial laboratories. The Company financed the aggregate purchase price of $205 million, which included $0.5 million of related transaction costs, and the repayment of substantially all of Focus Diagnostics’ outstanding debt with $135 million of borrowings under its secured receivables credit facility and with cash on-hand.

          The acquisition of Focus Diagnostics was accounted for under the purchase method of accounting. As such, the cost to acquire Focus Diagnostics was allocated to the respective assets and liabilities acquired based on their estimated fair values as of the closing date. The consolidated financial statements include the results of operations of Focus Diagnostics subsequent to the closing of the acquisition.

          Of the aggregate purchase price of $205 million, $142 million was allocated to goodwill, $33 million was allocated to customer relationships that are being amortized over 10-15 years and $9.1 million was allocated to trade names that are not subject to amortization. Substantially all of the goodwill is not expected to be deductible for tax purposes.

          Supplemental pro forma combined financial information has not been presented as the acquisition is not material to the Company’s consolidated financial statements.

          Acquisition of Enterix

          On August 31, 2006, the Company completed its acquisition of Enterix Inc. (“Enterix”), a privately held Australia-based company that develops and manufactures the InSure™ Fecal Immunochemical Test, a Food and Drug Administration (“FDA”)-cleared test for use in screening for colorectal cancer and other sources of lower gastrointestinal bleeding, for approximately $44 million in cash. The acquisition is not material to the Company’s consolidated financial statements.

F-19

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Pro Forma Combined Financial Information

          The following unaudited pro forma combined financial information for the years ended December 31, 2007 and 2006 assumes that the AmeriPath acquisition and related financing, including the Company’s June 2007 senior notes offering, were completed on January 1, 2006. Supplemental pro forma combined financial information for HemoCue, Focus and Enterix has not been presented as the acquisitions are not material to the Company’s consolidated results of operations (in thousands, except per share data).

	2007		2006
Net revenues	$	7,038,781	$	7,020,980
Net income		263,225		593,677
Basic earnings per common share:
Net income	$	1.36	$	3.01
Weighted average common shares outstanding – basic		193,241		196,985
Diluted earnings per common share:
Net income	$	1.35	$	2.98
Weighted average common shares outstanding – diluted		195,262		199,542

          The unaudited pro forma combined financial information presented above reflects certain reclassifications to the historical financial statements of AmeriPath to conform the acquired company’s accounting policies and classification of certain costs and expenses to that of Quest Diagnostics. These adjustments had no impact on pro forma net income. Pro forma results for the year ended December 31, 2007 exclude transaction related costs of $44 million, which were incurred and expensed by AmeriPath in conjunction with its acquisition by Quest Diagnostics.

4. TAXES ON INCOME

          The Company’s pretax income (loss) from continuing operations consisted of $1.02 billion, $920 million and $1.02 billion from U.S. operations and approximately $(1.2) million, $(7.1) million and $8.6 million from foreign operations for the years ended December 31, 2008, 2007 and 2006, respectively.

          The components of income tax expense (benefit) for 2008, 2007 and 2006 were as follows:

	2008			2007			2006
Current:
Federal	$	299,937		$	267,138		$	360,806
State and local		57,750			59,625			93,292
Foreign		3,833			1,093			4,586
Deferred:
Federal		20,764			23,787			(26,897	)
State and local		10,029			10,774			(24,206	)
Foreign		(5,545	)		(3,843	)		—
Total	$	386,768		$	358,574		$	407,581

F-20

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          A reconciliation of the federal statutory rate to the Company’s effective tax rate for 2008, 2007 and 2006 was as follows:

	2008			2007			2006
Tax provision at statutory rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal benefit		4.6			4.6			4.3
Impact of foreign operations		(1.1	)		(0.8	)		0.3
Non-deductible expenses, primarily meals and entertainment expenses		0.5			0.3			0.3
Other, net		(1.0	)		0.2			(0.5	)
Effective tax rate		38.0	%		39.3	%		39.4	%

          The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at December 31, 2008 and 2007 were as follows:

	2008			2007
Current deferred tax assets:
Accounts receivable reserves	$	82,594		$	54,226
Liabilities not currently deductible		135,825			95,615
Total current deferred tax assets	$	218,419		$	149,841
Non-current deferred tax assets (liabilities):
Liabilities not currently deductible	$	125,693		$	117,647
Stock-based compensation		55,413			36,664
Net operating loss carryforwards		52,394			29,131
Depreciation and amortization		(423,074	)		(393,134	)
Total non-current deferred tax liabilities	$	(189,574	)	$	(209,692	)

          During 2008, the Company increased deferred tax assets related to accounts receivable reserves by approximately $32 million, with a corresponding decrease in goodwill, for changes in estimates regarding the realization of tax benefits associated with acquired reserve balances.

          At December 31, 2008 and 2007, non-current deferred tax liabilities of $190 million and $210 million, respectively, are included in other long-term liabilities in the consolidated balance sheet.

          As of December 31, 2008, the Company had estimated net operating loss carryforwards for federal, state and foreign income tax purposes of $73 million, $647 million and $42 million, respectively, which expire at various dates through 2028. As of December 31, 2008 and 2007, deferred tax assets associated with net operating loss carryforwards of $66 million and $71 million, respectively, have each been reduced by a valuation allowance of $14 million and $42 million, respectively.

          Income taxes payable including those classified in other long-term liabilities in the consolidated balance sheets at December 31, 2008 and 2007, were $88 million and $83 million, respectively.

          As of January 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements and provides guidance on the recognition and measurement of tax positions taken or expected to be taken by an entity. The adoption of FIN 48 resulted in an increase to our contingent tax liability reserves of $30 million with corresponding charges to retained earnings, goodwill and additional paid-in capital. The contingent liabilities for tax positions under FIN 48 primarily relate to uncertainties associated with the realization of tax benefits derived from certain state net operating loss carryforwards, the allocation of income and expense among state jurisdictions, the characterization and timing of certain tax deductions associated with business combinations and employee compensation, and income and expenses associated with certain intercompany licensing arrangements.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          The recognition and measurement of certain tax benefits includes estimates and judgment by management and inherently involves subjectivity. Changes in estimates may create volatility in the Company’s effective tax rate in future periods and may be due to settlements with various tax authorities (either favorable or unfavorable), the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates.

          The total amount of unrecognized tax benefits as of and for the years ended December 31, 2008 and 2007 consists of the following:

	2008			2007
Balance, beginning of year	$	107,943		$	91,856
Additions:
for tax positions of current year		3,775			14,341
for tax positions of prior years		3,916			14,698
Reductions:
Changes in judgment		(32,684	)		(1,494	)
Expirations of statutes of limitations		(2,724	)		(4,423	)
Settlements		(9,349	)		(7,035	)
Balance, end of year	$	70,877		$	107,943

          The total amount of unrecognized tax benefits as of December 31, 2008, that, if recognized, would affect the effective tax rate is $51 million. Based upon the expiration of statutes of limitations, settlements and/or the conclusion of tax examinations, the Company believes it is reasonably possible that the total amount of unrecognized tax benefits for the items previously discussed may decrease by up to $34 million within the next twelve months.

          Accruals for interest expense on contingent tax liabilities are classified in income tax expense in the consolidated statements of operations. Accruals for penalties have historically been immaterial. As a result of changes in judgment and favorable resolutions of uncertain tax positions, $5 million of net interest was credited to income tax expense in 2008. Interest expense included in income tax expense in 2007 was approximately $6 million. As of December 31, 2008 and 2007, the Company has approximately $18 million and $23 million, respectively, accrued, net of the benefit of a federal and state deduction, for the payment of interest on uncertain tax positions. The Company does not consider this interest part of its fixed charges.

          In the regular course of business, various federal, state and local and foreign tax authorities conduct examinations of the Company’s income tax filings and the Company generally remains subject to examination until the statute of limitations expires for the respective jurisdiction. The Internal Revenue Service has completed its examinations of the Company’s consolidated federal income tax returns up through and including the 2004 tax year. The Company is currently appealing an issue with regards to its 2005 tax year. Certain state tax authorities are conducting audits for various years between 2004 and 2007. In December 2008, the Company reached a settlement agreement to pay a state tax authority approximately $44 million in taxes, penalties and interest ($26 million, net of federal and state benefits) for certain tax positions associated with intercompany licensing arrangements. This settlement is expected to be paid in 2009. At this time, the Company does not believe that there will be any material additional payments beyond its recorded contingent liability reserves that may be required as a result of these tax audits. As of December 31, 2008, a summary of the tax years that remain subject to examination for the Company’s major jurisdictions are:

United States – federal	2004 – 2008
United States – various states	2004 – 2008

          In conjunction with its acquisition of SmithKline Beecham Clinical Laboratories, Inc. (“SBCL”), which operated the clinical testing business of SmithKline Beecham plc (“SmithKline Beecham”), the Company entered into a tax indemnification arrangement with SmithKline Beecham that provides the parties with certain rights of indemnification against each other.

F-22

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

5. SUPPLEMENTAL CASH FLOW AND OTHER DATA

	2008			2007			2006
Depreciation expense	$	227,300		$	209,975		$	184,844
Interest expense		(185,476	)		(186,329	)		(96,454	)
Interest income		5,712			8,015			5,029
Interest, net		(179,764	)		(178,314	)		(91,425	)
Interest paid		189,294			157,502			102,055
Income taxes paid		359,336			315,745			381,348
Businesses acquired:
Fair value of assets acquired	$	—		$	2,954,728		$	278,078
Fair value of liabilities assumed		—			1,395,867			28,453

6.	PROPERTY, PLANT AND EQUIPMENT
	Property, plant and equipment at December 31, 2008 and 2007 consisted of the following:

	2008			2007
Land	$	35,786		$	36,272
Buildings and improvements		365,481			360,442
Laboratory equipment, furniture and fixtures		1,182,376			1,042,890
Leasehold improvements		348,821			318,552
Computer software developed or obtained for internal use		259,851			255,408
Construction-in-progress		57,478			92,918
		2,249,793			2,106,482
Less: accumulated depreciation and amortization		(1,370,106	)		(1,194,484	)
Total	$	879,687		$	911,998

7. GOODWILL AND INTANGIBLE ASSETS

          The changes in goodwill, net for the years ended December 31, 2008 and 2007 are as follows:

	2008			2007
Balance as of January 1	$	5,220,104		$	3,391,046
Goodwill acquired during the year		9,260			1,799,101
Other purchase accounting adjustments		(120,105	)		5,955
(Decrease) increase related to foreign currency translation		(54,333	)		24,002
Balance as of December 31	$	5,054,926		$	5,220,104

          For the year ended December 31, 2008, goodwill acquired during the year was associated with several immaterial acquisitions. Other purchase accounting adjustments were primarily due to changes in estimates regarding the realization of certain pre-acquisition net operating loss carryforwards, the reduction in certain acquired pre-acquisition tax loss contingencies, and a payment received from an escrow fund established at the time of the

F-23

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

HemoCue acquisition (see Note 3 for further discussion). Approximately 90% of the Company’s goodwill as of December 31, 2008 and December 31, 2007 was associated with its clinical testing business.

          For the year ended December 31, 2007, goodwill acquired during the year was primarily related to the acquisitions of AmeriPath and HemoCue, and other purchase accounting adjustments were primarily due to the impact on goodwill as a result of the adoption of FIN 48. (See Notes 3 and 4 for further discussions).

          Intangible assets at December 31, 2008 and 2007 consisted of the following:

	Weighted Average Amortization Period	December 31, 2008							December 31, 2007
		Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Amortizing intangible assets:
Customer-related intangibles	19 years	$	585,963	$	(99,384	)	$	486,579	$	589,418	$	(70,036	)	$	519,382
Non-compete agreements	5 years		54,382		(48,298	)		6,084		53,832		(46,476	)		7,356
Other	13 years		53,934		(13,258	)		40,676		64,214		(8,394	)		55,820
Total	19 years		694,279		(160,940	)		533,339		707,464		(124,906	)		582,558
Intangible assets not subject to amortization:
Tradenames			294,064		—			294,064		304,175		—			304,175
Total intangible assets		$	988,343	$	(160,940	)	$	827,403	$	1,011,639	$	(124,906	)	$	886,733

          Amortization expense related to intangible assets was $37.3 million, $27.9 million and $10.8 million for the years ended December 31, 2008, 2007 and 2006, respectively.

          The estimated amortization expense related to amortizable intangible assets for each of the five succeeding fiscal years and thereafter as of December 31, 2008 is as follows:

Fiscal Year Ending December 31,
2009	$	36,086
2010		35,309
2011		35,049
2012		33,831
2013		32,851
Thereafter		360,213
Total	$	533,339

F-24

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

          Accounts payable and accrued expenses at December 31, 2008 and 2007 consisted of the following:

	2008		2007
Trade accounts payable	$	191,219	$	205,067
Accrued wages and benefits		299,374		318,285
Accrued expenses		412,106		359,355
Accrued settlement reserves		316,920		242,009
Total	$	1,219,619	$	1,124,716

9. DEBT

          Short-term borrowings and current portion of long-term debt at December 31, 2008 and 2007 consisted of the following:

	2008		2007
Borrowings under Secured Receivables Credit Facility	$	—	$	100,000
Current portion of long-term debt		5,142		63,581
Total short-term borrowings and current portion of long-term debt	$	5,142	$	163,581

          Long-term debt at December 31, 2008 and 2007 consisted of the following:

	2008		2007
Industrial Revenue Bonds due September 2009	$	1,800	$	3,585
Term Loan due December 2008		—		60,000
Senior Notes due November 2010		399,724		399,574
Senior Notes due July 2011		274,724		274,613
Term Loan due May 2012		1,092,000		1,385,000
Senior Notes due November 2015		498,907		498,747
Senior Notes due July 2017		374,320		374,240
Senior Notes due July 2037		420,526		420,369
Debentures due June 2034		3,070		3,013
Other		18,160		21,652
Total		3,083,231		3,440,793
Less: current portion		5,142		63,581
Total long-term debt	$	3,078,089	$	3,377,212

          Senior Unsecured Revolving Credit Facility

          In May 2007, the Company entered into a $750 million senior unsecured revolving credit facility (the “Credit Facility”) which replaced the Company’s $500 million senior unsecured revolving credit facility. The Credit Facility matures in May 2012. Interest on the Credit Facility is based on certain published rates plus an applicable margin that will vary over a range from 40 basis points to 125 basis points based on changes in the Company’s public debt ratings. At the option of the Company, it may elect to enter into LIBOR-based interest rate contracts for periods up to six months. Interest on any outstanding amounts not covered under LIBOR-based interest rate contracts is based on an alternate base rate, which is calculated by reference to the prime rate or federal funds rate. As of December 31, 2008 and 2007, the Company’s borrowing rate for LIBOR-based loans under the Credit Facility was LIBOR (0.4% and 4.6% at December 31, 2008 and 2007, respectively) plus 0.40%. The Credit Facility is guaranteed by certain of the Company’s domestic, wholly-owned subsidiaries (the “Subsidiary Guarantors”). The Credit Facility contains various covenants, including the maintenance of certain financial ratios, which could impact the Company’s ability to, among other things, incur additional indebtedness. At December 31, 2008 and 2007, there were no outstanding borrowings under the Credit Facility.

F-25

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          The Company incurred $3.1 million of costs associated with the Credit Facility, which is being amortized over the term of the related debt.

          Secured Receivables Credit Facility

          In June 2008, the Company amended its existing receivables securitization facility (the “Secured Receivables Credit Facility”) and increased it from $375 million to $400 million. The Secured Receivables Credit Facility was supported by back-up facilities provided on a committed basis by two banks: (a) $125 million, which matured on December 13, 2008 and (b) $275 million, which originally matured on June 10, 2009.

          In December 2008, the Company replaced the $125 million portion of the Secured Receivables Credit Facility and amended the existing receivables securitization facility to increase it from $400 million to $500 million. The Secured Receivables Credit Facility continues to be supported by back-up facilities provided on a committed basis by two banks: (a) $225 million, which matures on December 11, 2009 and (b) $275 million, which also matures on December 11, 2009. Interest on the Secured Receivables Credit Facility is based on rates that are intended to approximate commercial paper rates for highly-rated issuers.

          At December 31, 2008 and 2007, the Company’s borrowing rate under the Secured Receivables Credit Facility was 3.6% and 5.4%, respectively. Borrowings outstanding under the Secured Receivables Credit Facility are classified as a current liability on the Company’s consolidated balance sheet. At December 31, 2008, there were no borrowings outstanding under the facility. At December 31, 2007, borrowings under the facility totaled $100 million.

          Term and Bridge Loan Credit Facilities

          On May 31, 2007, the Company entered into a five-year term loan facility (the “Term Loan due 2012”), pursuant to which it borrowed $1.6 billion, and a $1.0 billion bridge loan facility (the “Bridge Loan”), pursuant to which it borrowed $780 million. The Company used the proceeds to finance the acquisition of AmeriPath, and related transaction costs, to repay substantially all of AmeriPath’s outstanding debt and to repay the $450 million outstanding under an interim credit facility used to finance the acquisition of HemoCue and repay substantially all of HemoCue’s outstanding debt.

          The Term Loan due 2012 matures on May 31, 2012 and requires principal repayments of 1.25% of the amount borrowed on the last day of each calendar quarter starting on September 30, 2007, with the quarterly payments increasing on September 30, 2009 to 2.5% of the amount borrowed and on September 30, 2011 to 17.5% of the amount borrowed, with the remainder of the outstanding balance due on May 31, 2012. The Term Loan due 2012 is guaranteed by the Subsidiary Guarantors. Interest under the Term Loan due 2012 is based on certain published rates plus an applicable margin that will vary over a range from 40 basis points to 125 basis points based on changes in the Company’s public debt ratings. At the Company’s option, it may elect to enter into LIBOR-based interest rate contracts for periods up to six months. Interest on any outstanding amounts not covered under LIBOR-based interest rate contracts is based on an alternate base rate, which is calculated by reference to the prime rate or federal funds rate. As of December 31, 2008 and 2007, the Company’s borrowing rate for LIBOR-based loans was LIBOR (2.2% and 5.1% at December 31, 2008 and 2007, respectively) plus 0.50%.

          The Company incurred $7 million of costs associated with the Term Loan due 2012, which is being amortized over the term of the related debt.

          During the year ended December 31, 2008 and 2007, the Company repaid $293 million and $215 million, respectively, of borrowings outstanding under the Term Loan due 2012.

          AmeriPath Debt

          In connection with the acquisition of AmeriPath, the Company repaid substantially all of AmeriPath’s outstanding debt and related accrued interest, which approximated $780 million, as well as approximately $31 million representing the tender premium and solicitation fees related to the Company’s tender offer and consent solicitation for $350 million aggregate principal amount of 10.5% Senior Subordinated Notes of AmeriPath, Inc. due 2013 (the “AmeriPath Senior Subordinated Notes”), which commenced on May 21, 2007.

F-26

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          In conjunction with the cash tender offer, approximately $348 million in aggregate principal amount, or 99.4% of the $350 million outstanding under the AmeriPath Senior Subordinated Notes, was tendered. The Company made payments totaling $386 million to holders of such notes with respect to the cash tender offer and consent solicitation including tender premium and related solicitation fees and accrued interest.

          During 2008, the remaining $2 million of outstanding principal under the AmeriPath Senior Subordinated Notes was repaid.

          Industrial Revenue Bonds

          In connection with the acquisition of LabOne in November 2005, the Company assumed $7.2 million of Industrial Revenue Bonds. Principal is payable annually in equal installments through September 1, 2009. Interest is payable monthly at a rate which is adjusted weekly. At December 31, 2008 and 2007, the rate was 2.0% and 4.9%, respectively. At December 31, 2008 and 2007, the remaining principal outstanding was $1.8 million and $3.6 million, respectively. The bonds are secured by the Lenexa, Kansas laboratory facility and an irrevocable bank letter of credit.

          Term Loan due December 2008

          On December 19, 2003, the Company entered into a $75 million amortizing term loan facility (the “Term Loan due December 2008”), which was funded on January 12, 2004. Interest under the Term Loan due December 2008 is based on LIBOR plus an applicable margin that can fluctuate over a range of up to 119 basis points, based on changes in the Company’s public debt rating. As of December 31, 2007, the Company’s borrowing rate for LIBOR-based loans was LIBOR plus 0.55%. The entire outstanding principal balance was repaid in full in December 2008.

          Senior Notes

          In conjunction with its 2001 debt refinancing, the Company completed a $550 million senior notes offering in June 2001 (the “2001 Senior Notes”). The 2001 Senior Notes were issued in two tranches: (a) $275 million aggregate principal amount of 6¾% senior notes due 2006 (“Senior Notes due 2006”), issued at a discount of approximately $1.6 million and (b) $275 million aggregate principal amount of 7½% senior notes due 2011 (“Senior Notes due 2011”), issued at a discount of approximately $1.1 million. On July 12, 2006, the Company repaid the $275 million outstanding under the Senior Notes due 2006. After considering the discount, the effective interest rate on the Senior Notes due 2011 is 7.6%. The Senior Notes due 2011 require semiannual interest payments. The Senior Notes due 2011 are unsecured obligations of the Company and rank equally with the Company’s other unsecured senior obligations. The Senior Notes due 2011 are guaranteed by the Subsidiary Guarantors and do not have a sinking fund requirement.

          On October 31, 2005, the Company completed its $900 million private placement of senior notes (the “2005 Senior Notes”). The 2005 Senior Notes were priced in two tranches: (a) $400 million aggregate principal amount of 5.125% senior notes due November 2010 (“Senior Notes due 2010”); and (b) $500 million aggregate principal amount of 5.45% senior notes due November 2015 (“Senior Notes due 2015”). The Company used the net proceeds from the 2005 Senior Notes, together with cash on-hand, to pay the cash purchase price and transaction costs of the LabOne acquisition and to repay $127 million of LabOne’s debt. The Senior Notes due 2010 and 2015 were issued at a discount of $0.8 million and $1.6 million, respectively. After considering the discounts, the effective interest rates on the Senior Notes due 2010 and 2015 are approximately 5.3% and 5.6%, respectively. The 2005 Senior Notes require semiannual interest payments, which commenced on May 1, 2006. The 2005 Senior Notes are unsecured obligations of the Company and rank equally with the Company’s other unsecured senior obligations. The 2005 Senior Notes are guaranteed by the Subsidiary Guarantors. Under a registration rights agreement executed in connection with the offering and sale of the 2005 Senior Notes and related guarantees, the Company filed a registration statement which was declared effective on February 16, 2006, to enable the holders of the 2005 Senior Notes to exchange the notes and guarantees for publicly registered notes and guarantees and all the holders exchanged the notes and guarantees for publicly registered notes and guarantees.

          On June 22, 2007, the Company completed an $800 million senior notes offering (the “2007 Senior Notes”). The 2007 Senior Notes were priced in two tranches: (a) $375 million aggregate principal amount of 6.40% senior notes due July 2017 (the “Senior Notes due 2017”), issued at a discount of approximately $0.8 million and (b) $425 million aggregate principal amount of 6.95% senior notes due July 2037 (the “Senior Notes due 2037”), issued at a

F-27

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

discount of approximately $4.7 million. After considering the discounts, the effective interest rates on the Senior Notes due 2017 and the Senior Notes due 2037 are approximately 6.4% and 7.0%, respectively. The 2007 Senior Notes require semiannual interest payments, which commenced on January 1, 2008. The 2007 Senior Notes are unsecured obligations of the Company and rank equally with the Company’s other unsecured obligations. The 2007 Senior Notes do not have a sinking fund requirement and are guaranteed by the Subsidiary Guarantors.

          The Company incurred $6.3 million of costs associated with the 2007 Senior Notes, which is being amortized over the term of the related debt.

          The Company used the net proceeds from the 2007 Senior Notes to repay the $780 million of borrowings under the Bridge Loan, discussed above.

          Debentures due June 2034

          In connection with the acquisition of LabOne in November 2005, the Company assumed $103.5 million of 3.50% convertible senior debentures of LabOne due June 15, 2034 (the “Debentures due June 2034”). As a result of the change in control of LabOne, the holders of the debentures had the right from November 1, 2005 to December 1, 2005 to: (i) have their debentures repurchased by LabOne for 100% of the principal amount of the debentures, plus accrued and unpaid interest thereon through November 30, 2005; or (ii) have their debentures converted into the amount the respective holder would have received if the holder had converted the debentures prior to November 1, 2005, plus an additional premium. As a result of the change in control of LabOne, and as provided in the indenture to the debentures, the conversion rate increased so that each $1,000 principal amount of the debentures was convertible into cash in the amount of $1,280.88 if converted by December 1, 2005. As a result of the change in control of LabOne, of the total outstanding principal balance of the Debentures due June 2034 of $103.5 million, $99 million of principal was converted for $126.8 million in cash, reflecting a premium of $27.8 million. The remaining outstanding principal of the Debentures due June 2034 totaling $4.5 million was adjusted to its estimated fair value of $2.9 million on the date of the acquisition, reflecting a discount of $1.6 million based on the net present value of the estimated remaining obligations, at then current interest rates. The Debentures due June 2034 require semi-annual interest payments in June and December.

          As of December 31, 2008, long-term debt maturing in each of the years subsequent to December 31, 2009 is as follows:

Year ending December 31,
2010	$	401,287
2011		808,335
2012		561,397
2013		670
2014		276
Thereafter		1,306,124
Total long-term debt	$	3,078,089

10. FINANCIAL INSTRUMENTS

          Treasury Lock Agreements

          In October 2005, the Company entered into interest rate lock agreements with two financial institutions for a total notional amount of $300 million to lock the U.S. treasury rate component of a portion of the Company’s offering of its debt securities in the fourth quarter of 2005 (the “Treasury Lock Agreements”). The Treasury Lock Agreements, which had an original maturity date of November 9, 2005, were entered into to hedge part of the Company’s interest rate exposure associated with the minimum amount of debt securities that were issued in the fourth quarter of 2005. In connection with the Company’s private placement of its Senior Notes due 2015 on October 25, 2005, the Treasury Lock Agreements were settled and the Company received $2.5 million, representing the gain on the settlement of the Treasury Lock Agreements. These gains are deferred in stockholders’ equity, as a component of “accumulated other comprehensive (loss) income”, and amortized as an adjustment to interest expense over the term of the Senior Notes due 2015.

F-28

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Treasury Forward Agreements

          In June 2007, the Company entered into forward starting interest rate swap agreements with three financial institutions for a total notional amount of $300 million to lock the interest rate of a portion of the Company’s offering of its debt securities in the second quarter of 2007 (the “Treasury Forward Agreements”). The Treasury Forward Agreements were entered into to hedge a portion of the Company’s interest rate exposure associated with the debt securities that were issued in the second quarter of 2007. In connection with the Company’s 2007 Senior Notes issued in June 2007, the Treasury Forward Agreements were settled and the Company paid $3.5 million, representing the loss on the settlement of the Treasury Forward Agreements. These losses are deferred in stockholders’ equity, as a component of “accumulated other comprehensive (loss) income”, and are amortized as an adjustment to interest expense over the term of the Senior Notes due 2017.

          Interest Rate Swap Agreements

          In August 2007, the Company entered into various variable-to-fixed interest rate swap agreements (“the Interest Rate Swap Agreements”), whereby the Company fixed the interest rates on $500 million of its Term Loan due May 2012 for periods ranging from October 2007 through October 2009. As of December 31, 2008, variable-to-fixed interest rate swap agreements on $200 million of the Term Loan due May 2012 remain in place through October 2009 with fixed interest rates ranging from 5.13% to 5.27%.

          The Interest Rate Swap Agreements qualify as cash flow hedges under the requirements of SFAS 133. As such, gains and losses on the Interest Rate Swap Agreements are deferred into “accumulated other comprehensive (loss) income” until the hedged transaction impacts the Company’s earnings. During the year ended December 31, 2008 and 2007, the Company deferred losses of $0.9 million and $2.7 million, respectively, into “accumulated other comprehensive (loss) income.” The cash flow hedges were effective during 2008 and 2007.

11. PREFERRED STOCK AND COMMON STOCKHOLDERS’ EQUITY

          Series Preferred Stock

          Quest Diagnostics is authorized to issue up to 10 million shares of Series Preferred Stock, par value $1.00 per share. The Company’s Board of Directors has the authority to issue such shares without stockholder approval and to determine the designations, preferences, rights and restrictions of such shares. Of the authorized shares, 1,300,000 shares have been designated Series A Preferred Stock and 1,000 shares have been designated Voting Cumulative Preferred Stock. No shares are currently outstanding.

          Common Stock

          On May 4, 2006, the Company’s Restated Certificate of Incorporation was amended to increase the number of shares of common stock, par value $0.01 per share, from 300 million shares to 600 million shares.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Accumulated Other Comprehensive (Loss) Income

          The components of accumulated other comprehensive (loss) income for 2008, 2007 and 2006 were as follows:

	Foreign Currency Translation Adjustment				Market Value Adjustment				Deferred Gain (Loss)				Accumulated Other Comprehensive (Loss) Income
Balance, December 31, 2005		$	(1,948	)		$	(6,711	)		$	2,454			$	(6,205	)
Translation adjustment			2,460				—				—				2,460
Market value adjustment, net of tax benefit of $2,501			—				(3,815	)			—				(3,815	)
Reversal of market value adjustment, net of tax expense of $(5,053)			—				7,707				—				7,707
Deferred gain reclassifications			—				—				(212	)			(212	)
Balance, December 31, 2006			512				(2,819	)			2,242				(65	)
Translation adjustment			30,820				—				—				30,820
Market value adjustment, net of tax benefit of $24			—				(36	)			—				(36	)
Reversal of market value adjustment, net of tax expense of $(510)			—				802				—				802
Deferred loss, less reclassifications			—				—				(6,242	)			(6,242	)
Balance, December 31, 2007			31,332				(2,053	)			(4,000	)			25,279
Translation adjustment			(94,326	)			—				—				(94,326	)
Market value adjustment, net of tax benefit of $261			—				(398	)			—				(398	)
Reversal of market value adjustment, net of tax expense of $(1,257)			—				2,161				—				2,161
Deferred loss, less reclassifications			—				—				(784	)			(784	)
Balance, December 31, 2008		$	(62,994	)		$	(290	)		$	(4,784	)		$	(68,068	)

          The market value adjustments for 2008, 2007 and 2006 represented unrealized holding gains (losses), net of taxes. The reversal of market value adjustments for 2008, 2007 and 2006 represented prior periods unrealized holding losses for investments where the decline in fair value was deemed to be other than temporary in 2008, 2007 and 2006, and the resulting loss was recognized in the consolidated statements of operations (see Note 2). The deferred loss for 2008 primarily represented deferred losses on the Company’s interest rate swap agreements, net of amounts reclassified to interest expense. The deferred loss for 2007 represented the $3.5 million the Company paid upon the settlement of its Treasury Forward Agreements, net of amounts reclassified as an increase to interest expense, and $2.7 million in deferred losses on its Interest Rate Swap Agreements (see Note 10). Foreign currency translation adjustments are not adjusted for income taxes since they relate to indefinite investments in non-U.S. subsidiaries.

          Dividend Program

          During each of the quarters of 2008, 2007 and 2006, the Company’s Board of Directors has declared a quarterly cash dividend of $0.10 per common share.

          Share Repurchase Plan

          During the fourth quarter of 2008, the Board of Directors expanded the Company’s common stock share repurchase authorization by an additional $150 million.

          For the year ended December 31, 2008, the Company repurchased 5.5 million shares of its common stock at an average price of $46.09 per share for $254 million, and reissued 1.5 million shares in connection with employee benefit plans. For the year ended December 31, 2007, the Company repurchased 2.8 million shares of its common

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

stock at an average price of $52.14 per share for $146 million, and reissued 2.9 million shares in connection with employee benefit plans. For the year ended December 31, 2006, the Company repurchased 8.9 million shares of its common stock at an average price of $53.23 per share for $472 million, and reissued 4.2 million shares in connection with employee benefit plans.

          At December 31, 2008, the share repurchase authorization was essentially fully utilized. In January 2009, the Company’s Board of Directors authorized the Company to repurchase an additional $500 million of the Company’s common stock. The share repurchase authorization has no set expiration or termination date.

12. STOCK OWNERSHIP AND COMPENSATION PLANS

          Employee and Non-employee Directors Stock Ownership Programs

          In 2005, the Company established the ELTIP to replace the Company’s prior Employee Equity Participation Programs established in 1999 (the “1999 EEPP”) and 1996, as amended (the “1996 EEPP”). The ELTIP provides for three types of awards: (a) stock options, (b) stock appreciation rights and (c) stock awards. The ELTIP provides for the grant to eligible employees of either non-qualified or incentive stock options, or both, to purchase shares of Company common stock at a price of no less than the fair market value on the date of grant. The stock options are subject to forfeiture if employment terminates prior to the end of the vesting period prescribed by the Board of Directors. Grants of stock appreciation rights allow eligible employees to receive a payment based on the appreciation of Company common stock in cash, shares of Company common stock or a combination thereof. The stock appreciation rights are granted at an exercise price at no less than the fair market value of the Company’s common stock on the date of grant. Stock options and stock appreciation rights granted under the ELTIP expire on the date designated by the Board of Directors but in no event more than seven years from date of grant. No stock appreciation rights have been granted under the ELTIP or the 1999 EEPP. The ELTIP allows eligible employees to receive awards of shares, or the right to receive shares, of Company common stock, the equivalent value in cash or a combination thereof. These shares are generally earned on achievement of financial performance goals and are subject to forfeiture if employment terminates prior to the end of the vesting period prescribed by the Board of Directors. For performance share unit awards granted prior to 2008, the actual amount of performance share awards earned is based on the Company’s earnings per share growth for the performance period compared to that of a peer group of companies. Beginning with performance share unit awards granted in 2008, the performance measure for these awards is based on the cumulative annual growth rate of the Company’s earnings per share from continuing operations over a three year period. Key executive, managerial and technical employees are eligible to participate in the ELTIP. The provisions of the 1999 EEPP and the 1996 EEPP were similar to those outlined above for the ELTIP. Certain options granted under the 1999 EEPP remain outstanding.

          The ELTIP increased the maximum number of shares of Company common stock that may be optioned or granted to 48 million shares. In addition, any remaining shares under the 1996 EEPP are available for issuance under the ELTIP.

          In 2005, the Company established the Amended and Restated Director Long-Term Incentive Plan (the “DLTIP”), to replace the Company’s prior plan established in 1998. The DLTIP provides for the grant to non-employee directors of non-qualified stock options to purchase shares of Company common stock at a price of no less than the fair market value on the date of grant. The DLTIP also permits awards of restricted stock and restricted stock units to non-employee directors. The maximum number of shares that may be issued under the DLTIP is 2 million shares. The stock options expire seven years from date of grant and generally become exercisable in three equal annual installments beginning on the first anniversary date of the grant of the option regardless of whether the optionee remains a director of the Company. During 2008, 2007 and 2006, grants under the DLTIP totaled 77, 81 and 95 thousand shares, respectively.

          In general, the Company’s practice has been to issue shares related to its stock-based compensation program from shares of its common stock held in treasury. See Note 11 for further information regarding the Company’s share repurchase program.

          The fair value of each stock option award granted was estimated on the date of grant using a lattice-based option valuation model. The expected volatility under the lattice-based option-valuation model was based on the

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

current and the historical implied volatilities from traded options of the Company’s common stock. The dividend yield was based on the approved annual dividend rate in effect and current market price of the underlying common stock at the time of grant. The risk-free interest rate of each stock option granted was based on the U.S. Treasury yield curve in effect at the time of grant for bonds with maturities ranging from one month to seven years. The expected holding period of the options granted was estimated using the historical exercise behavior of employees. The weighted average assumptions used in valuing options granted in the periods presented are:

	2008	2007	2006
Weighted average fair value of options at grant date	$11.58	$18.05	$13.91
Expected volatility	22.5%	21.5%	18.2%
Dividend yield	0.8%	0.7%	0.7%
Risk-free interest rate	2.6% - 2.8%	4.7% - 4.8%	4.6%
Expected holding period, in years	5.2 – 5.9	5.3 – 6.2	5.6 – 6.2

          The fair value of restricted stock awards and performance share units is the average market price of the Company’s common stock at the date of grant.

          Transactions under the stock option plans for 2008 were as follows:

	Shares (in thousands)			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in millions)
Options outstanding, beginning of year		13,938			$	41.91
Options granted		1,453				47.66
Options exercised		(987	)			30.92
Options forfeited and cancelled		(411	)			47.96
Options outstanding, end of year		13,993			$	43.12		4.4		$	126
Exercisable, end of year		10,030			$	41.11		4.0		$	110
Vested and expected to vest, end of year		13,161			$	42.64		4.4		$	125

          The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing common stock price on the last trading day of 2008 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2008. This amount changes based on the fair market value of the Company’s common stock. Total intrinsic value of options exercised in 2008, 2007 and 2006 was $20 million, $52 million and $106 million, respectively.

          As of December 31, 2008, there was $14 million of unrecognized stock-based compensation cost related to stock options which is expected to be recognized over a weighted average period of 1.7 years.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          The following summarizes the activity relative to stock awards, including restricted stock awards, restricted stock units and performance share units, for 2008, 2007 and 2006:

	2008					2007					2006
	Shares(in thousands)			WeightedAverageGrant DateFair Value		Shares(in thousands)			WeightedAverageGrant DateFair Value		Shares(in thousands)			WeightedAverageGrant DateFair Value
Shares outstanding, beginning of year		677		$	52.24		450		$	52.41		107		$	49.71
Shares granted		843			47.60		538			52.05		1,020			52.32
Shares vested		(175	)		51.67		(74	)		52.30		(39	)		50.26
Shares forfeited and canceled		(62	)		50.16		(100	)		52.38		(56	)		51.92
Adjustment to estimate of performance share units to be earned		222			52.39		(137	)		51.94		(582	)		51.94
Shares outstanding, end of year		1,505		$	49.77		677		$	52.24		450		$	52.41

          In 2008, 2007 and 2006, the Company revised its estimate of the number of performance share units expected to be earned at the end of the performance periods as a result of revising its estimates of projected performance and increased (reduced) the number of performance share units by 0.2 million, (0.1) million and (0.6) million, respectively.

          As of December 31, 2008, there was $23 million of unrecognized stock-based compensation cost related to nonvested stock awards, which is expected to be recognized over a weighted average period of 1.8 years. Total fair value of shares vested was $8.4 million, $3.8 million and $2.1 million for the year ended December 31, 2008, 2007 and 2006, respectively. The amount of unrecognized stock-based compensation cost is subject to change based on revisions, if any, to management’s best estimates of the achievement of the performance goals specified in such awards and the resulting number of shares that will be earned at the end of the performance periods.

          For the years ended December 31, 2008, 2007 and 2006, stock-based compensation expense totaled $71 million, $57 million and $55 million, respectively. Income tax benefits related to stock-based compensation expense totaled $28 million, $23 million and $22 million for the year ended December 31, 2008, 2007 and 2006, respectively.

          Employee Stock Purchase Plan

          Under the Company’s Employee Stock Purchase Plan (“ESPP”), which was approved by the Company’s shareholders at the 2006 Annual Meeting of Shareholders, substantially all employees can elect to have up to 10% of their annual wages withheld to purchase Quest Diagnostics common stock. The purchase price of the stock is 85% of the market price of the Company’s common stock on the last business day of each calendar month. Under the ESPP, the maximum number of shares of Quest Diagnostics common stock which may be purchased by eligible employees is 5 million. Approximately 436, 448 and 474 thousand shares of common stock were purchased by eligible employees in 2008, 2007 and 2006, respectively.

          Defined Contribution Plans

          The Company maintains qualified defined contribution plans covering substantially all of its employees, and matches employee contributions up to a maximum of 6%. The Company’s expense for contributions to its defined contribution plans aggregated $78 million, $76 million and $69 million for 2008, 2007 and 2006, respectively.

          Supplemental Deferred Compensation Plan

          The Company’s supplemental deferred compensation plan is an unfunded, non-qualified plan that provides for certain management and highly compensated employees to defer up to 50% of their salary in excess of their defined contribution plan limits and for certain eligible employees, up to 95% of their variable incentive compensation. The Company matches employee contributions up to a maximum of 6%. The compensation deferred under this plan, together with Company matching amounts, are credited with earnings or losses measured by the

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

mirrored rate of return on investments elected by plan participants. Each plan participant is fully vested in all deferred compensation, Company match and earnings credited to their account. The amounts accrued under this plan were $25 million and $34 million at December 31, 2008 and 2007, respectively. Although the Company is currently contributing all participant deferrals and matching amounts to a trust, the funds in the trust, totaling $25 million and $34 million at December 31, 2008 and 2007, respectively, are general assets of the Company and are subject to any claims of the Company’s creditors. The Company’s expense for matching contributions to this plan were approximately $1 million for 2008, 2007 and 2006.

13. RELATED PARTY TRANSACTIONS

          At December 31, 2008, GlaxoSmithKline plc (“GSK”), the parent company of SmithKline Beecham, beneficially owned approximately 19% of the outstanding shares of Quest Diagnostics common stock.

          Quest Diagnostics is the primary provider of testing to support GSK’s clinical trials testing requirements worldwide (as amended, the “Clinical Trials Agreements”). Net revenues, primarily derived under the Clinical Trials Agreements were $71 million, $79 million and $87 million for 2008, 2007 and 2006, respectively. At December 31, 2008 and 2007, accounts receivable due from GSK were $9.1 million and $10.6 million, respectively.

          In addition, in connection with the acquisition of SBCL, SmithKline Beecham has agreed to indemnify Quest Diagnostics, on an after tax basis, against certain matters primarily related to taxes and billing and professional liability claims.

          At December 31, 2008, liabilities included $13 million due to SmithKline Beecham, primarily related to tax benefits associated with certain pre-acquisition tax loss carryforwards. At December 31, 2007, liabilities included $27 million due to SmithKline Beecham, primarily related to tax benefits associated with indemnifiable matters.

14. COMMITMENTS AND CONTINGENCIES

          Letter of Credit Lines and Contractual Obligations

          The Company has a line of credit with a financial institution totaling $85 million for the issuance of letters of credit (the “letter of credit line”). The letter of credit line, which is renewed annually, matures on November 19, 2009 and is guaranteed by the Subsidiary Guarantors.

          In support of its risk management program, to ensure the Company’s performance or payment to third parties, $89 million in letters of credit were outstanding at December 31, 2008. The letters of credit primarily represent collateral for current and future automobile liability and workers’ compensation loss payments. In addition, $5.3 million of bank guarantees were outstanding at December 31, 2008 in support of certain foreign operations.

          Minimum rental commitments under noncancelable operating leases, primarily real estate, in effect at December 31, 2008 are as follows:

Year ending December 31,
2009	$	174,025
2010		142,509
2011		103,174
2012		66,562
2013		42,183
2014 and thereafter		106,126
Minimum lease payments		634,579
Noncancelable sub-lease income		(7,086	)
Net minimum lease payments	$	627,493

          Operating lease rental expense for 2008, 2007 and 2006 aggregated $190 million, $171 million and $153 million, respectively. Rent expense associated with operating leases that include scheduled rent increases and tenant incentives, such as rent holidays, is recorded on a straight-line basis over the term of the lease.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          The Company has certain noncancelable commitments to purchase products or services from various suppliers, mainly for telecommunications and standing orders to purchase reagents and other laboratory supplies. At December 31, 2008, the approximate total future purchase commitments are $82 million, of which $43 million are expected to be incurred in 2009, $33 million are expected to be incurred in 2010 through 2011 and the balance thereafter.

          Contingent Lease Obligations

          The Company remains subject to contingent obligations under certain real estate leases that were entered into by certain predecessor companies of a subsidiary prior to the Company’s acquisition of the subsidiary. While the title to the properties and interest to the subject leases have been transferred to third parties on several occasions over the course of many years, the lessors have not released the subsidiary predecessor companies from their original obligations under the leases and therefore remain contingently liable in the event of default. The remaining terms of the lease obligations and the Company’s corresponding indemnifications range from 15 to 39 years. The lease payments under certain leases are subject to market value adjustments and therefore, the total contingent obligations under the leases cannot be precisely determined but are likely to total several hundred million dollars. A claim against the Company would be made only upon the current lessee’s default and after a series of claims and corresponding defaults by third parties that precede the Company in the order of indemnification. The Company also has certain indemnification rights from other parties to recover losses in the event of default on the lease obligations. The Company believes that the likelihood of its performance under these contingent obligations is remote and no liability has been recorded for any potential payments under the contingent lease obligations.

          Legal Matters

          The Company is involved in various legal proceedings. Some of the proceedings against the Company involve claims that are substantial in amount.

          NID Investigation

          NID and the Company each received a subpoena from the United States Attorney’s Office for the Eastern District of New York during the fourth quarter of 2004. The subpoenas requested a wide range of business records, including documents regarding parathyroid hormone (“PTH”) test kits manufactured by NID and PTH testing performed by the Company. The Company has voluntarily and actively cooperated with the investigation, providing information, witnesses and business records of NID and the Company, including documents related to PTH tests and test kits, as well as other tests and test kits. In the second and third quarters of 2005, the FDA conducted an inspection of NID and issued a Form 483 listing the observations made by the FDA during the course of the inspection. NID responded to the Form 483.

          During the fourth quarter of 2005, NID instituted its second voluntary product hold within a six-month period, due to quality issues, which adversely impacted the operating performance of NID. As a result, the Company evaluated a number of strategic options for NID, and on April 19, 2006, decided to cease operations at NID. Upon completion of the wind down of operations in the third quarter of 2006, the operations of NID were classified as discontinued operations. During the third quarter of 2006, the government issued two additional subpoenas, one to NID and one to the Company. The subpoenas covered various records, including records related to tests and test kits in addition to PTH.

          During the third quarter of 2007, the government and the Company began settlement discussions. In the course of those discussions, the government disclosed to the Company certain of the government’s legal theories regarding the amount of damages allegedly incurred by the government, which include alleged violations of civil and criminal statutes including the False Claims Act and the Food, Drug and Cosmetics Act. Violations of these statutes and related regulations could lead to a warning letter, injunction, fines or penalties, exclusion from federal healthcare programs and/or criminal prosecution, as well as claims by third parties. The Company analyzed the government’s position and presented its own analysis which argued against many of the government’s claims. In light of that analysis and based on the status of settlement discussions, during 2007 the Company established a reserve, in accordance with generally accepted accounting principles, reflected in discontinued operations, of $241

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

million in connection with these claims. During 2007, the Company recorded a deferred tax benefit associated with that portion of the reserve that it expected would be tax deductible.

          During 2008, the Company continued discussions with the United States Attorney’s Office to resolve the investigation. During the third quarter of 2008, the Company and the United States Attorney’s Office reached an agreement in principle to resolve these claims. As part of the agreement, NID, which was closed in 2006, is expected to enter a guilty plea to a single count of felony misbranding. The terms of the settlement are subject to the final negotiation and execution of definitive agreements, which is expected to include a corporate integrity agreement, and the approval by the United States Department of Justice and the United States Department of Health and Human Services and satisfactory resolution of related state claims. There can be no assurance, however, when or whether a settlement may be finalized, or as to its terms. If a settlement is not finalized, the Company would defend itself and NID and could incur significant costs in doing so.

          As a result of the agreement in principle in 2008, the Company recorded charges of $75 million in discontinued operations to increase its reserve for the settlement and related matters. As of December 31, 2008, the total reserve was $316 million. The Company has recorded deferred tax benefits of $58 million on the reserve, reflecting the Company’s current estimate of the portion of the reserve expected to be deductible for tax purposes. The reserve reflects the Company’s current estimate of the expected probable loss with respect to these matters, assuming the settlement is finalized. If a settlement is not finalized, the eventual losses related to these matters could be materially different than the amount reserved and could be material to the Company’s results of operations, cash flows and financial condition in the period that such matters are determined or paid.

          Other Matters

          The Company has in the past entered into several settlement agreements with various government and private payers relating to industry-wide billing and marketing practices that had been substantially discontinued. The federal or state governments may bring additional claims based on new theories as to the Company’s practices which management believes to be in compliance with law. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of government or private payers alleging inappropriate billing practices. The Company is aware of certain pending lawsuits, including a class action lawsuit, and has received several subpoenas related to billing practices.

          During the second quarter of 2005, the Company received a subpoena from the United States Attorney’s Office for the District of New Jersey. The subpoena seeks the production of business and financial records regarding capitation and risk sharing arrangements with government and private payers for the years 1993 through 1999. Also, during the third quarter of 2005, the Company received a subpoena from the United States Department of Health and Human Services, Office of the Inspector General. The subpoena seeks the production of various business records including records regarding our relationship with health maintenance organizations, independent physician associations, group purchasing organizations, and preferred provider organizations relating back to as early as 1995. The Company is cooperating with the United States Attorney’s Office and the Office of the Inspector General.

           During the second quarter of 2006, each of the Company and its subsidiary, Specialty Laboratories, Inc. (“Specialty”), received a subpoena from the California Attorney General’s Office. The subpoenas seek various documents including documents relating to billings to MediCal, the California Medicaid program. The subpoenas seek documents from various time frames ranging from three to ten years. During the third quarter of 2008, the Company received a request for additional information. The Company and Specialty are cooperating with the California Attorney General’s Office.

          In the first quarter of 2008, the United States Department of Justice informally requested records from the Company regarding AmeriPath’s billing practices for flow cytometry testing panels performed on blood, bone marrow and lymph node specimens. The inquiry sought to determine whether AmeriPath may have billed for laboratory tests that were not medically necessary. The Company cooperated fully with the inquiry. In December 2008, the government declined to intervene in the underlying qui tam complaint that led to the inquiry. Following the government’s declination, the qui tam relator voluntarily dismissed his complaint.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          The Company understands that there may be pending qui tam claims brought by former employees or other “whistle blowers” as to which the Company cannot determine the extent of any potential liability. The Company also is aware of certain pending individual or class action lawsuits related to billing practices filed under the qui tam provisions of the Civil False Claims Act and/or other federal and state statutes, regulations or other laws.

          Several of these other matters are in their early stages of development and involve responding to and cooperating with various government investigations and related subpoenas. While the Company believes that at least a reasonable possibility exists that losses may have been incurred, based on the nature and status of the investigations, the losses are either currently not probable or cannot be reasonably estimated.

          Management has established reserves in accordance with generally accepted accounting principles for the other matters discussed above. Such reserves totaled less than $5 million as of December 31, 2008. Although management cannot predict the outcome of such matters, management does not anticipate that the ultimate outcome of such matters will have a material adverse effect on the Company’s financial condition but may be material to the Company’s results of operations or cash flows in the period in which the impact of such matters is determined or paid. However, there may be pending qui tam claims brought by former employees or other “whistle blowers,” or other pending claims as to which the Company has not been provided with a copy of the complaint and accordingly cannot determine the extent of any potential liability.

          As a general matter, providers of clinical testing services may be subject to lawsuits alleging negligence or other similar legal claims. These suits could involve claims for substantial damages. Any professional liability litigation could also have an adverse impact on the Company’s client base and reputation. The Company maintains various liability insurance coverage for claims that could result from providing or failing to provide clinical testing services, including inaccurate testing results and other exposures. The Company’s insurance coverage limits its maximum exposure on individual claims; however, the Company is essentially self-insured for a significant portion of these claims. Reserves for such matters are established by considering actuarially determined losses based upon the Company’s historical and projected loss experience. Management believes that present insurance coverage and reserves are sufficient to cover currently estimated exposures. Although management cannot predict the outcome of any claims made against the Company, management does not anticipate that the ultimate outcome of any such proceedings or claims will have a material adverse effect on the Company’s financial condition but may be material to the Company’s results of operations or cash flows in the period in which the impact of such claims is determined or paid.

15. DISCONTINUED OPERATIONS

          During the fourth quarter of 2005, NID instituted its second voluntary product hold within a six-month period due to quality issues, which adversely impacted the operating performance of NID. As a result, the Company evaluated a number of strategic options for NID. On April 19, 2006, the Company decided to discontinue NID’s operations. During the third quarter of 2006, the Company completed its wind down of NID and classified the operations of NID as discontinued operations. Results of operations for NID have been reported as discontinued operations in the accompanying consolidated statements of operations and related disclosures for all periods presented.

          During the third quarter of 2007, the government and the Company began settlement discussions with respect to the government’s on going investigation involving NID and the Company, as discussed above (see Note 14). In the course of those discussions, the government disclosed to the Company certain of the government’s legal theories regarding the amount of damages allegedly incurred by the government. The Company analyzed the government’s position and presented its own analysis which argued against many of the government’s claims. In light of that analysis and based on the status of settlement discussions, the Company established a reserve, in accordance with generally accepted accounting principles, reflected in discontinued operations, of $241 million during 2007 in connection with these claims.

          During the third quarter of 2008, the Company and NID reached an agreement in principle with the United States Attorney’s Office to settle the federal government investigation involving NID and the Company regarding NID test kits and tests performed using those test kits.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          As a result of the agreement in principle in 2008, the Company recorded charges of $75 million in discontinued operations to increase its reserve for the settlement and related matters. As of December 31, 2008, the total reserve was $316 million. The Company has recorded deferred tax benefits of $58 million on the reserve, reflecting the Company’s current estimate of the portion of the reserve expected to be deductible for tax purposes. The reserve reflects the Company’s current estimate of the expected probable loss with respect to these matters, assuming the settlement is finalized. If a settlement is not finalized, the eventual losses related to these matters could be materially different than the amount reserved and could be material to the Company’s results of operations, cash flows and financial condition in the period that such matters are determined or paid. See Note 14 for further details.

          Summarized financial information for the discontinued operations of NID is set forth below:

	2008			2007			2006
Net revenues	$	—		$	—		$	3,610
Loss from discontinued operations before income taxes		(79,582	)		(250,278	)		(59,169	)
Income tax benefit		28,888			36,389			19,898
Loss from discontinued operations, net of taxes	$	(50,694	)	$	(213,889	)	$	(39,271	)

          Results for the year ended December 31, 2008 and 2007 reflect charges of $75 million and $241 million, respectively, to reserve for the settlement and related matters in connection with various government claims (see Note 14 for further details).

          Results for 2006 reflect losses from NID’s operations, due to its voluntary product hold instituted late in the second quarter of 2005 in connection with a quality review of all its products. In addition, results for 2006 also reflect pre-tax charges of $32 million, primarily related to the wind down of NID’s operations. These charges included: inventory write-offs of $7 million; asset impairment charges of $6 million; employee severance costs of $6 million; contract termination costs of $6 million; facility closure costs of $2 million; and costs to support activities to wind-down the business comprised primarily of employee costs and professional fees of $5 million.

          The settlement reserve is included in “accounts payable and accrued expenses” in the consolidated balance sheet at December 31, 2008 and 2007. The deferred tax asset recorded in connection with establishing the reserve is included in “deferred income taxes” in the consolidated balance sheet at December 31, 2008 and 2007. The remaining balance sheet information related to NID was not material at December 31, 2008 and 2007.

16. BUSINESS SEGMENT INFORMATION

          Clinical testing is an essential element in the delivery of healthcare services. Physicians use clinical tests to assist in the detection, diagnosis, evaluation, monitoring and treatment of diseases and other medical conditions. Clinical testing is generally categorized as clinical laboratory testing and anatomic pathology services. Clinical laboratory testing is performed on blood and body fluids, such as urine. Anatomic pathology services are performed on tissues, such as biopsies, and other samples, such as human cells. Customers of the clinical testing business include patients, physicians, hospitals, employers, governmental institutions and other commercial clinical laboratories. The clinical testing business accounted for greater than 90% of net revenues from continuing operations in 2008, 2007 and 2006.

          All other operating segments include the Company’s non-clinical testing businesses and consist of its risk assessment services business, its clinical trials testing business, its healthcare information technology business, MedPlus and its diagnostics products businesses. The Company’s risk assessment business provides underwriting support services to the life insurance industry including teleunderwriting, paramedical examinations, laboratory testing and medical record retrieval. The Company’s clinical trials testing business provides clinical testing performed in connection with clinical research trials on new drugs and vaccines. MedPlus is a developer and

F-38

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

integrator of clinical connectivity and data management solutions for healthcare organizations, physicians and clinicians. The Company’s diagnostics products business manufactures and markets diagnostic test kits.

          On April 19, 2006, the Company decided to discontinue NID’s operations and results of operations for NID have been classified as discontinued operations for all years presented (see Note 15).

          During the third quarter of 2006, the Company acquired Focus Diagnostics and Enterix, in the first quarter of 2007, it acquired Hemocue, and in the second quarter of 2007, it acquired AmeriPath (see Note 3). Enterix and Hemocue are included in the Company’s other operating segments. The majority of Focus Diagnostics’ operations are included in the Company’s clinical testing business, with the remainder in other operating segments. AmeriPath’s operations are included in the Company’s clinical testing business.

          At December 31, 2008, substantially all of the Company’s services are provided within the United States, and substantially all of the Company’s assets are located within the United States.

           The following table is a summary of segment information for the three years ended December 31, 2008, 2007 and 2006. Segment asset information is not presented since it is not reported to or used by the chief operating decision maker at the operating segment level. Operating earnings (loss) of each segment represents net revenues less directly identifiable expenses to arrive at operating income for the segment. General management and administrative corporate expenses, including amortization of intangible assets, are included in general corporate expenses below. The accounting policies of the segments are the same as those of the Company as set forth in Note 2.

	2008				2007				2006
Net revenues:
Clinical testing business	$	6,617,006		(a)	$	6,108,746		(b)	$	5,782,926
All other operating segments		632,441				596,161				485,733
Total net revenues	$	7,249,447			$	6,704,907			$	6,268,659
Operating earnings (loss):
Clinical testing business	$	1,318,904		(a)	$	1,191,139		(b)(c)	$	1,230,383		(d)
All other operating segments		56,677		(e)		45,285		(f)		16,484
General corporate expenses		(153,205	)			(145,088	)			(118,790	)
Total operating income		1,222,376				1,091,336				1,128,077
Non-operating expenses, net		(203,424	)	(g)		(178,934	)	(h)		(94,804	)	(i)
Income from continuing operations before income taxes		1,018,952				912,402				1,033,273
Income tax expense		386,768		(j)		358,574				407,581
Income from continuing operations		632,184				553,828				625,692
Loss from discontinued operations, net of taxes		(50,694	)	(k)		(213,889	)	(k)		(39,271	)	(k)
Net income	$	581,490			$	339,939			$	586,421

(a)

For 2008, management estimates the impact of hurricanes in the third quarter of 2008 reduced consolidated revenue growth and the increase in operating income for the year ended December 31, 2008 by approximately $10 million and $8 million, respectively, compared to the prior year. In addition, operating income for 2008 includes $14.0 million of charges, primarily associated with workforce reductions.

(b)

In the fourth quarter of 2006, the Company announced that it would not be a national contracted provider of laboratory services to United Healthcare Group Inc. (“UNH”) beginning January 1, 2007. UNH accounted for approximately 7% of the Company’s net revenues in 2006, with some of its regional laboratories having concentrations as high as 15% to 20%. The Company estimates that no longer being a contracted provider to UNH reduced its clinical testing volume in 2007 by 7%, most of that resulting from the direct loss of previously contracted work, and some of it associated with the loss of other work from physicians who choose to consolidate their testing with a single laboratory. The impact of the change in status with UNH was the principal driver of lower earnings in 2007 compared to the prior year, due to the significant impact it had during the first half of the year. However, the Company successfully mitigated the ongoing impact

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

	during the third quarter of 2007 as a result of actions taken to reduce costs, and higher reimbursement for the work the Company continues to perform for UNH members.
(c)	Operating income for 2007 includes $9.9 million of charges associated with workforce reductions in response to reduced volume levels.
(d)	Operating income for 2006 includes $27 million of special charges, primarily associated with integration activities.
(e)	Operating income for 2008 includes $2.2 million of charges, primarily associated with workforce reductions.
(f)	Operating income for 2007 includes $0.8 million of charges associated with workforce reductions in response to reduced volume levels, and a $4 million charge related to the expensing of in-process research and development associated with the acquisition of HemoCue (see Note 3).
(g)	For the year ended December 31, 2008, non-operating expenses, net includes a charge of $8.9 million associated with the write-down of an available-for-sale equity investment.
(h)	For the year ended December 31, 2007, non-operating expenses, net includes a charge of $4.0 million associated with the write-down of an equity investment.
(i)	For the year ended December 31, 2006, non-operating expenses, net includes $16.2 million of charges associated with the write-down of available-for-sale equity securities, $10.0 million of charges associated with the write-down of other investments and a $15.8 million gain associated with the sale of an investment.
(j)	Income tax expense for 2008 includes a benefit of $16.5 million primarily associated with favorable resolutions of certain tax contingencies.
(k)	Results for the year ended December 31, 2008 and 2007 reflect pre-tax charges of $75 million and $241 million, respectively, related to the government investigation of NID (see Note 14). Results for 2006 reflect losses from NID’s operations, due to its voluntary product hold instituted late in the second quarter of 2005 in connection with a quality review of all its products. In addition, results for 2006 also reflect pre-tax charges of $32 million, primarily related to the wind down of NID’s operations.

	2008		2007		2006
Depreciation and amortization:
Clinical testing business	$	208,115	$	189,939	$	167,586
All other operating segments		18,414		19,301		16,461
General corporate		38,064		28,639		11,640
Discontinued operations		—		—		1,711
Total depreciation and amortization	$	264,593	$	237,879	$	197,398
Capital expenditures:
Clinical testing business	$	178,505	$	193,785	$	168,636
All other operating segments		22,891		17,760		17,291
General corporate		11,285		7,556		6,722
Discontinued operations		—		—		773
Total capital expenditures	$	212,681	$	219,101	$	193,422

17. SUMMARIZED FINANCIAL INFORMATION

          The Company’s Senior Notes due 2010, Senior Notes due 2011, Senior Notes due 2015, Senior Notes due 2017 and Senior Notes due 2037 are fully and unconditionally guaranteed by the Subsidiary Guarantors. With the exception of Quest Diagnostics Receivables Incorporated (see paragraph below), the non-guarantor subsidiaries are primarily foreign and less than wholly-owned subsidiaries. In July 2006, the Company repaid at maturity the $275 million outstanding under its Senior Notes due 2006.

          In conjunction with the Company’s Secured Receivables Credit Facility, the Company maintains a wholly-owned non-guarantor subsidiary, Quest Diagnostics Receivables Incorporated (“QDRI”). The Company and certain of its Subsidiary Guarantors transfer certain domestic receivables to QDRI. QDRI utilizes the transferred receivables to collateralize borrowings under the Company’s Secured Receivables Credit Facility. The Company and the Subsidiary Guarantors provide collection services to QDRI. QDRI uses cash collections principally to purchase new receivables from the Company and the Subsidiary Guarantors.

F-40

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          The following condensed consolidating financial data illustrates the composition of the combined guarantors. Investments in subsidiaries are accounted for by the parent using the equity method for purposes of the supplemental consolidating presentation. Earnings (losses) of subsidiaries are therefore reflected in the parent’s investment accounts and earnings. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions.

F-41

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Balance Sheet
December 31, 2008

	Parent		Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	218,565	$	6,715		$	28,666		$	—		$	253,946
Accounts receivable, net		4,426		134,005			694,442			—			832,873
Other current assets		52,407		262,952			98,631			(3,990	)		410,000
Total current assets		275,398		403,672			821,739			(3,990	)		1,496,819
Property, plant and equipment, net		211,847		631,921			35,919			—			879,687
Goodwill and intangible assets, net		153,213		5,303,312			425,804			—			5,882,329
Intercompany receivable (payable)		576,236		(184,426	)		(391,810	)		—			—
Investment in subsidiaries		5,323,173		—			—			(5,323,173	)		—
Other assets		179,222		33,301			39,951			(107,479	)		144,995
Total assets	$	6,719,089	$	6,187,780		$	931,603		$	(5,434,642	)	$	8,403,830
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	552,094	$	628,958		$	42,557		$	(3,990	)	$	1,219,619
Short-term borrowings and current portion of long-term debt		—		2,886			2,256			—			5,142
Total current liabilities		552,094		631,844			44,813			(3,990	)		1,224,761
Long-term debt		2,498,342		245,472			334,275			—			3,078,089
Other liabilities		63,757		473,579			66,227			(107,479	)		496,084
Stockholders’ equity		3,604,896		4,836,885			486,288			(5,323,173	)		3,604,896
Total liabilities and stockholders’ equity	$	6,719,089	$	6,187,780		$	931,603		$	(5,434,642	)	$	8,403,830

Condensed Consolidating Balance Sheet
December 31, 2007

	Parent		Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	111,610	$	14,847		$	41,137		$	—		$	167,594
Accounts receivable, net		27,309		234,532			620,126			—			881,967
Other current assets		46,986		183,505			101,055			(6,750	)		324,796
Total current assets		185,905		432,884			762,318			(6,750	)		1,374,357
Property, plant and equipment, net		215,062		654,341			42,595			—			911,998
Goodwill and intangible assets, net		153,848		5,422,270			530,719			—			6,106,837
Intercompany receivable (payable)		859,841		(610,371	)		(249,470	)		—			—
Investment in subsidiaries		5,149,196		—			—			(5,149,196	)		—
Other assets		167,105		48,433			38,054			(81,091	)		172,501
Total assets	$	6,730,957	$	5,947,557		$	1,124,216		$	(5,237,037	)	$	8,565,693
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	451,944	$	634,079		$	45,443		$	(6,750	)	$	1,124,716
Short-term borrowings and current portion of long-term debt		—		62,386			101,195			—			163,581
Total current liabilities		451,944		696,465			146,638			(6,750	)		1,288,297
Long-term debt		2,829,927		247,573			299,712			—			3,377,212
Other liabilities		124,844		457,837			74,352			(81,091	)		575,942
Stockholders’ equity		3,324,242		4,545,682			603,514			(5,149,196	)		3,324,242
Total liabilities and stockholders’ equity	$	6,730,957	$	5,947,557		$	1,124,216		$	(5,237,037	)	$	8,565,693

F-42

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Statement of Operations
For the Year Ended December 31, 2008

	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	829,484		$	5,999,552		$	653,183		$	(232,772	)	$	7,249,447
Operating costs and expenses:
Cost of services		486,922			3,527,559			241,675			—			4,256,156
Selling, general and administrative		191,583			1,234,815			334,772			(24,236	)		1,736,934
Amortization of intangible assets		268			30,857			6,168			—			37,293
Royalty (income) expense		(424,404	)		424,404			—			—			—
Other operating expense (income), net		404			(511	)		(3,205	)		—			(3,312	)
Total operating costs and expenses		254,773			5,217,124			579,410			(24,236	)		6,027,071
Operating income		574,711			782,428			73,773			(208,536	)		1,222,376
Non-operating expense, net		(188,720	)		(198,595	)		(24,645	)		208,536			(203,424	)
Income from continuing operations before taxes		385,991			583,833			49,128			—			1,018,952
Income tax expense		130,746			237,119			18,903			—			386,768
Income from continuing operations		255,245			346,714			30,225			—			632,184
Income (loss) from discontinued operations, net of taxes		—			(55,511	)		4,817			—			(50,694	)
Equity earnings from subsidiaries		326,245			—			—			(326,245	)		—
Net income	$	581,490		$	291,203		$	35,042		$	(326,245	)	$	581,490
Condensed Consolidating Statement of Operations For the Year Ended December 31, 2007
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	821,908		$	5,488,797		$	715,478		$	(321,276	)	$	6,704,907
Operating costs and expenses:
Cost of services		458,544			3,265,817			245,487			—			3,969,848
Selling, general and administrative		162,857			1,153,522			319,934			(23,455	)		1,612,858
Amortization of intangible assets		222			21,013			6,669			—			27,904
Royalty (income) expense		(393,975	)		393,975			—			—			—
Other operating expense (income), net		51			(2,578	)		5,488			—			2,961
Total operating costs and expenses		227,699			4,831,749			577,578			(23,455	)		5,613,571
Operating income		594,209			657,048			137,900			(297,821	)		1,091,336
Non-operating expense, net		(178,849	)		(282,187	)		(15,719	)		297,821			(178,934	)
Income from continuing operations before taxes		415,360			374,861			122,181			—			912,402
Income tax expense		157,270			150,994			50,310			—			358,574
Income from continuing operations		258,090			223,867			71,871			—			553,828
Income (loss) from discontinued operations, net of taxes		—			(213,917	)		28			—			(213,889	)
Equity earnings from subsidiaries		81,849			—			—			(81,849	)		—
Net income	$	339,939		$	9,950		$	71,899		$	(81,849	)	$	339,939

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Statement of Operations For the Year Ended December 31, 2006
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	942,692		$	4,995,640		$	710,692		$	(380,365	)	$	6,268,659
Operating costs and expenses:
Cost of services		501,942			2,958,591			235,473			—			3,696,006
Selling, general and administrative		147,862			1,020,774			264,488			(22,408	)		1,410,716
Amortization of intangible assets		1,451			8,924			468			—			10,843
Royalty (income) expense		(394,693	)		394,693			—			—			—
Other operating (income) expense, net		(3,358	)		24,704			1,671			—			23,017
Total operating costs and expenses		253,204			4,407,686			502,100			(22,408	)		5,140,582
Operating income		689,488			587,954			208,592			(357,957	)		1,128,077
Non-operating (expense) income, net		(160,244	)		(295,672	)		3,155			357,957			(94,804	)
Income from continuing operations before taxes		529,244			292,282			211,747			—			1,033,273
Income tax expense		201,426			118,441			87,714			—			407,581
Income from continuing operations		327,818			173,841			124,033			—			625,692
Loss from discontinued operations, net of taxes		—			(28,980	)		(10,291	)		—			(39,271	)
Equity earnings from subsidiaries		258,603			—			—			(258,603	)		—
Net income	$	586,421		$	144,861		$	113,742		$	(258,603	)	$	586,421

Condensed Consolidating Statement of Cash Flows For the Year Ended December 31, 2008
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	581,490		$	291,203		$	35,042		$	(326,245	)	$	581,490
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		53,116			193,975			17,502			—			264,593
Provision for doubtful accounts		11,261			106,804			208,163			—			326,228
Provision for special charge		—			72,650			—			—			72,650
Other, net		(279,394	)		56,698			10,638			326,245			114,187
Changes in operating assets and liabilities		462,768			(470,560	)		(288,307	)		—			(296,099	)
Net cash provided by (used in) operating activities		829,241			250,770			(16,962	)		—			1,063,049
Net cash (used in) provided by investing activities		(144,149	)		(149,004	)		14,137			80,133			(198,883	)
Net cash used in financing activities		(578,137	)		(109,898	)		(9,646	)		(80,133	)		(777,814	)
Net change in cash and cash equivalents		106,955			(8,132	)		(12,471	)		—			86,352
Cash and cash equivalents, beginning of year		111,610			14,847			41,137			—			167,594
Cash and cash equivalents, end of year	$	218,565		$	6,715		$	28,666		$	—		$	253,946

F-44

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Statement of Cash Flows For the Year Ended December 31, 2007
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	339,939		$	9,950		$	71,899		$	(81,849	)	$	339,939
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		50,726			170,344			16,809			—			237,879
Provision for doubtful accounts		11,219			83,240			205,767			—			300,226
Provision for restructuring and other special charges		—			238,781			—			—			238,781
Other, net		(64,298	)		37,970			20,596			81,849			76,117
Changes in operating assets and liabilities		634,379			(200,171	)		(700,226	)		—			(266,018	)
Net cash provided by (used in) operating activities		971,965			340,114			(385,155	)		—			926,924
Net cash used in investing activities		(2,200,512	)		(1,334,217	)		(316,554	)		2,092,090			(1,759,193	)
Net cash provided by financing activities		1,205,559			1,001,289			735,465			(2,092,090	)		850,223
Net change in cash and cash equivalents		(22,988	)		7,186			33,756			—			17,954
Cash and cash equivalents, beginning of year		134,598			7,661			7,381			—			149,640
Cash and cash equivalents, end of year	$	111,610		$	14,847		$	41,137		$	—		$	167,594

Condensed Consolidating Statement of Cash Flows For the Year Ended December 31, 2006
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	586,421		$	144,861		$	113,742		$	(258,603	)	$	586,421
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		46,674			140,103			10,621			—			197,398
Provision for doubtful accounts		5,934			51,258			186,251			—			243,443
Provision for restructuring and other special charges		—			47,868			7,920			—			55,788
Other, net		(316,207	)		55,233			22,948			258,603			20,577
Changes in operating assets and liabilities		200,269			(129,327	)		(222,673	)		—			(151,731	)
Net cash provided by operating activities		523,091			309,996			118,809			—			951,896
Net cash used in investing activities		(13,177	)		(120,444	)		(9,748	)		(271,033	)		(414,402	)
Net cash used in financing activities		(452,257	)		(186,650	)		(112,110	)		271,033			(479,984	)
Net change in cash and cash equivalents		57,657			2,902			(3,049	)		—			57,510
Cash and cash equivalents, beginning of year		76,941			4,759			10,430			—			92,130
Cash and cash equivalents, end of year	$	134,598		$	7,661		$	7,381		$	—		$	149,640

F-45

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
(in thousands, except per share data)
Quarterly Operating Results (unaudited)

2008 (a) (b)	First Quarter			Second Quarter			Third Quarter				Fourth Quarter			Total Year
Net revenue from continuing operations	$	1,784,637		$	1,837,901		$	1,826,603		(c)	$	1,800,306		$	7,249,447
Gross profit from continuing operations		726,010			754,420			753,480		(c)		759,381			2,993,291
Income from continuing operations		140,694			162,218	(d)		159,676		(c) (d) (e)		169,596	(d) (f)		632,184
Loss from discontinued operations		(1,087	)		(890	)		(48,934	)	(g)		217			(50,694	)
Net income	$	139,607		$	161,328		$	110,742			$	169,813		$	581,490
Earnings per common share – basic
Income from continuing operations	$	0.72		$	0.83		$	0.82			$	0.88		$	3.25
Loss from discontinued operations		—			—			(0.25	)			—			(0.26	)
Net income	$	0.72		$	0.83		$	0.57			$	0.88		$	2.99
Earnings per common share – dilutive
Income from continuing operations	$	0.72		$	0.83		$	0.81			$	0.87		$	3.23
Loss from discontinued operations		(0.01	)		(0.01	)		(0.25	)			—			(0.26	)
Net income	$	0.71		$	0.82		$	0.56			$	0.87		$	2.97
2007 (a) (b)	First Quarter			Second Quarter			Third Quarter				Fourth Quarter			Total Year
Net revenue from continuing operations	$	1,526,208		$	1,641,156		$	1,767,070			$	1,770,473		$	6,704,907
Gross profit from continuing operations		594,423			672,414			740,472				727,750			2,735,059
Income from continuing operations		107,515	(h)		141,979			150,325				154,009	(i)		553,828
Loss from discontinued operations		(1,622	)		(647	)		(52,360	)	(j)		(159,260	)  (j)		(213,889)
Net income (loss)	$	105,893		$	141,332		$	97,965			$	(5,251	)	$	339,939
Earnings per common share – basic
Income from continuing operations	$	0.56		$	0.74		$	0.78			$	0.80		$	2.87
Loss from discontinued operations		(0.01	)		—			(0.27	)			(0.83	)		(1.11	)
Net income (loss)	$	0.55		$	0.74		$	0.51			$	(0.03	)	$	1.76
Earnings per common share – dilutive
Income from continuing operations	$	0.55		$	0.73		$	0.77			$	0.79		$	2.84
Loss from discontinued operations		(0.01	)		—			(0.27	)			(0.82	)		(1.10	)
Net income (loss)	$	0.54		$	0.73		$	0.50			$	(0.03	)	$	1.74

(a)	During the third quarter of 2006, the Company completed its wind down of NID and classified the operations of NID as discontinued operations. Results of operations have been prepared to report the results of NID as discontinued operations for all periods presented (see Note 15).
(b)	On January 31, 2007, the Company completed the acquisition of HemoCue. On May 31, 2007, the Company completed the acquisition of AmeriPath. The quarterly operating results include the results of operations of HemoCue and AmeriPath subsequent to the closing of the applicable acquisitions.
(c)	The Company estimates the impact of hurricanes in the third quarter of 2008 reduced consolidated revenue growth and the increase in operating income for 2008 by approximately $10 million and $8 million, respectively, compared to the prior year.
(d)	In the second, third and fourth quarters of 2008, the Company recorded a tax benefit of $2.8 million, $3.4 million and $10.3 million, respectively, primarily associated with favorable resolutions of certain tax contingencies.
(e)	In the third quarter of 2008, the Company recorded a $8.9 million charge associated with the write-down of an equity investment.
(f)	In the fourth quarter of 2008, the Company recorded $16.2 million of costs, primarily associated with workforce reductions.
(g)	In the third quarter of 2008, the Company recorded a charge of $73 million associated with the government’s investigation in connection with NID (see Note 14).
(h)	In the first quarter of 2007, the Company recorded $10.7 million of costs associated with workforce reductions and a $4 million charge related to in-process research and development expense associated with the acquisition of HemoCue.
(i)	In the fourth quarter of 2007, the Company recorded a charge of $4.0 million associated with the write-down of an equity investment.
(j)	In the third and fourth quarters of 2007, the Company recorded a charge of $51 million and $190 million, respectively, associated with the government’s investigation in connection with NID (see Note 14).

F-46

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION ACCOUNTS AND RESERVES
(in thousands)

	Balance at 1-1-08		Provision for Doubtful Accounts		Net Deductions and Other			Balance at 12-31-08
Year ended December 31, 2008
Doubtful accounts and allowances	$	250,067	$	326,228	$	314,961	(a)	$	261,334
	Balance at 1-1-07		Provision for Doubtful Accounts		Net Deductions and Other			Balance at 12-31-07
Year ended December 31, 2007
Doubtful accounts and allowances	$	205,086	$	300,226	$	255,245	(a)	$	250,067
	Balance at 1-1-06		Provision for Doubtful Accounts		Net Deductions and Other			Balance at 12-31-06
Year ended December 31, 2006
Doubtful accounts and allowances	$	193,754	$	243,443	$	232,111	(a)	$	205,086

(a) Primarily represents the write-off of accounts receivable, net of recoveries.

F-47

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

EXHIBITS TO FORM 10-K
For the fiscal year ended December 31, 2008
Commission File No. 001-12215

QUEST DIAGNOSTICS INCORPORATED

Exhibit Number	Description
3.1	Restated Certificate of Incorporation (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: May 31, 2001) and incorporated herein by reference) (Commission File Number 001-12215)
3.2	Amendment of the Restated Certificate of Incorporation (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference)
3.3	Amended and Restated By-Laws of the Registrant (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: February 13, 2009) and incorporated herein by reference)
4.1	Form of 7½% Senior Note due 2011, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 27, 2001) and incorporated herein by reference) (Commission File Number 001-12215)
4.2	Form of 5.125% Exchange Senior Note due 2010, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: November 1, 2005) and incorporated herein by reference)
4.3	Form of 5.45% Exchange Senior Note due 2015, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: November 1, 2005) and incorporated herein by reference)
4.4	Form of 6.40% Senior Note due 2017, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 19, 2007) and incorporated herein by reference)
4.5	Form of 6.95% Senior Note due 2037, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 19, 2007) and incorporated herein by reference)
4.6	Indenture dated as of June 27, 2001, among the Company, the Subsidiary Guarantors, and the Trustee (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 27, 2001) and incorporated herein by reference) (Commission File Number 001-12215)
4.7	First Supplemental Indenture, dated as of June 27, 2001, among the Company, the Subsidiary Guarantors, and The Bank of New York (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 27, 2001) and incorporated herein by reference) (Commission File Number 001-12215)
4.8	Second Supplemental Indenture, dated as of November 26, 2001, among the Company, the Subsidiary Guarantors, and The Bank of New York (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: November 26, 2001) and incorporated herein by reference)(Commission File Number 001-12215)
4.9	Third Supplemental Indenture, dated as of April 4, 2002, among the Company, the Additional Subsidiary Guarantors, and The Bank of New York (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: April 1, 2002) and incorporated herein by reference) (Commission File Number 001-12215)
4.10	Fourth Supplemental Indenture dated as of March 19, 2003, among Unilab Corporation (f/k/a Quest Diagnostics Newco Incorporated), the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference)

E-1

4.11	Fifth Supplemental Indenture dated as of April 16, 2004, among Unilab Acquisition Corporation (d/b/a FNA Clinics of America), the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference)
4.12	Sixth Supplemental Indenture dated as of October 31, 2005, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: October 31, 2005) and incorporated herein by reference)
4.13	Seventh Supplemental Indenture dated as of November 21, 2005, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: November 21, 2005) and incorporated herein by reference)
4.14	Eighth Supplemental Indenture dated as of July 31, 2006, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: July 31, 2006) and incorporated herein by reference)
4.15	Ninth Supplemental Indenture dated as of September 30, 2006, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: September 30, 2006) and incorporated herein by reference)
4.16	Tenth Supplemental Indenture dated as of June 22, 2007, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 19, 2007) and incorporated herein by reference)
4.17	Eleventh Supplemental Indenture dated as of June 22, 2007, among the Company, The Bank of New York, and the Additional Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 19, 2007) and incorporated herein by reference)
4.18	Twelfth Supplemental Indenture dated as of June 25, 2007, among the Company, The Bank of New York, and the Additional Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 19, 2007) and incorporated herein by reference)
10.1	Agreement and Plan of Merger dated as of April 15, 2007, by and among the Company, Ace Acquisition Sub, Inc. and AmeriPath Group Holdings, Inc. (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: April 15, 2007) and incorporated herein by reference)
10.2	Amendment dated as of May 31, 2007 to Agreement and Plan of Merger dated as of April 15, 2007, by and among the Company, Ace Acquisition Sub, Inc. and AmeriPath Group Holdings, Inc. (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: May 31, 2007) and incorporated herein by reference)
10.3	Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008, among Quest Diagnostics Receivables Inc., as Borrower, the Company, as Servicer, each of the lenders party thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference)
10.4*	Amendment No. 1 dated as of December 12, 2008 to Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008, among Quest Diagnostics Receivables Inc., as Borrower, the Company, as Servicer, each of the lenders party thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent
10.5*	Third Amended and Restated Receivables Sale Agreement dated as of December 12, 2008, among the Company, its subsidiaries who are or become a seller thereunder, as the Sellers, and Quest Diagnostics Receivables Inc., as the Buyer
10.6	Credit Agreement dated as of May 31, 2007, among the Company, certain subsidiary guarantors of the Company, the lenders party thereto, Bank of America, N.A., as Administrative Agent, Morgan Stanley Senior Funding, Inc., as Syndication Agent, Barclays Bank Plc, JPMorgan Chase Bank, N.A., Merrill Lynch Bank, USA and Wachovia Bank, National Association, as co-Documentation Agents, and Morgan Stanley Senior Funding, Inc. and Banc of America Securities LLC, as Joint Lead Arrangers and Joint Book Runners (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: May 31, 2007) and incorporated herein by reference)

E-2

10.7	Stock and Asset Purchase Agreement dated as of February 9, 1999, among SmithKline Beecham plc, SmithKline Beecham Corporation and the Company (the “Stock and Asset Purchase Agreement”) (filed as Appendix A of the Company’s Definitive Proxy Statement dated May 11, 1999 and incorporated herein by reference) (Commission File Number 001-12215)
10.8	Amendment No. 1 dated August 6, 1999, to the Stock and Asset Purchase Agreement (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: August 16, 1999) and incorporated herein by reference) (Commission File Number 001-12215)
10.9	Stockholders Agreement dated as of August 16, 1999, between SmithKline Beecham plc and the Company (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: August 16, 1999) and incorporated herein by reference) (Commission File Number 001-12215)
10.10	Amended and Restated Employee Stock Purchase Plan (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2007 and incorporated herein by reference)
10.11‡	1996 Employee Equity Participation Program, as amended (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2002 and incorporated herein by reference) (Commission File Number 001-12215)
10.12‡	Equity Award Agreement dated as of March 4, 2008 (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference)
10.13‡	Equity Award Agreement (CEO) dated as of March 4, 2008 between the Company and Surya N. Mohapatra (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference)
10.14*‡	Amended and Restated Quest Diagnostics Incorporated Employee Long-Term Incentive Plan as amended October 31, 2008
10.15‡	Form of Non-Qualified Stock Option Agreement (filed as an Exhibit to the Company’s current report on Form 8-K (Date of report: February 15, 2006) and incorporated herein by reference)
10.16‡	Form of Non-Qualified Stock Option Agreement dated as of February 12, 2007 (filed as an Exhibit to the Company’s 2006 annual report on Form 10-K and incorporated herein by reference)
10.17‡	Non-Qualified Stock Option Agreement, dated as of February 12, 2007, between the Company and Surya N. Mohapatra (filed as an Exhibit to the Company’s 2007 annual report on Form 10-K and incorporated herein by reference)
10.18‡	Form of Performance Share Agreement (2007-2009 Performance Period) (filed as an Exhibit to the Company’s 2006 annual report on Form 10-K and incorporated herein by reference)
10.19‡	Form of Performance Share Agreement (filed as an Exhibit to the Company’s current report on Form 8-K (Date of report: February 15, 2006) and incorporated herein by reference)
10.20‡	Performance Share Award Agreement, dated as of February 12, 2007, between the Company and Surya N. Mohapatra (filed as an Exhibit to the Company’s 2007 annual report on Form 10-K and incorporated herein by reference)
10.21*‡	Amended and Restated Quest Diagnostics Incorporated Long-Term Incentive Plan for Non-Employee Directors as amended October 31, 2008
10.22*‡	Amended and Restated Deferred Compensation Plan For Directors as amended October 31, 2008
10.23*‡	Amended and Restated Employment Agreement between the Company and Surya N. Mohapatra dated as of November 7, 2008
10.24*‡	Supplemental Deferred Compensation Plan (Post 2004) amended December 30, 2008
10.25*‡	Supplemental Deferred Compensation Plan (Pre-2005) amended December 30, 2008
10.26*‡	Quest Diagnostics Incorporated Supplemental Executive Retirement Plan, as amended effective November 7, 2008
10.27‡	Senior Management Incentive Plan (filed as Appendix A to the Company’s Definitive Proxy Statement dated March 28, 2003) and incorporated herein by reference) (Commission File Number 001-12215)

E-3

10.28*‡	Amended and Restated Quest Diagnostics Incorporated Executive Officer Severance Plan as amended October 31, 2008
10.29‡	AmeriPath Group Holdings, Inc. 2006 Stock Option and Restricted Stock Purchase Plan (filed as an Exhibit to the Company’s registration statement on Form S-8 and incorporated herein by reference) (Commission File Number 333-143889)
10.30‡	Profit Sharing Plan of Quest Diagnostics Incorporated, Amended and Restated as of January 1, 2007 (filed as an Exhibit to the Company’s 2007 annual report on Form 10-K and incorporated herein by reference)
10.31*‡	Amendment to the Profit Sharing Plan of Quest Diagnostics Incorporated dated as of December 23, 2008
10.32‡	Amendment Dated as of August 17, 2007 to the AmeriPath Group Holdings, Inc. 2006 Stock Option Plan and Restricted Stock Purchase Plan (filed as an exhibit to the Company’s 2007 Annual Report on Form 10-K and incorporated herein by reference)
11.1	Statement re: Computation of Earnings Per Common Share (the calculation of per share earnings is in Part II, Item 8, Note 2 to the consolidated financial statements (Summary of Significant Accounting Policies) and is omitted in accordance with Item 601(b)(11) of Regulation S-K)
21.1*	Subsidiaries of Quest Diagnostics Incorporated
23.1*	Consent of PricewaterhouseCoopers LLP
24.1*	Power of Attorney (included on signature page)
31.1*	Rule 13a-14(a) Certification of Chief Executive Officer
31.2*	Rule 13a-14(a) Certification of Chief Financial Officer
32.1**	Section 1350 Certification of Chief Executive Officer
32.2**	Section 1350 Certification of Chief Financial Officer

* Filed herewith.

** Furnished herewith.

‡ Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 15(b) of Form 10-K.

E-4

EX-10.4

Exhibit 10.4

AMENDMENT NO. 1 TO FOURTH AMENDED AND RESTATED CREDIT AND
SECURITY AGREEMENT

          THIS AMENDMENT NO. 1 TO FOURTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT (this “Amendment”) is entered into as of December 12, 2008, by and among:

          (1) QUEST DIAGNOSTICS RECEIVABLES INC., a Delaware corporation (together with its successors and permitted assigns, the “Borrower”),

          (2) QUEST DIAGNOSTICS INCORPORATED, a Delaware corporation (together with its successors, “Quest Diagnostics”), as initial servicer (in such capacity, together with any successor servicer or sub-servicer, the “Servicer”),

          (3) ATLANTIC ASSET SECURITIZATION LLC, a Delaware limited liability company, as assignee of Variable Funding Capital Company LLC (together with its successors, “Atlantic” and together with VFCC, the “Conduits”), and CALYON NEW YORK BRANCH, in its capacity as a Liquidity Bank to Atlantic and assignee of Wachovia Bank, National Association (together with its successors, “Calyon” and together with Atlantic, the “Atlantic Group”),

          (4) GOTHAM FUNDING CORPORATION, a Delaware corporation (together with its successors, “Gotham” and together with Atlantic, the “Conduits”), and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, in its capacity as a Liquidity Bank to Gotham (together with its successors, “BTMU” and, together with Gotham, the “Gotham Group”),

          (5) CALYON NEW YORK BRANCH, in its capacity as agent for the Atlantic Group (together with its successors in such capacity, the “Atlantic Agent” or a “Co-Agent”), and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, in its capacity as agent for the Gotham Group (together with its successors in such capacity, the “Gotham Agent” or a “Co-Agent”), and

          (6) THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, as administrative agent for the Atlantic Group, the Gotham Group and the Co-Agents (in such capacity, together with any successors thereto in such capacity, the “Administrative Agent” and together with each of the Co-Agents, the “Agents”),

with respect to that certain Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008, by and among the parties hereto (as heretofore amended, the “Existing Agreement” which, as amended hereby, is hereinafter referred to as the “Agreement”).

          Unless otherwise indicated, capitalized terms used in this Amendment are used with the meanings attributed thereto in the Existing Agreement.

1

WITNESSETH:

          WHEREAS, the parties hereto desire to amend the Existing Agreement on the terms and subject to the conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto hereby agree as follows:

          1. Amendments to Existing Agreement.

          1.1. All references to “Variable Funding Capital Company LLC” in the Existing Agreement, and all references to “VFCC” in the Existing Agreement (whether alone, or as part of another defined term) are hereby replaced with references to “Atlantic Asset Securitization LLC” and “Atlantic,” respectively. All references to “Wachovia Bank, National Association” in the Existing Agreement, and all references to “Wachovia” in the Existing Agreement (whether alone, or as part of another defined term) are hereby replaced with references to “Calyon New York Branch” and “Calyon,” respectively.

          1.2. The third recital to the Existing Agreement is hereby deleted in its entirety, and the second recital is hereby amended and restated in its entirety to read as follows:

     WHEREAS, Quest Diagnostics and certain of its Subsidiaries as Originators and the Borrower have entered into the Sale Agreement pursuant to which each of the Originators has sold and/or contributed, and hereafter will sell to the Borrower, Participation Interest in all of such Originator’s right title and interest in and to its Specified Government Receivables, all of such Originator’s right, title and interest in and to its Private Receivables and certain related rights;

          1.3. Section 2.3 of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

     Section 2.3. Computation of Concentration Limits and Unpaid NetBalance. The Obligor Concentration Limits and the aggregate Unpaid Net Balance of Private Receivables (as defined in the Sale Agreement) of each Obligor and its Affiliated Obligors (if any) shall be calculated as if each such Obligor and its Affiliated Obligors were one Obligor.

          1.4. Section 2.5 of the Existing Agreement is hereby amended to add a new subsection (e) to read as follows:

          (e) No Deduction

          All payments to be made by a Loan Party hereunder shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.

          1.5 Section 2.5 of the Existing Agreement is hereby further amended to add a new subsection (f) to read as follows:

          (f) Gross Up

2

     If a Loan Party shall be required by any Requirement of Law to deduct any Taxes from or in respect of any sum payable under any Loan Document to any Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions, such Agent or such Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan Party shall make such deductions, (iii) such Loan Party shall pay the full amount deducted to the relevant taxation authority or other Governmental Authority in accordance with applicable Requirements of Law, and (iv) within 30 days after the date of such payment, such Loan Party shall furnish to the Administrative Agent (which shall forward the same to such Agent or such Lender) the original or a certified copy of a receipt evidencing payment thereof, to the extent such receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Administrative Agent.

          1.6 Section 8.2(g) of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

     (g) Power of Attorney. The Borrower hereby grants to the Servicer an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take in the name of the Borrower all steps which are necessary or advisable to endorse, negotiate or otherwise realize on any writing or other right of any kind held or transmitted by the Borrower or transmitted or received by any Agent or any Lender in connection with any Receivable. This power of attorney shall automatically terminate as to any Servicer replaced in accordance with Section 8.1(b) and shall automatically transfer to its successor.

          1.7 Section 10.1(g) of the Existing Agreement is hereby amended to delete “15.40%” where it appears and to substitute in lieu thereof “14.00%” .

          1.8. The definition of “Dilution Reserve” in the Existing Agreement is hereby amended to delete “1.5” where it appears and to substitute in lieu thereof “2.0” .

          1.9. The text of clause (e) of the definition of “Interest Payment Date” in Annex A to the Existing Agreement is hereby replaced with “[intentionally deleted].”

          1.10. The definition of “Loss Reserve” in the Existing Agreement is hereby amended to delete “2.0” where it appears and to substitute in lieu thereof “2.25” .

          1.11. The definition of “Obligor Concentration Limit” in the Existing Agreement is hereby amended to delete “Receivables” where it appears in the second line thereof and to substitute in lieu thereof “Private Receivables”.

          1.12. The definitions of “VFCC Fee Letter” and “VFCC Liquidity Agreement” in the Existing Agreement are hereby deleted in their entirety.

          1.13. The following new definitions are hereby inserted in Annex A to the Existing Agreement in their appropriate alphabetical order:

3

          “Atlantic Fee Letter” means that certain Atlantic Fee Letter dated as of December 12, 2008 by and among Quest Diagnostics, the Borrower, Atlantic and the Atlantic Agent, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time.

          “Atlantic Liquidity Agreement” means the Liquidity Asset Purchase Agreement dated as of December 12, 2008 among Atlantic, the Atlantic Agent, and the Liquidity Banks from time to time party thereto, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time.

          “Eligible Participation Interest” means a Participation Interest in a Specified Government Receivable that meets the following criteria and which Participation Interest has been transferred to the Borrower pursuant to the Sale Agreement in a “true participation” transaction:

          (a) a Specified Government Receivable which arises out of the provision or sale of Clinical Laboratory Services by an Eligible Originator in the ordinary course of its business;

          (b) a Specified Government Receivable as to which the perfection of the Administrative Agent’s security interest, on behalf of the Secured Parties, in the applicable Participation Interest is governed by the laws of a jurisdiction where the Uniform Commercial Code-Secured Transactions is in force;

          (c) a Specified Government Receivable constitutes an “account” or a “payment intangible” (each as defined in the Uniform Commercial Code as in effect in any relevant jurisdiction);

          (d) a Specified Government Receivable the Obligor of which is a Governmental Authority of the United States or any of its states, possessions or territories;

          (e) a Specified Government Receivable which is not a Disallowed Receivable at such time;

          (f) the portion of a Specified Government Receivable which is not an Ineligible Defaulted Receivable at such time;

          (g) a Specified Government Receivable with regard to which the representations and warranties of the Borrower in Sections 6.1(j), (l) and (p)are true and correct;

          (h) a Specified Government Receivable with regard to which the granting of a Participation Interest therein does not contravene or conflict with any law;

          (i) a Specified Government Receivable which is denominated and payable only in Dollars in the United States;

          (j) a Specified Government Receivable which constitutes the legal, valid and binding obligation of the Obligor thereof enforceable against such Obligor in accordance

4

with its terms and is not subject to any actual or reasonably expected dispute, offset (except as provided below), counterclaim or defense whatsoever; provided, however, that if such dispute, offset, counterclaim or defense affects only a portion of the Unpaid Net Balance of such Specified Government Receivable, then such Specified Government Receivable may be deemed an Eligible Specified Government Receivable to the extent of the portion of such Unpaid Net Balance which is not so affected;

          (k) a Specified Government Receivable which, together with any Contract related thereto, does not contravene in any material respect any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no party to the Contract related thereto is in violation of any such law, rule or regulation in any material respect if such violation would impair the collectibility of such Specified Government Receivable;

          (l) a Specified Government Receivable which satisfies in all material respects all applicable requirements of the applicable Eligible Originator’s Credit and Collection Policy;

          (m) a Specified Government Receivable which is due and payable within 60days from the invoice date of such Specified Government Receivable;

          (n) a Specified Government Receivable the original term of which has not been extended (except as permitted in Section 8.2(c));

          (o) a Specified Government Receivable which has not been identified, either specifically or as a member of a class, in a notice by any of the Agents, in the exercise of its commercially reasonable credit judgment, as a Specified Government Receivable that is not acceptable, including, without limitation, because such Specified Government Receivables arises under an unreasonable Contract that is not acceptable to such Agent; and

          (p) if the applicable Eligible Originator acquired such Specified Government Receivable through a Material Acquisition as to which the Administrative Agent is permitted to and has, in fact, conducted, a Review in accordance with Section 7.1(c), the Administrative Agent has notified the Borrower in writing that (i) such Specified Government Receivable is (and other similarly-acquired Specified Government Receivables are) acceptable to the Agents based on the satisfactory outcome of such Review, and (ii) each Conduit’s Rating Agency Condition has been satisfied.

          “Excess Participation Interests” means, at any time, an amount equal the excess, if any, of the aggregate Outstanding Balance of all Eligible Participation Interests over 17.5% of the Outstanding Balance of all Eligible Receivables and all Eligible Participation Interests.

5

          “Medicaid” means the medical assistance program established by Title XIX of the Social Security Act (42 U.S.C. Secs. 1396 etseq.) and any statutes succeeding thereto.

          “Medicare” means the health insurance program for the aged and disabled established by Title XVIII of the Social Security Act (42 U.S.C. Secs. 1395 etseq.) and any statutes succeeding thereto.

          “Participation Interest” means a 100% beneficial interest in the applicable Originator’s right, title and interest, whether now owned or hereafter arising and wherever located, in, to and under each of such Originator’s Specified Government Receivables.

          “Purchased Asset” means each Private Receivable and each Participation Interest acquired by the Borrower pursuant to the Sale Agreement.

          1.14. The definitions in Annex A to the Existing Agreement of the terms set forth below are hereby amended and restated in their entirety to read as follows:

          “Net Pool Balance” means, at any time, an amount equal to (i) Net Receivables, minus (ii) Specified Government Ineligibles, and minus (iii) Excess Participation Interests.

          “Net Receivables” means, at any time, an amount equal to the reported aggregate Unpaid Net Balance of all Receivables (including the Specified Government Receivables the subject of Participation Interests) at such time, minus (i) the aggregate Unpaid Net Balance of all Receivables (including the Specified Government Receivables the subject of Participation Interests) that are not Eligible Receivables or the subject of Eligible Participation Interests, as applicable, at such time, minus (ii) Receivables (other than those covered by any other clause of this definition) that are not yet Defaulted Receivables which are owing from any Top 10 Obligor as to which more than 50%of the aggregate Unpaid Net Balance of all Receivables owing from such Top 10 Obligor are Defaulted Receivables, minus (iii) the Excess Concentration Amount at such time, and minus (iv) the Excess Rollforward Difference.

          “Sale Agreement” means the Third Amended and Restated Receivables Sale Agreement dated as of December 12, 2008 between each of the Originators, as a seller and/or contributor, and the Borrower, as purchaser and contributee, as it may be amended, supplemented or otherwise modified in accordance with Section 7.3(f) .

          “Scheduled Termination Date” means as to each Liquidity Bank, the earlier to occur of December 11, 2009 and the date on which its Liquidity Commitment(s) terminate(s) in accordance with the Liquidity Agreement to which it is a party.

6

          “Specified Government Receivable” means a Government Receivable arising under Medicare or Medicaid for covered services rendered to eligible beneficiaries thereunder.

          1.15. Sections 6.1(p) and 6.1(u) of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

          (p) Eligibility. Each Receivable included as an Eligible Receivable in the Net Pool Balance in connection with any computation or recomputation of the Borrowing Base is an Eligible Receivable on such date, and each Participation Interest included as an Eligible Participation Interest in the Net Pool Balance in connection with any computation or recomputation of the Borrowing Base is an Eligible Participation Interest on such date.

          (u) Investment Company Act; Other Restrictions. No Loan Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the United States Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any law or regulation which limits its ability to incur Indebtedness, other than Regulation X of the Board of Governors of the Federal Reserve System.

               1.16. All references in Sections 6.1(l), 6.1(t), 7.1(j), 7.3(a), 7.3(i), 7.3(k), 7.3(l), 7.4(i), 8.3(a), 9.1(a), 10.1(m), 10.1(n), 13.1(L), and 14.5(b) of the Existing Agreement to “Receivable” or “Receivables” are hereby replaced with “Purchased Asset” or “Purchased Assets”, respectively.

                1.17. Sections 13.1(a)(C) and 13.1(a)(P) are hereby amended and restated in their entirety to read, respectively, as follows:

          (C) the failure by any Loan Party to comply with any applicable law, rule or regulation with respect to any Receivable or the related Contract and/or Invoice, including, without limitation, any state or local assignment of claims act or similar legislation prohibiting or imposing notice and acknowledgement requirements or other limitations or conditions on the sale of participations in a Specified Government Receivable, or the nonconformity of any Receivable or the related Contract and/or Invoice with any such applicable law, rule or regulation;

          (P) any loss incurred by any of the Secured Parties as a result of the inclusion in the Borrowing Base of Private Receivables owing from any single Obligor and its Affiliated Obligors which causes the aggregate Unpaid Net Balance of all such Private Receivables to exceed the applicable Obligor Concentration Limit; or

               1.18. All references in the Existing Agreement to “The Civilian Health and Medical Program of the Uniform Services” are hereby replaced with “TRICARE”.

               1.19. BTMU’s Commitment is $275,000,000, and Calyon’s Commitment is hereby increased to $225,000,000.

7

               1.20. Exhibit 3.1(A) and Schedule 14.2 to the Existing Agreement are hereby amended and restated in their entirety to read as set forth in Annexes 1 and 2, respectively, hereto.

               2. Representations.

               2.1. Each of the Loan Parties represents and warrants to the Lenders and the Agents that it has duly authorized, executed and delivered this Amendment and that the Agreement constitutes, a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability).

               2.2. Each of the Loan Parties further represents and warrants to the Lenders and the Agents that each of its representations and warranties set forth in Section 6.1 of the Agreement is true and correct as of the date hereof and that no Event of Default or Unmatured Default exists as of the date hereof and is continuing.

               3. Conditions Precedent. This Amendment shall become effective as of the date first above written upon (a) receipt by the Administrative Agent of each of the documents listed on Annex 3 hereto, and (b) receipt by each of the Atlantic Agent and the BTMU Agent of the upfront fee specified in the Fee Letter for its Group.

               4. Miscellaneous.

               4.1. Except as expressly amended hereby, the Existing Agreement shall remain unaltered and in full force and effect, and each of the parties hereby ratifies and confirms the Agreement and each of the other Transaction Documents to which it is a party.

               4.2. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW.

               4.3. EACH LOAN PARTY HEREBY ACKNOWLEDGES AND AGREES THAT:

               4.3.1. IT IRREVOCABLY (i) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK COUNTY, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE AGREEMENT, AND (ii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF AN ACTION OR PROCEEDING IN SUCH COURTS.

               4.3.2. TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,

8

ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THE AGREEMENT.

               4.4. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Amendment.

9

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

QUEST DIAGNOSTICS RECEIVABLES INC.
By:	/s/ Robert F. O’Keef
	Name:	Robert F. O’Keef
	Title:	Vice President and Treasurer
QUEST DIAGNOSTICS INCORPORATED
By:	/s/ Robert F. O’Keef
	Name:	Robert F. O’Keef
	Title:	Vice President and Treasurer

[Signature Page to Amendment No. 1 to Fourth Amended and Restated Credit and Security Agreement]

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK
BRANCH, INDIVIDUALLY
By:	/s/ Lillian Kim
	Name: Lillian Kim
	Title: Authorized Signatory
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK
BRANCH, AS GOTHAM AGENT
By:	/s/ Aditya Reddy
	Name: Aditya Reddy
	Title: VP and Manager
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK
BRANCH, AS ADMINISTRATIVE AGENT
By:	/s/ Aditya Reddy
	Name: Aditya Reddy
	Title: VP and Manager

[Signature Page to Amendment No. 1 to Fourth Amended and Restated Credit and Security Agreement]

GOTHAM FUNDING CORPORATION
By:	/s/ Louise E. Colby
	Name: Louise E. Colby
	Title: Vice President

[Signature Page to Amendment No. 1 to Fourth Amended and Restated Credit and Security Agreement]

CALYON NEW YORK BRANCH, INDIVIDUALLY
By:	/s/ Sam Pilcer
	Name: Sam Pilcer
	Title: Managing Director
By:	/s/ Kostantina Kourmpetis
	Name: Kostantina Kourmpetis
	Title: Managing Director
CALYON NEW YORK BRANCH, AS ATLANTIC AGENT
By:	/s/ Sam Pilcer
	Name: Sam Pilcer
	Title: Managing Director
By:	/s/ Kostantina Kourmpetis
	Name: Kostantina Kourmpetis
	Title: Managing Director
ATLANTIC ASSET SECURITIZATION LLC
By:	CALYON NEW YORK BRANCH
	AS ATTORNEY-IN-FACT
By:	/s/ Sam Pilcer
	Name: Sam Pilcer
	Title: Managing Director
By:	/s/ Kostantina Kourmpetis
	Name: Kostantina Kourmpetis
	Title: Managing Director

[Signature Page to Amendment No. 1 to Fourth Amended and Restated Credit and Security Agreement]

ANNEX 1

EXHIBIT 3.1(A)
FORM OF MONTHLY REPORT

[attached]

ANNEX 2

SCHEDULE14.2
NOTICEADDRESSESANDWIRETRANSFERINFORMATION

A. Borrower and initial Servicer

Address for notices to both:

c/o Quest Diagnostics Inc.
3 Giralda Farms
Madison, NJ 07940

Attention: Treasurer
Fax: (973) 520-2037

cc: General Counsel
Fax: (484) 676-8630

Wire transfer instructions (unless otherwise notified):

Bank:	The Bank of New York New York, NY
Account: ABA: Account Name:	#8900438193 #021000018 Quest Diagnostics Receivables Inc.

B. Atlantic

Address for notices (other than Borrowing Requests):

Atlantic Asset Securitization LLC
c/o Calyon Securities
1301 Avenue of the Americas
New York, NY 10019
Attention: Bill Wood

Phone: (212) 261-7808
Fax: (212) 261-3448

Wire transfer instructions (unless otherwise notified):

Bank Name:
City/State: ABA
Routing #:
Account #:
Account Name:
Reference:
Attention: Calyon, NY Branch
New York, NY
026008073
01-25680-0001-00-001
Atlantic Asset Securitization Corp.
Quest
Florence Reyes

	C. Calyon New York Branch, individually or as Atlantic Agent
Address for notices (other than Borrowing Requests):
	Calyon New York Branch 1301 Avenue of the Americas New York, NY 10019 Attention: Bill Wood Phone: (212) 261-7808 Fax: (212) 261-3448
Wire transfer instructions (unless otherwise notified):

Bank Name:
City/State:
ABA Routing #:
Account #:
Account Name:
Reference:
Attention: Calyon, NY Branch
New York, NY
026008073
01-25680-0001-00-001
Atlantic Asset Securitization Corp.
Quest
Florence Reyes

E. The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, individually, as Gotham Agent or
Administrative Agent, and Gotham

Address for notices (other than Borrowing Requests):

	Gotham Funding Corporation c/o The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch 1251 Avenue of the Americas New York, New York 10020-1104 USA Attn: Securitization Group Telephone: (212) 782-4537/4908 Facsimile: (212) 782-6998
Wire transfer instructions (unless otherwise notified):
	Bank of Tokyo-Mitsubishi UFJ Trust Company ABA # 026-009-687 Gotham Funding Corporation’s Account # 310-035-147 Ref: Quest Diagnostics Receivables Inc.

BORROWING REQUESTS SHOULD BE SENT TO THE
ADDRESS AND FAX NO. SPECIFIED ON EXHIBIT 2.1

ANNEX 3

CLOSING LIST

[attached]

EX-10.5

Exhibit 10.5

THIRD AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT

DATED AS OF DECEMBER 12,2008

BETWEEN

QUEST DIAGNOSTICS INCORPORATED AND EACH OF ITS DIRECT OR
INDIRECT WHOLLY-OWNED SUBSIDIARIES WHO IS OR HEREAFTER BECOMES
A SELLER HEREUNDER,
as the Sellers,

AND

QUEST DIAGNOSTICS RECEIVABLES INC.,
as the Buyer

TABLE OF CONTENTS
		PAGE
ARTICLE I - CAPITALIZATION OF THE BUYER AND AMOUNTS AND TERMS OF THE
PURCHASES		2
SECTION 1.1.	EXCHANGE OF SPECIFIED GOVERNMENT RECEIVABLES	2
SECTION 1.2.	PURCHASES OF PRIVATE RECEIVABLES AND PARTICIPATION INTERESTS	2
SECTION 1.3.	PAYMENT FOR THE PURCHASES	4
SECTION 1.4.	PURCHASE PRICE CREDIT ADJUSTMENTS	6
SECTION 1.5.	PAYMENTS AND COMPUTATIONS, ETC	7
SECTION 1.6.	TRANSFER OF RECORDS	7
SECTION 1.7.	CHARACTERIZATION; GRANTING CLAUSES	8
ARTICLE II - REPRESENTATIONS AND WARRANTIES		8
SECTION 2.1.	REPRESENTATIONS OF THE SELLERS	8
(a) Ownership of such Seller		8
(b) Existence; Due Qualification; Permits		8
(c) Action		9
(d) Title to Receivables; Valid Security Interest		9
(e) Absence of Change of Control		9
(f) Noncontravention		9
(g) No Proceedings		10
(h) Taxes		10
(i) Government Approvals		11
(j) Financial Statements and Absence of Certain Material Adverse Changes		11
(k) Nature of Receivables		12
(l) Margin Regulations		12
(m) Quality of Title		12
(n) Accurate Reports		13
(o) Offices		13
(p) Collection Accounts		14
(q) Eligible Receivables and Eligible Participation Interests		14
(r) Names		14
(s) Credit and Collection Policy		14
(t) Payments to Sellers		14
(u) Investment Company Act; Other Restrictions		14
(v) Solvency		15
(w) ERISA		15
(x) Bulk Sales Act		15
(y) Reliance on Separate Legal Identity		15
ARTICLE III - CONDITIONS OF PURCHASES		15
SECTION 3.1.	CONDITIONS PRECEDENT TO INITIAL PURCHASE	15
SECTION 3.2.	CONDITIONS PRECEDENT TO ALL PURCHASES	16
SECTION 3.3.	REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES	16
ARTICLE IV - COVENANTS		17
SECTION 4.1.	AFFIRMATIVE COVENANTS.	17
(a) Compliance With Laws, Etc		17
(b) Preservation of Existence		17
(c) Audits		17
(d) Keeping of Records and Books of Account		17
(e) Performance and Compliance with Receivables and Contracts		18
(f) Location of Records		18
i

(g) Credit and Collection Policies		18
(h) Separate Corporate Existence of the Buyer		18
(i) Collections		18
(j) Further Assurances		18
SECTION 4.2.	REPORTING REQUIREMENTS	19
(a) Sales, Liens, Etc		19
(b) Extension or Amendment of Receivables		19
(c) Change in Business or Credit and Collection Policy		19
(d) Change in Payment Instructions to Obligors		20
(e) Deposits to Collection Accounts and Collection Account		20
(f) Changes to Other Documents		20
(g) Change of Name, State of Organization, or Records Locations		20
(h) Mergers, Consolidations and Acquisitions		20
(i) Disposition of Receivables and Related Assets		21
(j) Receivables Not to be Evidenced by Promissory Notes		21
(k) Accounting for Purchases		21
ARTICLE V - JOINDER OF ADDITIONAL SELLERS		21
SECTION 5.1.	ADDITION OF NEW SELLERS	21
SECTION 5.2.	DOCUMENTATION	21
ARTICLE VI - ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE RECEIVABLES		22
SECTION 6.1.	RIGHTS OF THE BUYER	22
SECTION 6.2.	RESPONSIBILITIES OF THE SELLERS	22
(a) Collection Procedures		22
(b) Performance Under Contract		22
(c) Power of Attorney		22
SECTION 6.3.	FURTHER ACTION EVIDENCING PURCHASES	23
SECTION 6.4.	APPLICATION OF COLLECTIONS	23
ARTICLE VII - INDEMNIFICATION		23
SECTION 7.1.	INDEMNITIES BY THE SELLERS	26
SECTION 7.2.	CONTRIBUTION	26
ARTICLE VIII - MISCELLANEOUS		26
SECTION 8.1.	WAIVERS AND AMENDMENTS	26
SECTION 8.2.	NOTICES, ETC	26
SECTION 8.3.	CUMULATIVE REMEDIES	26
SECTION 8.4.	BINDING EFFECT; ASSIGNABILITY	27
SECTION 8.5.	GOVERNING LAW	27
SECTION 8.6.	COSTS, EXPENSES AND TAXES	27
SECTION 8.7.	SUBMISSION TO JURISDICTION	28
SECTION 8.8.	WAIVER OF JURY TRIAL	28
SECTION 8.9.	CAPTIONS AND CROSS REFERENCES; INCORPORATION BY REFERENCE	28
SECTION 8.10.	EXECUTION IN COUNTERPARTS	28
SECTION 8.11.	ACKNOWLEDGMENT AND AGREEMENT	28
SECTION 8.12.	NO PROCEEDINGS	28
ANNEX A - DEFINITIONS		35
EXHIBIT A – FORM OF PURCHASE REPORT		41
EXHIBIT B – FORM OF SUBORDINATED NOTE		43
EXHIBIT C - CREDIT AND COLLECTION POLICIES		50
ii

EXHIBIT D - FORM OF JOINDER AGREEMENT	70
SCHEDULE 2.1(0) - SELLERS’ FEDERAL TAXPAYER ID NUMBERS; CHIEF EXECUTIVE OFFICE ADDRESSES; PRINCIPAL LABORATORIES AND BILLING CENTERS, AND LOCATION(S) WHERE RECORDS ARE KEPT

iii

THIRD AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT

           THIS THIRD AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT (as amended, supplemented, restated or otherwise modified from time to time, this “Agreement”), dated as of December 12, 2008 is entered into by and between:

     (1) Quest Diagnostics Incorporated, a Delaware corporation (“Quest Diagnostics”), Quest Diagnostics Nichols Institute (formerly known as Quest Diagnostics Incorporated), a California corporation, Quest Diagnostics Incorporated, a Michigan corporation, Quest Diagnostics Incorporated, a Maryland corporation, Quest Diagnostics LLC, a Connecticut limited liability company, Quest Diagnostics LLC, a Massachusetts limited liability company, Quest Diagnostics of Pennsylvania Inc., a Delaware corporation, MetWest Inc., a Delaware corporation, Quest Diagnostics LLC, an Illinois limited liability company, Quest Diagnostics Clinical Laboratories, Inc., a Delaware corporation, Unilab Corporation, a Delaware corporation (“Unilab”), Quest Diagnostics Nichols Institute, Inc., a Virginia corporation formerly known as Medical Laboratories Corporation, Inc. (“Quest-Nichols”), Quest Diagnostics Incorporated, a Nevada corporation formerly known as APL Healthcare Group, Inc. (“Quest-Nevada”), LabOne, Inc., a Missouri corporation (successor by merger with Central Plains Laboratores, LLC, a Kansas limited liability company) (“LabOne”), ExamOne World Wide, Inc., a Pennsylvania corporation (“ExamOne”), LabOne of Ohio, Inc., a Delaware corporation (“LabOne Ohio”), Systematic Business Services, Inc., a Missouri corporation (“SBS”), and each of the other direct or indirect, wholly-owned subsidiaries of Quest Diagnostics who hereafter becomes a party hereto by executing a joinder agreement in the form of Exhibit D hereto (each, a “Joinder Agreement”), as sellers, and

     (2) Quest Diagnostics Receivables Inc., a Delaware corporation, as purchaser (the “Buyer”),

and amends and restates in its entirety that certain Second Amended and Restated Receivables Sale Agreement dated as of April 20, 2004 by and among Central Plains Laboratories, LLC, a Kansas limited liability company (“Central Plains”) and the parties hereto other than LabOne, Inc., ExamOne, LabOne Ohio and SBS (the “Existing Agreement”). Unless otherwise indicated, capitalized terms used in this Agreement are defined in ANNEX A hereto or, if not defined therein, in that certain Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008, by and among the Buyer, as borrower, Quest Diagnostics, as initial servicer, Variable Funding Capital Company LLC, Wachovia Bank, National Association, individually and as VFCC Agent, Gotham Funding Corporation, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., individually, as Gotham Agent and as Administrative Agent, as amended, supplemented, restated, joined or otherwise modified from time to time in accordance with the terms thereof (the “Credit and Security Agreement”).

W I T N E S S E T H :

1

     WHEREAS, Quest Diagnostics owns, directly or indirectly all of the issued and outstanding Equity Interests of each of the other Sellers;

     WHEREAS, the Buyer is a limited purpose corporation, all of the issued and outstanding Equity Interests of which are owned by Quest Diagnostics;

     WHEREAS, Quest Diagnostics contributed to the Buyer’s capital all of its Receivables in existence as of the Initial Cut-Off Date, together with all Related Assets associated therewith;

     WHEREAS, the Sellers desire to sell Private Receivables and the Related Assets with respect thereto and Participation Interests in Specified Government Receivables and the Related Assets with respect thereto, in each case owned from time to time by the Sellers to the Buyer, and the Buyer is willing, on the terms and subject to the conditions set forth herein, to purchase such Private Receivables, Participation Interests and Related Assets from the Sellers;

     WHEREAS, the Buyer has pledged the Private Receivables, the Participation Interests and the Related Assets received from the Sellers hereunder to secure Obligations under the Credit and Security Agreement, including, without limitation, its obligations to repay Loans made thereunder; and

     WHEREAS, at the request of the Buyer and its assigns, Quest Diagnostics has agreed to continue to act as Servicer for the Private Receivables and to act as Servicer for the Specified Government Receivables subject to Participation Interests, although Quest Diagnostics has informed the Buyer and its assigns that it may, subject to their approval and to satisfaction of the Rating Agency Condition, if required, transfer that function to an Affiliate;

          NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
CAPITALIZATION OF THE BUYER AND AMOUNTS AND TERMS OF THE
PURCHASES

          Section 1.1. Exchange of Specified Government Receivables. Effective on the date hereof with respect to all of the Specified Government Receivables and Related Assets sold by the Existing Sellers to Buyer under the Previous Agreements, Buyer and each such Existing Seller hereby exchange such Specified Government Receivables and Related Assets for Participation Interests in such Specified Government Receivables and Related Assets.

          Section 1.2. Purchases of Private Receivables and Participation Interests.

          (a) Effective on the Applicable Closing Date for each Seller that has not already sold or contributed Private Receivables and Related Assets or Participation Interests and Related Assets under the Previous Agreements

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(including by operation of Section 1.1 above), in consideration for the Purchase Price and upon the terms and subject to the conditions set forth herein, each such Seller does hereby sell, assign, transfer, set-over and otherwise convey to the Buyer, without recourse (except to the extent expressly provided herein), and the Buyer does hereby purchase from such Seller, all of such Seller’s right, title and interest in and to such Seller’s Initial Private Receivables and all Related Assets with respect thereto and such Seller’s Initial Participation Interests and all Related Assets with respect thereto.

     (b) Effective on each Business Day after each Seller’s Applicable Closing Date and prior to the Sale Termination Date, in consideration for the Purchase Price and upon the terms and subject to the conditions set forth herein, such Seller does hereby sell, assign, transfer, set-over and otherwise convey to the Buyer, without recourse (except to the extent expressly provided herein), and the Buyer does hereby purchase from such Seller, all of such Seller’s right, title and interest in and to such Seller’s Additional Private Receivables and all Related Assets with respect thereto and such Seller’s Additional Participation Interests and all Related Assets with respect thereto.

      (c) It is the intention of the parties hereto that each conveyance of Private Receivables and Participation Interests made under this Agreement shall constitute an outright “sale of accounts” (as such terms are used in Article 9 of the UCC) or other absolute transfer, which is absolute and irrevocable and shall provide the Buyer with the full benefits of ownership of the Private Receivables, Participation Interests and the associated Related Assets. Except for the Purchase Price Credits owed pursuant to Section 1.4, each conveyance of Private Receivables and Participation Interests hereunder is made without recourse to the applicable Seller; provided, however, that (i) each Seller shall be liable to the Buyer for all representations, warranties, covenants and indemnities made by such Seller pursuant to the terms of the Transaction Documents to which such Seller is a party, and (ii) such conveyance does not constitute and is not intended to result in an assumption by the Buyer or any assignee thereof of any obligation of such Seller or any other Person arising in connection with the Participation Interests, the Private Receivables, the related Contracts, and/or other Related Assets or any other obligations of such Seller. In view of the intention of the parties hereto that the conveyances of Private Receivables and Participation Interests made hereunder shall constitute outright sales of such Private Receivables and Participation Interests rather than loans secured thereby, each Seller agrees that it will, on or prior to its Applicable Closing Date, mark its master data processing records relating to its Receivables with the following legend (or the substantive equivalent thereof):

“THE RECEIVABLES DESCRIBED HEREIN, TOGETHER
WITH CERTAIN RELATED ASSETS, ARE EITHER THE
PROPERTY OF QUEST DIAGNOSTICS RECEIVABLES

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INC. OR SUBJECT TO RIGHTS OF QUEST DIAGNOSTICS RECEIVABLES INC.”

Upon the request of the Buyer or the Administrative Agent, each Seller will file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of the Buyer’s ownership interest in the Private Receivables, the Participation Interests and the respective Related Assets or as the Buyer or the Administrative Agent may reasonably request.

     (d) Nothing herein shall be deemed to preclude Quest Diagnostics from contributing to the Buyer’s capital, in lieu of selling, Private Receivables and Participation Interests in Specified Government Receivables, in each case originated by Quest Diagnostics together with the Related Assets associated therewith, and any such contribution is made with the intention that each such contribution, if any, will be made with the same intentions as are set forth in Section 1.2(c) above. No Purchase Price shall be payable in respect of any contributed Private Receivable, Participation Interest or its respective associated Related Assets.

     (e) Following each sale or contribution of a Participation Interest in a Specified Government Receivable, each Seller hereby agrees to hold such Government Receivable and any Related Assets and proceeds with respect thereto for the benefit of the Buyer; providedthat no Seller shall take any action in contravention of any law, rule or regulation applicable to such Specified Government Receivable. It is understood and agreed that sales and contributions of Participation Interests in Specified Government Receivables shall not include any right to collect the proceeds of any Specified Government Receivable directly from the applicable Governmental Entity, except insofar as a court of competent jurisdiction shall order such Governmental Entity to make such payments directly to the Buyer or its assigns.

          Section 1.3. Payment for the Purchases.

          (a) The Purchase Price for each purchase of Initial Private Receivables and Related Assets from any Seller (other than Quest Diagnostics) and each purchase of Initial Participation Interests and Related Assets from any Seller (other than Quest Diagnostics) either has been paid pursuant to the Existing Agreements or shall be payable in full pursuant to this Agreement by the Buyer to such Seller on such Seller’s Applicable Closing Date in one or both of the following manners:

          (i) by delivery of immediately available funds, to the extent of the Buyer’s Available Funds; and

          (ii) solely to the extent such Available Funds are insufficient to pay the full amount of Purchase Price then due and owing, by delivery of a Subordinated Note made by the Buyer to the applicable Seller (and making a notation of a

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Subordinated Loan thereunder), so long as the aggregate principal amount of Subordinated Loans outstanding at any one time under such Subordinated Notes does not exceed the lesser of (A) the remaining unpaid portion of such Purchase Price, and (B) the maximum Subordinated Loan that could be borrowed without rendering the Buyer’s net worth less than the amount required by Section 7.3(g) of the Credit and Security Agreement.

The Purchase Price for each purchase of Additional Private Receivables and Related Assets and each purchase of Additional Participation Interests and Related Assets shall be due and owing in full by the Buyer to the applicable Seller on the date of such purchase (except that the Buyer may, with respect to any such purchase, offset against such Purchase Price any amounts owed by such Seller to the Buyer hereunder and which have become due but remain unpaid) and shall be paid to such Seller in the manner provided in the following paragraphs (b), (c) and (d).

          (b) With respect to any purchase of Additional Private Receivables and Related Assets from any Seller and any purchase of Additional Participation Interests and Related Assets from any Seller, the Buyer shall pay the Purchase Price therefor on the next subsequent Settlement Date in accordance with Section 1.3(d) and in one or more of the following manners:

     (i) by delivery of immediately available funds, to the extent of the Buyer’s Available Funds; and

     (ii) solely to the extent such Available Funds are insufficient to pay the full amount of Purchase Price then due and owing, by delivery of a Subordinated Note made by the Buyer to the applicable Seller (or by increasing the aggregate outstanding principal amount outstanding thereunder), so long as the aggregate principal amount of Subordinated Loans outstanding at any one time under such Subordinated Note does not exceed the lesser of (A) the remaining unpaid portion of such Purchase Price, and (B) the maximum Subordinated Loan that could be borrowed without rendering the Buyer’s net worth less than the amount required by Section 7.3(g) of the Credit and Security Agreement.

Subject to the limitations set forth in Section 1.3(a)(ii) and Section 1.3(b)(ii), each of the Sellers irrevocably agrees to advance each Subordinated Loan requested by the Buyer on or prior to such Seller’s Sale Termination Date. The Subordinated Loans owing to each Seller shall be evidenced by, and shall be payable in accordance with the terms and provisions, of its Subordinated Note and shall be payable solely from Available Funds. Each Seller is hereby authorized by the Buyer to endorse on the schedule attached to its Subordinated Note an appropriate notation evidencing the date and amount of each Subordinated Loan thereunder, as well as the date of each payment with respect thereto, provided that the failure to make such notation shall not affect any obligation of the Buyer thereunder.

          (c) On each Monthly Reporting Date after its Applicable Closing Date, each Seller shall (or shall require the Servicer to) deliver to the Buyer and the Administrative Agent a report in substantially the form of Exhibit A hereto (each such report being herein called a “Purchase Report”) with respect to the Private Receivables and Participation Interests sold by

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such Seller to the Buyer during the Settlement Period then most recently ended. Each such Purchase Report shall list the applicable Seller separately and shall specify, as applicable: (i) the Initial Private Receivables, Additional Private Receivables, Initial Participation Interests and/or Additional Participation Interests sold by such Seller during the Settlement Period then most recently ended, (ii) the amount of the Private Receivables described in the foregoing clause (i) that were Eligible Receivables on the date they were acquired by the Buyer, and (iii) the amount of the Participation Interests described in the foregoing clause (i) that were Eligible Participation Interests on the date they were acquired by the Buyer.

          (d) Although the Purchase Price for each purchase of Additional Private Receivables and Related Assets and purchase of Additional Participation Interests and Related Assets shall be due and payable in full by the Buyer to the applicable Seller on the date of such purchase, settlement of the Purchase Price between the Buyer and such Seller shall be effected on Settlement Dates with respect to all purchases within the same Settlement Period and based on the information contained in the Purchase Report delivered for such Settlement Period pursuant to Section 1.3(c). Although cash settlements shall be effected on Settlement Dates, increases or decreases in the Subordinated Loans shall be deemed to have occurred and shall be effective as of the last Business Day of the Settlement Period to which such settlement relates.

          Section 1.4. Purchase Price Credit Adjustments. If as of the last day of any Settlement Period:

          (a) the outstanding aggregate balance of the Net Private Receivables originated by any Seller and the Net Participation Interests as reflected in the preceding Purchase Report (net of any positive adjustments) has been reduced for any of the following reasons:

      (i) as a result of any rejected services, any cash discount or any other adjustment by the applicable Seller or any Affiliate thereof (regardless of whether the same is treated by such Seller or Affiliate as a write-off), or as a result of any surcharge or other governmental or regulatory action, or

     (ii) as a result of any setoff or breach of the underlying agreement in respect of any claim by the Obligor thereof (whether such claim arises out of the same or a related or an unrelated transaction), or

     (iii) on account of the obligation of the applicable Seller or any Affiliate thereof to pay to the related Obligor any rebate or refund, or

     (iv) as a result of any Unpaid Net Balance of any Private Receivable or Participation Interest on the date of its sale or contribution proving to have been less on such date than the amount reflected on the applicable Purchase Report, or

          (b) any of the representations or warranties of the applicable Seller set forth in Section 2.1(d), (k) or (m) was not true when made with respect to any Private Receivable originated by it or any Participation Interest in any Specified Government Receivable originated by it, or any of the representations or warranties of the applicable Seller set forth in Section

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2.1(m) is no longer true with respect to any Private Receivable or any Participation Interest in any Specified Government Receivable originated by it,

then, in such event, the Buyer shall be entitled to a credit (each, a “Purchase Price Credit”) against the Purchase Price otherwise payable hereunder equal to (A) the amount of such reduction, cancellation or overstatement, in the case of the preceding clauses (a)(i), (a)(ii), (a)(iii) and (a)(iv), and (B) in the full amount of the Unpaid Net Balance of such Receivable in the case of the preceding clause (b). If such Purchase Price Credit exceeds the original Unpaid Net Balance of the Private Receivables and Participation Interests to be sold by the applicable Seller on the date of a purchase, then the applicable Seller shall pay the remaining amount of such Purchase Price Credit in cash not later than the next Settlement Date; provided that if such Seller’s Sale Termination Date has not occurred, such Seller shall be allowed to deduct the remaining amount of such Purchase Price Credit from any Indebtedness owed to it under its Subordinated Note.

          Section 1.5. Payments and Computations, Etc. All amounts to be paid or deposited by the Buyer hereunder shall be paid or deposited in accordance with the terms hereof on the day when due in immediately available funds to the account of the applicable Seller designated from time to time by such Seller or as otherwise directed by such Seller. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any amount hereunder when due, such Person agrees to pay, on demand, interest on the past due amount at the Default Rate until paid in full; provided, however, that such interest shall not at any time exceed the maximum rate permitted by applicable law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed.

          Section 1.6. Transfer of Records.

          (a) In connection with the purchases of Private Receivables and Participatiion Interests hereunder, each Seller hereby sells, transfers, assigns and otherwise conveys to the Buyer all of such Seller’s right and title to and interest in the Records relating to all Private Receivables and the Specified Government Receivables the subject of Participation Interests sold hereunder, without the need for any further documentation in connection with any purchase. In connection with such transfer, each Seller hereby grants to each of the Buyer, the Administrative Agent and the Servicer an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all software used by such Seller to account for its Receivables, to the extent necessary to administer such Receivables following replacement of Quest Diagnostics (or any of its Affiliates) as the Servicer, whether such software is owned by such Seller or is owned by others and used by such Seller under license agreements with respect thereto, provided that should the consent of any licensor of such Seller to such grant of the license described herein be required, such Seller hereby agrees that upon the request of the Buyer, the Servicer or the Administrative Agent, such Seller will use its reasonable efforts to obtain the consent of such third-party licensor. The license granted hereby shall be irrevocable, and shall terminate on the date this Agreement terminates in accordance with its terms.

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          (b) Each Seller (i) shall take such action requested by the Buyer and/or the Administrative Agent, from time to time hereafter, that may be necessary or reasonably appropriate to ensure that the Buyer has an enforceable ownership interest in the Records relating to the Private Receivables and the Specified Government Receivables the subject of Participation Interests purchased from such Seller hereunder, and (ii) shall use its reasonable efforts to ensure that the Buyer and the Servicer each has an enforceable right (whether by license or sublicense or otherwise) to use all of the computer software used to account for such Receivables and/or to recreate such Records.

          Section 1.7. Characterization; Granting Clause.

          (a) If, notwithstanding the intention of the parties expressed in Section 1.2(c), any sale by any of the Sellers to the Buyer of Receivables hereunder shall be characterized as a secured loan and not a sale, then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. For this purpose and without being in derogation of the parties’ intention that each sale of Private Receivables and Participation Interests hereunder shall constitute a true sale thereof, each of the Sellers hereby grants to the Buyer a duly perfected security interest in all of such Seller’s right, title and interest in, to and under all of such Seller’s Private Receivables and Participation Interests now existing and hereafter arising, and in all Related Assets with respect thereto, which security interest shall be prior to all other Liens thereto. After the occurrence of a Seller’s Sale Termination Event, the Buyer and its assigns shall have as against the applicable Seller, in addition to the rights and remedies which they may have under this Agreement, all other rights and remedies provided to a secured creditor after default under the UCC and other applicable law, which rights and remedies shall be cumulative.

          (b) Each Seller hereby covenants and agrees to do all things necessary under each of its Contracts to facilitate collection of the Receivables arising thereunder by the Buyer and its assigns.

ARTICLE II
REPRESENTATIONS AND WARRANTIES

          Section 2.1. Representations of the Sellers. In order to induce the Buyer to enter into this Agreement and to make purchases and accept the contributions hereunder, each Seller hereby makes the following representations and warranties, as to itself, as of the date of each sale or contribution by it hereunder:

          (a) Ownership of such Seller. Quest Diagnostics owns, directly or indirectly, all the issued and outstanding Equity Interests of each of the other Sellers, and all of such Equity Interests are fully paid and non-assessable.

          (b) Existence; Due Qualification; Permits. Such Seller: (i) is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (ii) has all requisite corporate or other power and authority, and has all governmental licenses, authorizations, consents and approvals necessary to own its Property and carry on its business as now being conducted; (iii) is qualified to do business and is

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in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary; and (iv) is in compliance with all Requirements of Law, except, in the case of clauses (i), (ii), (iii) and (iv) where the failure thereof individually or in the aggregate could not reasonably be expected to have a Seller Material Adverse Effect. Such Seller holds all governmental permits, licenses, authorizations, consents and approvals necessary for such Seller to own, lease, and operate its Properties and to operate its businesses as now being conducted (collectively, the “Permits”), except for Permits the failure of which to obtain would not have a Seller Material Adverse Effect. None of the Permits has been modified in any way that is reasonably likely to have a Seller Material Adverse Effect. All Permits are in full force and effect except where the failure to be in full force and effect would not have a Seller Material Adverse Effect.

          (c) Action. Such Seller has all necessary corporate or other entity power, authority and legal right to execute, deliver and perform its obligations under each Transaction Document to which it is a party and to consummate the transactions herein and therein contemplated; the execution, delivery and performance by such Seller of each Transaction Document to which it is a party and the consummation of the transactions herein and therein contemplated have been duly authorized by all necessary corporate or other entity action on its part; and this Agreement has been duly and validly executed and delivered by such Seller and constitutes, and each of the other Transaction Documents to which it is a party when executed and delivered by such Seller will constitute, its legal, valid and binding obligation, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws of general applicability from time to time in effect affecting the enforcement of creditors’ rights and remedies and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

          (d) Title to Receivables; Valid Security Interest. Each such Private Receivable originated by such Seller and each such Participation Interest has been transferred to the Buyer free and clear of any Lien except as created hereby or by the other Transaction Documents. Without limiting the foregoing, such Seller has delivered to the Administrative Agent (as the Buyer’s assignee) in form suitable for filing all financing statements or other similar instruments or documents necessary under the UCC of all appropriate jurisdictions to perfect the Buyer’s ownership interest in such Private Receivable and Participation Interest and the Administrative Agent’s collateral assignment thereof. This Agreement creates a valid security interest in each such Private Receivable and its Related Assets and such Participation Interest and Related Assets in favor of the Buyer, and, upon filing of the financing statements described in the preceding sentence, together with UCC termination statements delivered hereunder, such security interest will be a first priority perfected security interest.

          (e) Absence of Change of Control. No Change of Control has occurred.

          (f) Noncontravention.

          (i) None of the execution, delivery and performance by such Seller of any Transaction Document to which it is a party nor the consummation of the transactions herein and therein contemplated will (A) conflict with or result in a breach of, or require any consent (which

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has not been obtained and is in full force and effect) under, any Organic Document of such Seller or any applicable Requirement of Law or any order, writ, injunction or decree of any Governmental Authority binding on such Seller, or any term or provision of any Contractual Obligation of such Seller or (B) constitute (with due notice or lapse of time or both) a default under any such Contractual Obligation, or (C) result in the creation or imposition of any Lien (except for the Liens created pursuant to the Transaction Documents) upon any Property of such Seller pursuant to the terms of any such Contractual Obligation, except with respect to each of the foregoing which could not reasonably be expected to have a Seller Material Adverse Effect and which would not subject the Buyer or its assigns to any material risk of damages or liability to third parties.

          (ii) Such Seller is not in default under any material contract or agreement to which it is a party or by which it is bound, nor, to such Seller’s knowledge, does any condition exist that, with notice or lapse of time or both, would constitute such default, excluding in any case such defaults that are not reasonably likely to have a Seller Material Adverse Effect.

          (g) No Proceedings. Except as described in Quest Diagnostics’ Form 10-K for the fiscal year ended December 31, 2007 and all filings made with the SEC under the Exchange Act by such Seller prior to the date of this Agreement, copies of which have been provided to the Buyer and the Administrative Agent or made available on EDGAR:

     (i) There is no Proceeding (other than any qui tam Proceeding, to which this Section is limited to the best of such Seller’s knowledge) pending against, or, to the knowledge of such Seller, threatened in writing against or affecting, such Seller or any of its Properties before any Governmental Authority that, if determined or resolved adversely to such Seller, could reasonably be expected to have a Seller Material Adverse Effect.

     (ii) There is (A) no unfair labor practice complaint pending against any Seller or, to the best knowledge of such Seller, threatened against such Seller, before the National Labor Relations Board or any other Governmental Authority, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against such Seller or, to the best knowledge of such Seller after due inquiry, threatened against such Seller, (B) no strike, labor dispute, slowdown or stoppage pending against such Seller or, to the best knowledge of such Seller, after due inquiry, threatened against such Seller and (C) to the best knowledge of such Seller after due inquiry, no union representation question existing with respect to the employees of such Seller and, to the best knowledge of such Seller, no union organizing activities are taking place, except such as would not, with respect to any matter specified in clause (A), (B) or (C) above, individually or in the aggregate, have a Seller Material Adverse Effect.

     (h) Taxes.

     (i) Except as would not have a Seller Material Adverse Effect: (A) all tax returns, statements, reports and forms (including estimated Tax or information returns) (collectively, the “Tax Returns”) required to be filed with any taxing

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authority by, or with respect to, such Seller have been timely filed in accordance with all applicable laws; (B) such Seller has timely paid or made adequate provision for payment of all Taxes shown as due and payable on Tax Returns that have been so filed, and, as of the time of filing, each Tax Return was accurate and complete and correctly reflected the facts regarding income, business, assets, operations, activities and the status of such Seller (other than Taxes which are being contested in good faith and for which adequate reserves are reflected on the financial statements delivered hereunder); and (C) such Seller has made adequate provision for all Taxes payable by such Seller for which no Tax Return has yet been filed.

     (ii) Except as described in Quest Diagnostics’ Form 10-K for the fiscal year ended December 31, 2007 and all filings made with the SEC under the Exchange Act by such Seller prior to the date of this Agreement, copies of which have been provided to the Buyer and the Administrative Agent: (A) as of the date hereof such Seller is not a member of an affiliated group of corporations within the meaning of Section 1504 of the Code other than an affiliated group of corporations of which Quest Diagnostics is the common parent; and (B) there are no material tax sharing or tax indemnification agreements under which such Seller is required to indemnify another party for a material amount of Taxes other than, in the case of Quest Diagnostics, the tax indemnity contained in the Merger Agreement dated as of August 16, 1999, between Glaxo Smith Kline (formerly known as Smith Kline Beecham) and Quest Diagnostics.

          (i) Government Approvals. No authorizations, approvals or consents of, and no filings or registrations with, any Governmental Authority or any securities exchange are necessary for the execution, delivery or performance by such Seller of the Transaction Documents to which it is a party or for the legality, validity or enforceability hereof or thereof or for the consummation of the transactions herein and therein contemplated, except for filings and recordings in respect of the Liens created pursuant to the Transaction Documents (all of which have been duly made or delivered to the Administrative Agent for filing or may be prepared for filing by the Buyer or the Administrative Agent in accordance with the terms of the Transaction Documents) and except for consents, authorizations and filings that have been obtained or made and are in full force and effect or the failure of which to obtain would not have a Seller Material Adverse Effect.

     (j) Financial Statements and Absence of Certain Material Adverse Changes.

     (i) The information, reports, financial statements, exhibits and schedules furnished in writing by such Seller to the Administrative Agent or any of the Lenders in connection with the negotiation, preparation or delivery of the Transaction Documents, including Quest Diagnostics’ Annual Report on Form 10-K for the year ended December 31, 2007 and all filings made with the SEC under the Exchange Act by such Seller prior to the date of this Agreement, copies of which have been provided to the Buyer and the Administrative Agent or made available on EDGAR, but in each case excluding all projections, whether prior to

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or after the date of this Agreement, when taken as a whole, do not, as of the date such information was furnished, contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements herein or therein, in light of the circumstances under which they were made, not materially misleading. The projections and pro forma financial information furnished at any time by such Seller to the Buyer, the Administrative Agent or any Lender pursuant to the Transaction Documents have been prepared in good faith based on assumptions believed by such Seller and/or Quest Diagnostics to be reasonable at the time made, it being recognized that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount and no Seller, however, makes any representation as to the ability of any Seller to achieve the results set forth in any such projections. Each Seller understands that all such statements, representations and warranties shall be deemed to have been relied upon by the Buyer as a material inducement to entering into this Agreement and making any Purchase hereunder and by the Agents and the Lenders as a material inducement to make each extension of credit under the Credit and Security Agreement.

     (ii) From December 31, 2007 through and including the date of this Agreement, there has been no material adverse change in Quest Diagnostics’ consolidated financial condition, business or operations. Since the date of this Agreement, there has been no material adverse change in Quest Diagnostics’ consolidated financial condition, business or operations that has had, or would reasonably be expected to have, a material adverse effect upon its ability to perform its obligations, as a Seller or, if applicable, as Servicer, under the Transaction Documents when and as required, or a material adverse effect on the collectibility of any material portion of the Receivables.

     (iii) Since such Seller’s Applicable Closing Date, no event has occurred which would have a Seller Material Adverse Effect.

          (k) Nature of Receivables. Each Receivable constitutes an “Account” or a “Payment Intangible.”

          (l) Margin Regulations. The use of all funds obtained by such Seller under this Agreement or any other Transaction Document to which it is a party will not conflict with or contravene any of Regulation T, U or X.

          (m) Title to Receivables and Quality of Title.

          (i) Upon issuance of its shares of capital stock to Quest Diagnostics (in the case of contributed Initial Private Receivables, Initial Participation Interests and any Private Receivables and/or Participation Interests that Quest Diagnostics, in its sole discretion, may elect to contribute thereafter) and payment of the applicable Purchase Price for each purchased Private Receivable and Participation Interest in one or both of the manners permitted by this Agreement, the Buyer will

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have irrevocably obtained all good title to such Private Receivable, Participation Interest and its respective Related Assets (other than any Related Asset constituting a Contract that contains a prohibition on assignment, in which case the Buyer has obtained a valid and perfected first priority perfected security interest in the applicable Seller’s right to receive payments thereunder to the extent contemplated by Section 9-406 of the UCC of the applicable jurisdiction), and the Buyer has the legal right to sell and encumber, each such Private Receivable, Participation Interest and its Related Assets. Without limiting the foregoing, there have been duly filed all financing statements or other similar instruments or documents necessary under the UCC of all appropriate jurisdictions to perfect the Buyer’s ownership interest in such Private Receivable and Participation Interest.

     (ii) No financing statement or other instrument similar in effect covering any portion of the Collateral is on file in any recording office except such as may be filed (A) in favor of a Seller in accordance with the Contracts, (B) in favor of the Buyer and its assigns in connection with this Agreement, (C) in favor of the Administrative Agent in accordance with the Credit and Security Agreement, (D) in connection with any Lien arising solely as the result of any action taken by the Administrative Agent or one of the Secured Parties, or (E) which shall be terminated or amended pursuant to the UCC termination statements or amendments delivered hereunder.

          (n) Accurate Reports. No Purchase Report prepared by such Seller, or to the extent information therein was supplied by such Seller, no other information, exhibit, schedule or information concerning the Receivables originated by such Seller furnished or to be furnished verbally or in writing before or after the date of this Agreement, by or on behalf of such Seller to the Buyer or any of its assigns pursuant to this Agreement was or will be inaccurate in any material respect as of the date it was or will be dated or (except as otherwise disclosed to the Buyer and the Administrative Agent at such time) as of the date so furnished, or contained or (in the case of information or other materials to be furnished in the future) will contain any material misstatement of fact or omitted or (in the case of information or other materials to be furnished in the future) will omit to state a material fact or any fact necessary to make the statements contained therein not materially misleading in light of the circumstances made or presented.

          (o) Offices. The principal laboratories and billing centers of such Seller are located at the respective addresses set forth on Schedule 2.1(o) hereto or its Joinder Agreement, as applicable, and the offices where such Seller keep all books, records and documents evidencing the Receivables originated by it (other than books, records and documents that are stored off-site with respect to Receivables which are no longer outstanding or which have been written-off), the related material Contracts and all purchase orders and other agreements related to such Receivables are located at the addresses specified in Schedule 2.1(o) hereto or its Joinder Agreement (or at such other locations, notified to the Buyer in accordance with Section 4.3(g), in jurisdictions where all action required by Section 4.3(g) has been taken and completed).

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          (p) Collection Accounts. Such Seller has instructed all Obligors thereon to pay all Collections either directly by mail addressed to a Lockbox listed on Schedule 6.1(o) to the Credit and Security Agreement which is subject to a Collection Account Agreement, or by wire transfer or other electronic funds transfer directly to a Collection Account listed on Schedule 6.1(o) to the Credit and Security Agreement which is subject to a Collection Account Agreement. All payments on the Specified Government Receivables originated by a Seller do not conflict with any rules or regulations applicable to such Specified Government Receivable. Such Seller has instructed each bank maintaining a Lockbox or Collection Account to sweep all collected funds received therein each Business Day to a Collection Account in the name of the Buyer which is subject to a Collection Account Agreement. The Buyer will cause each of the Collection Accounts that is currently in the name of a Seller to be transferred to it and into its own name within a reasonable period of time after the initial Advance under the Credit and Security Agreement, and each Seller agrees to cooperate fully with the Buyer in effecting such transfers.

          (q) Eligible Receivables and Eligible Participation Interests. Each Private Receivable originated by such Seller that is included as an Eligible Receivable on any Purchase Report was an Eligible Receivable on the date on which it was sold or contributed to the Buyer pursuant hereto. Each Eligible Participation Interest of such Seller that is included as an Eligible Participation Interest on any Purchase Report was an Eligible Participation Interest on the date on which it was sold or contributed to the Buyer pursuant hereto

          (r) Names. Except as set forth on Schedule 2.1(o), in the five years preceding the date hereof, such Seller has not used any legal names, trade names or assumed names other than the name in which it has executed this Agreement.

          (s) Credit and Collection Policy. With respect to the Receivables originated by such Seller, such Seller has complied in all material respects with its applicable Credit and Collection Policy, and no change has been made to such Credit and Collection Policy since the date of this Agreement which would be reasonably likely to materially and adversely affect the collectibility of the Receivables originated by such Seller or decrease the credit quality of any newly created Receivables originated by such Seller except for such changes as to which the Administrative Agent has received the notice required under Section 7.2(h) of the Credit and Security Agreement and has given its prior written consent thereto (which consent shall not be unreasonably withheld or delayed).

          (t) Payments to Sellers. With respect to each Private Receivable and each Participation Interest sold or contributed to the Buyer by such Seller under this Agreement, the Buyer has given reasonably equivalent value to such Seller in consideration for such Private Receivable, Participation Interest and the Related Assets with respect thereto and no such transfer is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§101 et seq.), as amended.

          (u) Investment Company Act; Other Restrictions. Such Seller is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the United States Investment Company Act of 1940, as amended. Such Seller is not subject to regulation under any law or regulation which limits its ability to incur Indebtedness, other than Regulation X of the Board of Governors of the Federal Reserve System.

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          (v) Solvency. As of the date of each sale or contribution by such Seller hereunder, after giving effect thereto, such Seller is and will be Solvent.

          (w) ERISA. No ERISA Event has occurred or is reasonably expected to occur which could have a Seller Material Adverse Effect. The present value of all accumulated benefit obligations of all underfunded Pension Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $20.0 million the fair market value of the assets of all such underfunded Pension Plans of the Sellers. Each ERISA Entity is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Employee Benefit Plan. Using actuarial assumptions and computation methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of any of each ERISA Entity to all Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan, would not result in a Seller Material Adverse Effect. All Foreign Plans are in substantial compliance with all Requirements of Law (other than to the extent such failure to comply would not reasonably be expected to have a Seller Material Adverse Effect).

          (x) Bulk Sales Act. No transaction contemplated hereby requires compliance with any bulk sales act or similar law.

          (y) Reliance on Separate Legal Identity. Such Seller is aware that the Lenders, the Liquidity Banks and the Agents are entering into the Transaction Documents in reliance upon the Buyer’s identity as a legal entity separate from such Seller and any of its other Affiliates.

ARTICLE III
CONDITIONS OF PURCHASES

          Section 3.1. Conditions Precedent to the Initial Purchase under this Agreement. The initial purchase from each Seller on or after December 12, 2008 is subject to the conditions precedent that (1) the Buyer shall have executed and delivered a Subordinated Note in favor of each such Seller, and (2) the Buyer shall have received, on or before each Seller’s Applicable Closing Date, the following, each (unless otherwise indicated) dated such Seller’s Applicable Closing Date, and each in form, substance and date reasonably satisfactory to the Buyer and the Administrative Agent:

     (a)A copy of the resolutions of such Seller’s board of directors, board of managers, general partners or analogous Persons of such Seller approving the Transaction Documents to be delivered by it and the transactions contemplated hereby and thereby, certified by a Responsible Officer of such Seller;

     (b)A good standing certificate for such Seller issued as of a recent date by the Secretary of State of the state of its formation;

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     (c)A certificate of a Responsible Officer of such Seller certifying the names and true signatures of the officers, partners, managers or members authorized on such Seller’s behalf to sign the Transaction Documents to be delivered by it, on which certificate the Buyer and the Servicer (if the Servicer is not such Seller) may conclusively rely until such time as the Buyer and the Servicer shall receive from such Seller a revised certificate meeting the requirements of this subsection (c);

     (d)Recently certified copies of such Seller’s Organic Document or a certificate of a Responsible Officer that there have been no changes therein since the date of the Existing Agreement;

     (e)Copies of the proper financing statements (Form UCC-1 or UCC-3) necessary to continue the perfection of the Liens under the Existing Agreements and give effect to the amendments embodied in this Agreement;

     (f)Evidence (i) of the execution and delivery by each of the parties thereto of each of the other Transaction Documents to be executed and delivered in connection herewith and (ii) that each of the conditions precedent to the execution, delivery and effectiveness of such other Transaction Documents has been satisfied to the Buyer’s satisfaction; and

     (g)One or more opinions of such Seller’s counsel in form and substance reasonably satisfactory to the Agents covering the matters referenced in Exhibit 5.1(h) to the Credit and Security Agreement, the treatment of the transactions evidenced hereby as true sales and certain related bankruptcy matters.

     Section 3.2. Conditions Precedent to All Purchases. Each purchase shall be subject to the further conditions precedent that:

     (a) Such Seller’s Sale Termination Date shall not have occurred;

     (b) The Buyer (or its assigns) shall have received such other approvals, opinions or documents as it may reasonably request; and

     (c) On the date of such purchase, each of the representations and warranties of such Seller set forth in Article II hereof are true and correct on and as of the date of such purchase (and after giving effect thereto) as though made on and as of such date except to the extent it relates to an earlier date.

          Section 3.3. Reaffirmation of Representations and Warranties. Each Seller, by accepting the Purchase Price related to each purchase of such Seller’s Private Receivables, Participation Interests and respective Related Assets, shall be deemed to have certified that the representations and warranties of such Seller contained in Article II are true and correct as to such Seller on and as of the day of such purchase, with the same effect as though made on and as of such day except to the extent it relates to an earlier date.

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ARTICLE IV
COVENANTS

          Section 4.1. Affirmative Covenants. From each Seller’s Applicable Closing Date until the later of the Final Payout Date or the cessation of the purchases of the Buyer hereunder, unless the Buyer and the Agents shall otherwise consent in writing:

          (a) Compliance With Laws, Etc. Such Seller will comply with all applicable laws, rules, regulations and orders, including those with respect to the Receivables and related Contracts and Invoices, except, in each of the foregoing cases, where the failure to so comply would not individually or in the aggregate have a Seller Material Adverse Effect.

          (b) Preservation of Existence. Such Seller will preserve and maintain its existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification would have a Seller Material Adverse Effect.

          (c) Audits. Such Seller will, subject to compliance with applicable law: (i) at any time and from time to time upon not less than ten (10) Business Days’ notice (unless an Unmatured Default or Event of Default has occurred and is continuing, in which case, not more than one (1) Business Day’s notice shall be required) during regular business hours, permit the Buyer, the Agents or any of their agents or representatives: (A) to examine and make copies of and abstracts from all Records, Contracts and Invoices in the possession or under the control of such Seller, and (B) to visit the offices and properties of such Seller for the purpose of examining such Records, Contracts and Invoices and to discuss matters relating to Receivables or such Seller’s performance hereunder with any of the officers or employees of such Seller having knowledge of such matters; and (ii) without limiting the provisions of clause (i) above, from time to time, at the expense of such Seller, permit certified public accountants or auditors acceptable to the Agents to conduct a review of such Seller’s Contracts, Invoices and Records (each, a “Review”); provided, however, that, so long as no Event of Default has occurred and is continuing, such Seller shall only be responsible for the costs and expenses of one (1) such Review under this Section in any one calendar year unless (1) the first such Review in such calendar year resulted in negative findings (in which case such Seller shall be responsible for the costs and expenses of two (2) such Reviews in such calendar year), or (2) the Buyer delivers an Extension Request under the Credit and Security Agreement and the applicable Response Date is more than 3 calendar months after the first Review in such calendar year. Notwithstanding the foregoing, if (1) such Seller requests the approval of a new Eligible Originator who is a Material Proposed Addition or (2) any Material Acquisition is consummated by such Seller, such Seller shall be responsible for the costs and expenses of one additional Review per proposed Material Proposed Addition or per Material Acquisition in the calendar year in which such Material Proposed Addition is expected to occur or such Material Acquisition is expected to be consummated if such additional Review is requested by the Buyer or any of the Agents.

          (d) Keeping of Records and Books of Account. Such Seller will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate essential Records evidencing the Receivables originated by such Seller in the event of

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the destruction of the originals thereof), and keep and maintain, all Contracts, Records and other information necessary or reasonably advisable for the collection of all such Receivables (including, without limitation, Records adequate to permit the identification as of any Business Day when required of outstanding Unpaid Net Balances by Obligor and related debit and credit details of the Receivables).

          (e) Performance and Compliance with Receivables and Contracts. Such Seller will, at its expense, timely and fully perform and comply with all provisions, covenants and other promises, if any, required to be observed by it under the Contracts and/or Invoices related to the Receivables originated by such Seller and all agreements related to such Receivables except for such failures to fully perform and comply as would not, individually or in the aggregate, have a Seller Material Adverse Effect.

          (f) Location of Records. Such Seller will keep its chief place of business and chief executive office, and the offices where it keeps its Records and material Contracts (and, to the extent that any of the foregoing constitute instruments, chattel paper or negotiable documents, all originals thereof), at the addresses referred to in Schedule 6.1(n) to the Credit and Security Agreement or to its Joinder Agreement, if applicable, or, upon 15 days’ prior written notice to the Administrative Agent, at such other locations in jurisdictions where all action required by Section 8.5 of the Credit and Security Agreement shall have been taken and completed.

          (g) Credit and Collection Policies. Such Seller will comply in all material respects with its Credit and Collection Policy in regard to the Receivables originated by it and the related Contracts and Invoices.

          (h) Separate Corporate Existence of the Buyer. Each Seller will take such actions as shall be required in order to maintain the separate identity of the Buyer separate and apart from such Seller and its other Affiliates, including those actions set forth in Section 7.4 of the Credit and Security Agreement.

          (i) Collections. Such Seller will instruct all Obligors thereon to pay all Collections either directly by mail addressed to a Lockbox listed on Schedule 6.1(o) to the Credit and Security Agreement which is subject to a Collection Account Agreement, or by wire transfer or other electronic funds transfer directly to a Collection Account listed on Schedule 6.1(o) to the Credit and Security Agreement which is subject to a Collection Account Agreement. Such Seller will instruct each bank maintaining a Lockbox or Collection Account in the name of any Seller to sweep all collected funds received therein each Business Day to a Collection Account in the name of the Buyer (or the Administrative Agent or its designee) which is subject to a Collection Account Agreement. Such Seller will cooperate fully with the Buyer in transferring each of the Collection Accounts to the Buyer and, to the extent that such Collection Account is not already in the Buyer’s name, into the Buyer’s name within a reasonable period of time after the initial Advance under the Credit and Security Agreement.

          (j) Further Assurances. Such Seller shall take all necessary action to establish and maintain in favor of the Buyer, a valid and perfected ownership interest in the Private Receivables, Participation Interests and respective Related Assets.

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          Section 4.2. Reporting Requirements. From such Seller’s Applicable Closing Date until the later of the Final Payout Date or the cessation of the purchases of the Buyer hereunder, such Seller will furnish to the Buyer and the Administrative Agent:

     (a) Proceedings. As soon as possible and in any event within ten Business Days after any Authorized Officer of such Seller obtains knowledge thereof, notice of (i) any litigation, investigation or proceeding which may exist at any time which would reasonably be expected to have a Seller Material Adverse Effect and (ii) any development in previously disclosed litigation which development would reasonably be expected to have a Seller Material Adverse Effect;

     (b) Change in Business or Credit and Collection Policy. Prompt written notice of any material change in the character of such Seller’s business prior to the occurrence of such change, and not less than 15 Business Days’ prior written notice of any material change in such Seller’s Credit and Collection Policy (together with a copy of such proposed change); and

     (c) Other. Promptly, from time to time, such other information, documents, records or reports respecting the Receivables originated by such Seller, the condition, operations, financial or otherwise, of such Seller or such Seller’s performance hereunder that the Buyer or any of the Agents may from time to time reasonably request in order to protect the interests of the Buyer and the Administrative Agent, on behalf of the Secured Parties, under or as contemplated by the Transaction Documents.

          Section 4.3. Negative Covenants. From such Seller’s Applicable Closing Date until the later of the Final Payout Date or the cessation of the purchases of the Buyer hereunder, unless the Buyer and the Agents shall otherwise consent in writing, such Seller shall not:

          (a) Sales, Liens, Etc. (i) Except as otherwise provided herein and in the other Transaction Documents, sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien upon or with respect to, any Private Receivables, Participation Interests or Specified Government Receivable underlying a Participation Interest, or any account to which any Collections are sent, or any right to receive income or proceeds from or in respect of any of the foregoing (except, prior to the execution of Collection Agreements, set-off rights of any bank at which any such account is maintained), or (ii) assert any interest in the Receivables, except as Servicer (or a designated sub-servicer for the Servicer).

          (b) Extension or Amendment of Receivables. Extend, amend or otherwise modify the terms of any Receivable originated by it, or amend, modify or waive any term or condition of any Contract or Invoice related thereto in any way that adversely affects the collectibility of the Receivables originated by such Originator, taken as a whole, or any material part thereof, or the Buyer’s rights therein.

          (c) Change in Business or Credit and Collection Policy. Make or permit to be made any change in the character of its business or in the Credit and Collection Policy, which

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change would, in either case, impair the collectibility of any significant portion of the Receivables originated by it or otherwise materially and adversely affect the interests or remedies of the Buyer and its assigns under this Agreement or any other Transaction Document.

          (d) Change in Payment Instructions to Obligors. Add or terminate any bank as a Collection Bank from those listed in Schedule 6.1(o) to the Credit and Security Agreement or, after the Collection Account has been established pursuant to Section 7.1(i) of the Credit and Security Agreement, make any change in its instructions to Obligors regarding payments to be made to the Buyer or the Servicer or payments to be made to any Collection Bank (except for a change in instructions solely for the purpose of directing Obligors to make such payments to another existing Collection Bank and where such change is immaterial and does not adversely affect the interests of the Administrative Agent, on behalf of the Lenders, in any respect), unless (i) the Administrative Agent shall have received prior written notice of such addition, termination or change and (ii) the Administrative Agent shall have received duly executed copies of Collection Agreements in a form reasonably acceptable to the Administrative Agent with each new Collection Bank.

          (e) Deposits to Collection Accounts. Deposit or authorize the deposit to any Collection Account of any cash or cash proceeds other than Collections of Receivables and of certain of the Excluded JV Receivables.

          (f) Changes to Other Documents. Enter into any amendment or modification of, or supplement to (i) such Seller’s Organic Documents which could reasonably be expected to be materially adverse to the Buyer, (ii) this Agreement, or (iii) the Subordinated Notes.

          (g) Change of Name, State of Organization, or Records Locations. Change its name or state of organization or relocate any office where Records are kept unless it shall have: (i) given the Administrative Agent at least 15 days’ prior notice thereof and (ii) prior to effectiveness of such change, delivered to the Administrative Agent all financing statements, instruments and other documents requested by the Administrative Agent in connection with such change or relocation.

          (h) Mergers, Consolidations and Acquisitions. Liquidate or dissolve, consolidate with, or merge into or with, any other Person, except for: (i) mergers and consolidations of a Seller with one or more other Sellers (so long as in any such transaction involving Quest Diagnostics, Quest Diagnostics is the survivor), and (ii) other mergers or consolidations that do not constitute Material Acquisitions, provided that, in each of the foregoing cases:

     (A) the Administrative Agent and the Buyer receive prior written notice of such consolidation or merger, and the successor or surviving entity (if not a Seller) unconditionally assumes such Seller’s (or Sellers’) respective obligations under the Transaction Documents to which it is (or they are) a party immediately prior to giving effect to such consolidation or merger,

     (B) all UCC financing statements necessary to maintain the validity and perfection of the Buyer’s ownership interest in the

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Private Receivables, Participation Interests and related Related Assets acquired or to be acquired from such Seller or Sellers under this Agreement, and the Administrative Agent’s security interest therein on behalf of the Secured Parties, have been duly filed in all necessary jurisdictions, and

     (C) if the surviving entity in such transaction(s) is not an existing Seller under this Agreement, all other documents required to be delivered in connection with a Joinder Agreement hereunder have been duly executed and delivered substantially contemporaneously with such transaction(s).

          (i) Disposition of Receivables and Related Assets. Except pursuant to this Agreement, sell, lease, transfer, assign or otherwise dispose of (in one transaction or in a series of transactions) any Private Receivables, Participation Interests and respective Related Assets.

          (j) Receivables Not to be Evidenced by Promissory Notes. Take any action to cause or permit any Receivable generated by it to become evidenced by any “instrument” (as defined in the applicable UCC), except in connection with the collection of overdue Receivables, provided that the original of any such instrument is delivered to the Buyer for immediate delivery to the Administrative Agent, duly endorsed.

          (k) Accounting for Purchases. Account for the transactions contemplated hereby in any manner other than as a sale or contribution of Private Receivables, Participation Interests and the respective Related Assets by such Seller to the Buyer.

ARTICLE V
JOINDER OF ADDITIONAL SELLERS

          Section 5.1. Addition of New Sellers. From time to time upon not less than 60 days’ prior written notice to the Buyer and the Administrative Agent (or such shorter period of time as the Agents may agree upon), Quest Diagnostics may propose that one or more of its existing or hereafter acquired wholly-owned Subsidiaries become a Seller hereunder. No such addition shall become effective (a) if such addition constitutes a Material Proposed Addition, without the written consent of the Agents and, if applicable, each of the rating agencies who is then rating Commercial Paper Notes of any Conduit but may become effective prior to such 60th day if such written consent is given more promptly and (b) unless all conditions precedent to such addition required by Section 5.2 below are satisfied prior to such date).

          Section 5.2. Documentation. In the event that the Buyer and the Agents consent to the addition of a New Seller, such New Seller shall execute a Joinder Agreement and shall deliver each of the documents, certificates and opinions required to be delivered under Section 3.1 prior to such New Seller’s Closing Date, together with such updated Schedules and Exhibits hereto as may be necessary to ensure that after giving effect to the addition of such New Seller, each of the representations and warranties of such New Seller under Article II hereof will be true and correct, and the Buyer will deliver a Subordinated Note to such New Seller.

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ARTICLE VI
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES

               Section 6.1. Rights of the Buyer. Each Seller hereby authorizes the Buyer and the Servicer (if other than such Seller) or their respective designees to take any and all steps in such Seller’s name necessary or desirable, in their respective determination, to collect all amounts due under any and all Receivables, including, without limitation, endorsing such Seller’s name on checks and other instruments representing Collections and enforcing such Receivables, the Invoices and the provisions of the related Contracts that concern payment and/or enforcement of rights to payment.

               Section 6.2. Responsibilities of the Sellers. Anything herein to the contrary notwithstanding:

     (a) Collection Procedures. Each Seller agrees to direct all Obligors to make payments of such Seller’s Receivables directly to a Collection Account that is the subject of a Lock Box Agreement at a Collection Bank. Each Seller further agrees to transfer any Collections (including any security deposits applied to the Unpaid Net Balance of any Receivable) that it receives on such Receivables directly to the Servicer (if other than such Seller) within one (1) Business Day after receipt thereof, and agrees that all such Collections shall be deemed to be received in trust for the Buyer; provided that, to the extent permitted pursuant to Section 1.3, each Seller may retain such Collections as a portion of the Purchase Price then payable to it or apply such Collections to the reduction of the outstanding balance of its Subordinated Note.

     (b) Performance Under Contract. Each Seller shall remain responsible for performing its obligations hereunder and under the Contracts applicable to such Seller, and the exercise by the Buyer or its designee of its rights hereunder shall not relieve any Seller from such obligations.

     (c) Power of Attorney. Each Seller hereby grants to the Servicer (if other than such Seller) an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take in the name of such Seller all steps necessary or advisable to endorse, negotiate or otherwise realize on any writing or other right of any kind held or transmitted by such Seller or transmitted or received by the Buyer (whether or not from such Seller) in connection with any Receivables generated by such Seller.

               Section 6.3. Further Action Evidencing Purchases. Each Seller agrees that from time to time, at its expense, it will promptly execute (if required) and deliver all further instruments and documents, and take all further action that the Buyer may reasonably request in order to perfect, protect or more fully evidence the Buyer’s ownership of the Private Receivables generated by such Seller (and the Related Assets) and the Participation Interests (and the Related Assets) purchased by the Buyer hereunder, or to enable the Buyer to exercise or enforce any of

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its rights hereunder or under any other Transaction Document. Without limiting the generality of the foregoing, upon the request of the Buyer, each Seller will:

     (a) file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate; and

     (b) mark the summary master control data processing records with the legend set forth in Section 1.1(c) .

Each Seller hereby authorizes the Buyer or its designee to file one or more financing or continuation statements, and amendments thereto and assignment thereof, relative to all or any of the Private Receivables (and the Related Assets) and the Participation Interests (and the Related Assets) now existing or hereafter sold by such Seller. If such Seller fails to perform any of its agreements or obligations under this Agreement, the Buyer or its designee may (but shall not be required to) itself perform, or cause performance of, such agreement or obligation, and the expenses of the Buyer or its designee incurred in connection therewith shall be payable by such Seller.

               Section 6.4. Application of Collections. Except as otherwise specified by such Obligor or required by the underlying Contract or law: any payment by an Obligor in respect of any indebtedness owed by it to such Seller or to the Buyer shall be applied first, as a Collection of any Receivable or Receivables then outstanding of such Obligor in the order of the age of such Receivables, starting with the oldest of such Receivables (unless another reasonable basis for allocation of such payments to the Receivables of such Obligor exists), and second, to any other indebtedness of such Obligor.

ARTICLE VII
INDEMNIFICATION

               Section 7.1. Indemnities by the Sellers. Without limiting any other rights which any such Person may have hereunder or under applicable law, each of the Sellers hereby agrees to indemnify the Buyer, its assigns, and each of their respective Affiliates, and all successors, transferees, participants and assigns and all officers, directors, shareholders, controlling persons, employees and agents (each, a “Seller Indemnified Party”), forthwith on demand, from and against any and all damages, losses, claims, liabilities and related costs and expenses, including attorneys’ fees and disbursements (all of the foregoing being collectively referred to as “Seller Indemnified Amounts”) awarded against or incurred by any of them arising out of or relating to this Agreement, any of the other Transaction Documents to which such Seller is a party, the Private Receivables and Related Assets and/or the Participation Interests and Related Assets, excluding, however, (i) Seller Indemnified Amounts to the extent determined by a court of competent jurisdiction to have resulted from bad faith, gross negligence or willful misconduct on the part of such Seller Indemnified Party, (ii) taxes imposed by the jurisdiction in which such Seller Indemnified Party’s principal executive office is located, on or measured by the overall net income of such Seller Indemnified Party; and (iii) recourse (except as otherwise specifically provided in this Agreement) for Seller Indemnified Amounts to the extent the same includes losses in respect of Receivables which are uncollectible on account of

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the insolvency, bankruptcy or lack of creditworthiness of the related Obligor. Without limiting the foregoing, each of the Sellers shall indemnify each Seller Indemnified Party for Seller Indemnified Amounts arising out of or relating to:

     (A) the creation of any Lien on, or transfer by such Seller of any interest in, its Private Receivables, Participation Interests and respective Related Assets other than (1) the sales and contributions of Private Receivables, Participation Interests and respective Related Assets pursuant hereto, and (2) the Lien granted by the Buyer pursuant to the Credit and Security Agreement;

     (B) any representation or warranty made by such Seller (or any of its officers) under or in connection with any Transaction Document or any Purchase Report delivered by such Seller pursuant hereto, which shall have been false, incorrect or misleading in any respect when made or deemed made or delivered, as the case may be;

     (C) the failure by such Seller to comply with any applicable law, rule or regulation with respect to any of its Receivables or the related Contracts or Invoices, including, without limitation, any state or local assignment of claims act or similar legislation prohibiting or imposing notice and acknowledgement requirements or other limitations or conditions on the assignment of a Specified Government Receivable, or the nonconformity of any of such Seller’s Receivables or the related Contracts or Invoices with any such applicable law, rule or regulation;

     (D) the failure to vest and maintain vested in the Buyer, a valid and perfected ownership interest in the Private Receivables, Participation Interest and related Related Assets sold or contributed by such Seller hereunder, free and clear of any other Lien, other than a Lien arising solely as a result of the Buyer, now or at any time thereafter;

     (E) the failure to file, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Private Receivables, Participation Interests or Related Assets sold or contributed by such Seller hereunder;

     (F) any dispute, claim, offset or defense (other than discharge in bankruptcy) of the Obligor to the payment of any Receivable originated by such Seller (including, without limitation, a defense based on such Receivable or the related Contract or Invoice not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the services related to such Receivable or the furnishing or failure to furnish such services;

     (G) any matter described in Section 1.4;

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     (H) any failure of such Seller to perform its duties or obligations in accordance with the provisions of this Agreement or the other Transaction Documents to which it is a party;

     (I) any claim relating to a breach by such Seller of any related Contract or Invoice with respect to any Receivable;

     (J) any sales or use tax payable in connection with the transactions giving rise to any Receivable originated by such Seller, and any documentary stamp taxes or recording taxes associated with the perfection of the Buyer’s ownership in the Private Receivables, Participation Interests and respective Related Assets;

     (K) the commingling by such Seller of Collections of Receivables at any time with other funds;

     (L) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document to which such Seller is a party, the transactions contemplated hereby or thereby, the use of the proceeds of any sale, the Buyer’s ownership interest in the Receivables and Related Assets originated by such Seller or any other investigation, litigation or proceeding relating to such Seller or the Receivables and Related Assets originated by it in which any Seller Indemnified Party becomes involved as a result of any of the transactions contemplated hereby or thereby;

     (M) any products or professional liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or Invoice or any Receivable originated by such Seller;

     (N) any inability to litigate any claim against any Obligor in respect of any Receivable originated by such Seller as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding; or

     (O) the occurrence of any Event of Bankruptcy with respect to such Seller; or

     (P) failure of any Specified Government Receivables to be recorded in the applicable Seller’s billing and accounting systems solely as a Client-Billed Receivable.

In addition to Quest Diagnostics’ obligations under the foregoing indemnity with respect to itself as a Seller and the Receivables originated by it, Quest Diagnostics hereby agrees to be jointly and severally liable with each other Seller for such other Seller’s indemnity obligations set forth above.

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          Section 7.2. Contribution. If for any reason the indemnification provided above in Section 7.1 (and subject to the exceptions set forth therein) is unavailable to a Seller Indemnified Party or is insufficient to hold a Seller Indemnified Party harmless, then the applicable Seller(s) shall contribute to the amount paid or payable by such Seller Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such Seller Indemnified Party on the one hand and the applicable Seller(s) on the other hand but also the relative fault of such Seller Indemnified Party as well as any other relevant equitable considerations.

ARTICLE VIII
MISCELLANEOUS

          Section 8.1. Waivers and Amendments. The provisions of this Agreement may from time to time be amended, restated, otherwise modified or waived, if such amendment, modification or waiver is in writing and consented to by each Seller, the Buyer, the Agents and the Servicer (if the Servicer is not a Seller); provided, however, that material amendments, modifications and waivers may require the prior written consent of the rating agencies who are then rating the Commercial Paper Notes of any Conduit. No failure or delay on the part of the Buyer, the Servicer, any Seller or any third party beneficiary in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Buyer, the Servicer or any Seller in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Buyer or the Servicer under this Agreement shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.

          Section 8.2. Notices, Etc. All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including facsimile communication) and shall be personally delivered or sent by express mail or courier or by certified mail, postage-prepaid, or by facsimile, to the intended party in care of Quest Diagnostics at the address or facsimile number of Quest Diagnostics set forth on Schedule 14.2 of the Credit and Security Agreement or, in the case of a New Seller, below its signature on its Joinder Agreement, or at such other address or facsimile number as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective, (i) if personally delivered or sent by express mail or courier or if sent by certified mail, when received, and (ii) if transmitted by facsimile, when sent, receipt confirmed by telephone or electronic means.

          Section 8.3. Cumulative Remedies. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

          Section 8.4. Binding Effect; Assignability. This Agreement shall be binding upon and inure to the benefit of the Buyer, each Seller and its respective successors and permitted assigns. Except as permitted in Section 4.3(h), no Seller may assign its rights hereunder or any interest herein without the prior written consent of the Buyer and the Agents;

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subject to Section 8.11, the Buyer may not assign its rights hereunder or any interest herein without the prior written consent of each of the Sellers and the Agents. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect as to each Seller until the date after such Seller’s Sale Termination Date on which such Seller has received payment in full for all Private Receivables, Participation Interests and respective Related Assets conveyed by it to the Buyer hereunder and shall have paid and performed all of its obligations hereunder in full. The rights and remedies with respect to any breach of any representation and warranty made by any Seller pursuant to Article II and the indemnification and payment provisions of Article VII and Section 8.6 shall be continuing and shall survive any termination of this Agreement.

               Section 8.5. Governing Law. EACH TRANSACTION DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS, TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE OWNERSHIP INTERESTS OR SECURITY INTERESTS OF THE BUYER OR THE ADMINISTRATIVE AGENT, ON BEHALF OF THE SECURED PARTIES, IN ANY COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

               Section 8.6. Costs, Expenses and Taxes. In addition to the obligations of each Seller under Article VII, each of the Sellers agrees to pay on demand:

     (a) all reasonable costs and expenses, including attorneys’ fees, in connection with the enforcement against such Seller of this Agreement and the other Transaction Documents executed by such Seller; and

     (b) all stamp duties and other similar filing or recording taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement or the other Transaction Documents, and agrees to indemnify each Seller Indemnified Party against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees.

               Section 8.7. Submission to Jurisdiction. EACH PARTY HERETO HEREBY IRREVOCABLY (a) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN THE STATE OF NEW YORK, OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT; (b) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR UNITED STATES FEDERAL COURT; (c) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; (d) CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS

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TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN SECTION 8.2; AND (e) TO THE EXTENT ALLOWED BY LAW, AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUITON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHINGIN THIS SECTION 8.7 SHALL AFFECT BUYER’S RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST ANY SELLER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

          Section 8.8. Waiver of Jury Trial. EACH PARTY HERETO EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR UNDER ANY AMENDMENT, INSTRUMENT, JOINDER AGREEMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED BY IT OR ON ITS BEHALF IN CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

          Section 8.9. Captions and Cross References; Incorporation by Reference. The various captions (including, without limitation, the table of contents) in this Agreement are included for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. References in this Agreement to any underscored Section or Exhibit are to such Section or Exhibit of this Agreement, as the case may be. The Exhibits hereto are hereby incorporated by reference into and made a part of this Agreement.

          Section 8.10. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

          Section 8.11. Acknowledgment and Agreement. By execution below, each Seller expressly acknowledges and agrees that all of the Buyer’s rights, title, and interests in, to, and under this Agreement shall be pledged and/or collaterally assigned by the Buyer to the Administrative Agent for the benefit of the Secured Parties pursuant to the Credit and Security Agreement (and the Lenders may further assign such rights in accordance with the Credit and Security Agreement), and each Seller consents to such assignment. Each of the parties hereto acknowledges and agrees that the Agents and the Lenders are third party beneficiaries of the rights of the Buyer arising hereunder and under the other Transaction Documents to which any Seller is a party.

          Section 8.12. No Proceedings. Each Seller agrees that it shall not institute against the Buyer or any Conduit, or join any other Person in instituting against the Buyer or any Conduit, any insolvency proceeding (namely, any proceeding of the type referred to in the definition of Event of Bankruptcy) as long as there shall not have elapsed one year plus one day after the Final Payout Date. The foregoing shall not limit any Seller’s right to file any claim in

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or otherwise take any action with respect to any insolvency proceeding that was instituted by any Person other than a Seller.

<signature pages follow>

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date first above written.

QUEST DIAGNOSTICS INCORPORATED, A MICHIGAN
By:	/s/ Robert F. O’Keef
	Name: Robert F. O’Keef
	Title: Vice President and Treasurer
QUEST DIAGNOSTICS INCORPORATED, A MICHIGAN
CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
QUEST DIAGNOSTICS INCORPORATED, A MARYLAND
CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
QUEST DIAGNOSTICS LLC, A CONNECTICUT LIMITED
LIABILITY COMPANY
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President

[Signature Page to Third Amended and Restated Receivables Sale Agreement]

QUEST DIAGNOSTICS LLC, A MASSACHUSETTS LIMITED
LIABILITY COMPANY
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
QUEST DIAGNOSTICS OFPENNSYLVANIA
INCORPORATED, A DELAWARE CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
QUEST DIAGNOSTICS LLC, AN ILLINOIS LIMITED
LIABILITY COMPANY
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
METWEST INC., A DELAWARE CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
QUEST DIAGNOSTICS CLINICAL LABORATORIES,
INC., A DELAWARE CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President

[Signature Page to Third Amended and Restated Receivables Sale Agreement]

UNILAB CORPORATION, A DELAWARE CORPORATION,
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
QUEST DIAGNOSTICS NICHOLS INSTITUTE, INC., A
VIRGINIA CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
QUEST DIAGNOSTICS NICHOLS INSTITUTE, (f/k/a
QUEST DIAGNOSTICS INCORPORATED) A CALIFORNIA
CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
QUEST DIAGNOSTICS INCORPORATED, A NEVADA
CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
QUEST DIAGNOSTICS INCORPORATED, A NEVADA
CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President

[Signature Page to Third Amended and Restated Receivables Sale Agreement]

LABONE, INC., A MISSOURI CORPORATION (successor by
merger with Central Plains Laboratories, LLC, a Kansas
limited liability company)
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
EXAMONE WORLD WIDE, INC., A PENNSYLVANIA
CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
LABONE OF OHIO, INC., AN OHIO CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President
SYSTEMATIC BUSINESS SERVICES, INC., A MISSOURI
CORPORATION
By:	/s/ Michael G. Lukas
	Name: Michael G. Lukas
	Title: Vice President

[Signature Page to Third Amended and Restated Receivables Sale Agreement]

QUEST DIAGNOSTICS RECEIVABLES INC., A
DELAWARE CORPORATION
By:	/s/ Robert F. O’Keef
	Name: Robert F. O’Keef
	Title: Vice President and Treasurer

[Signature Page to Third Amended and Restated Receivables Sale Agreement]

ANNEX A
DEFINITIONS

     A. Incorporation of Credit and Security Agreement Definitions. Unless otherwise defined herein, terms that are capitalized and used throughout this Agreement are used as defined in the Credit and Security Agreement (hereinafter defined).

     B. Certain Defined Terms. The following terms have the respective meanings indicated hereinbelow:

     “Additional Participation Interests” means, with respect to any Seller, all Participation Interests of such Seller arising after the close of such Seller’s business on the applicable Existing Cut-Off Date (in the case of each of the Existing Sellers) or the applicable New Seller Cut-Off Date (in the case of any New Seller) through and including such Seller’s Sale Termination Date.

     “Additional Private Receivables” means, with respect to any Seller, all Private Receivables of such Seller arising after the close of such Seller’s business on the applicable Existing Cut-Off Date (in the case of each of the Existing Sellers) or the applicable New Seller Cut-Off Date (in the case of any New Seller) through and including such Seller’s Sale Termination Date.

     “Applicable Closing Date” means (i) with respect to each of the Original Sellers, July 21, 2000, (ii) with respect to each of Unilab, Quest-Nichols and Quest-Nevada, April 20, 2004, (iii) with respect to each of LabOne, ExamOne, Central Plains, LabOne Ohio and SBS, November 10, 2006, and (iv) with respect to each New Seller, its New Seller Closing Date.

     “Applicable Cut-Off Date” means (i) with respect to each of the Existing Sellers, the applicable Existing Cut-Off Date, (ii) with respect to each New Seller, its New Seller Cut-Off Date, and (iii) with respect to all Sellers, each Cut-Off Date after the applicable date in the preceding clause (i) or clause (ii).

     “Available Funds” means, on any date of determination, monies then held by or on behalf of the Buyer after deduction of (a) all Obligations, if any, that are due and owing under the Credit and Security Agreement, (b) all Servicer’s Fees that are then due and owing, and (c) in the Buyer’s discretion, the accrued and unpaid portion of all current expenses of the Buyer (whether or not then due and owing).

“Buyer” has the meaning set forth in the preamble.

     “Collections” means, (a) with respect to any Receivable, (i) all funds which are received from or on behalf of any related Obligor in payment of any amounts owed (including, without limitation, purchase prices, finance charges, interest and all other charges) in respect of such Receivable, or applied to such amounts owed by such Obligor (including, without limitation, payments that the Buyer, the applicable Seller or the Servicer receives from third party payors and applies in the ordinary course of its business to amounts owed in respect of such Receivable and net proceeds of sale or other disposition of repossessed goods or other

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collateral or property of the Obligor or any other party directly or indirectly liable for payment of such Receivable and available to be applied thereon), or (ii) all Purchase Price Credits, and (b) with respect to any Participation Interest, (i) all funds which are received from or on behalf of any related Obligor in payment of any amounts owed (including, without limitation, purchase prices, finance charges, interest and all other charges) in respect of such Specified Government Receivable underlying such Participation Interest, or applied to such amounts owed by such Obligor (including, without limitation, payments that the Buyer, the applicable Seller or the Servicer receives from third party payors and applies in the ordinary course of its business to amounts owed in respect of such Specified Government Receivable and net proceeds of sale or other disposition of repossessed goods or other collateral or property of the Obligor or any other party directly or indirectly liable for payment of such Specified Government Receivable and available to be applied thereon), or (ii) all Purchase Price Credits.

     “Contract” means, with respect to any Receivable, any requisition, purchase order, agreement, contract or other writing with respect to the provision of services by a Seller to an Obligor other than (i) an Invoice and (ii) any confidential patient information including, without limitation, test results.

“Credit and Security Agreement” has the meaning set forth in the preamble.

     “Discount Factor” means a percentage calculated to provide the Buyer with a reasonable return on its investment in the Private Receivables and Participation Interests acquired from each Seller after taking account of (i) the time value of money based upon the anticipated dates of collection of the Private Receivables and the Specified Government Receivables underlying the Participation Interests and the cost to the Buyer of financing its investment in such Private Receivables and Participation Interests during such period and (ii) the risk of nonpayment by the Obligors. Each Seller and the Buyer may agree from time to time to change the Discount Factor applicable to purchases from such Seller based on changes in one or more of the items affecting the calculation thereof, provided that any change to the Discount Factor shall take effect as of the commencement of a Calculation Period, shall apply only prospectively and shall not affect the Purchase Price payment in respect of Purchases which occurred during any Calculation Period ending prior to the Calculation Period during which such Seller and the Buyer agree to make such change.

     “Excluded JV Receivable” means any account receivable (and proceeds thereof) that Quest Diagnostics of Pennsylvania Inc. (“Quest Pennsylvania”) bills in its own name and collects through its own accounts arising from services for which revenues belong to Quest Diagnostics Venture LLC under that certain Sharing and General Allocation Agreement dated as of November 1, 1998 by and among Quest Diagnostics Venture LLC, a Pennsylvania limited liability company, Quest Pennsylvania and UPMC Health System Diversified Services, Inc., as amended or modified from time to time.

     “Existing Agreement” has the meaning set forth in the preamble.

     “Existing Cut-Off Date” means, with respect to each of the Existing Sellers, the Cut-Off Date immediately preceding the Applicable Closing Date of such Existing Seller.

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     “Existing Sellers” means the Original Sellers, Unilab Corporation, a Delaware corporation; Quest Diagnostics Nichols Institute, Inc., a Virginia corporation formerly known as Medical Laboratories Corporation, Inc.; Quest Diagnostics Incorporated, a Nevada corporation formerly known as APL Healthcare Group, Inc.; LabOne, Inc., a Missouri corporation (successor by merger with Central Plains Laboratories, LLC, a Kansas limited liability company); ExamOne World Wide, Inc., a Pennsylvania corporation; LabOne of Ohio, Inc., a Delaware corporation; and Systematic Business Services, Inc., a Missouri corporation.

     “Initial Participation Interests” means, with respect to any Seller, all Participation Interests of such Seller that existed as of the close of such Seller’s business on the applicable Existing Cut-Off Date (in the case of each of the Existing Sellers) or the applicable New Seller Cut-Off Date (in the case of any New Seller).

     “Initial Private Receivables” means, with respect to any Seller, all Private Receivables of such Seller that existed and was owing to such Seller as of the close of such Seller’s business on the applicable Existing Cut-Off Date (in the case of each of the Existing Sellers) or the applicable New Seller Cut-Off Date (in the case of any New Seller).

     “Invoice” means, with respect to any Receivable, any paper or electronic bill, statement or invoice for services rendered by a Seller to an Obligor.

     “Joinder Agreement” has the meaning set forth in the preamble.

     “New Seller” means any direct or indirect wholly-owned Subsidiary of Quest Diagnostics that hereafter becomes a Seller under this Agreement by executing a Joinder Agreement and complying with the provisions of Article V hereof.

     “New Seller Closing Date” means, as to any New Seller, the Business Day on which each of the conditions set forth in Article V has been satisfied.

     “New Seller Cut-Off Date” means, with respect to each New Seller, Cut-Off Date immediately preceding its New Seller Closing Date.

     “Original Agreement” means the Amended and Restated Receivables Sale Agreement dated as of September 30, 2003 by and among the Original Sellers and the Buyer.

     “Original Sellers” means Quest Diagnostics Incorporated, a Delaware corporation; Quest Diagnostics Incorporated, a Michigan corporation; Quest Diagnostics Incorporated, a Maryland corporation; Quest Diagnostics Nichols Institute (formerly known as Quest Diagnostics Incorporated), a California corporation; Quest Diagnostics LLC, a Connecticut limited liability company; Quest Diagnostics LLC, a Massachusetts limited liability company; Quest Diagnostics of Pennsylvania Inc., a Delaware corporation; Quest Diagnostics LLC, an Illinois limited liability company; MetWest Inc., a Delaware corporation; and Quest Diagnostics Clinical Laboratories, Inc., a Delaware corporation.

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     “Participation Interest” means, with respect to any Seller, a 100% beneficial interest in such Seller’s right, title and interest, whether now owned or hereafter arising and wherever located, in, to and under each Specified Government Receivable owned by such Seller.

     “Previous Agreements” means the Original Agreement and the Existing Agreement.

     “Private Receivable” means any Receivable other than a Government Receivable.

     “Purchase Price” means, with respect to any purchase of Private Receivables and their Related Assets and any purchase of Participation Interests and their Related Assets from a Seller on any date, the aggregate price to be paid therefor by the Buyer to the applicable Seller in accordance with Section 1.3 of this Agreement on such date, which price shall equal (i) the product of (x) the Unpaid Net Balance of such Private Receivables or the Specified Government Receivables underlying such Participation Interests as of the Applicable Cut-Off Date, multiplied by (y) one minus the Discount Factor then in effect, minus (ii) any Purchase Price Credits to be credited against the Purchase Price otherwise payable in accordance with Section 1.4 of the Agreement.

     “Purchase Price Credit” shall have the meaning provided in Section 1.4 hereof.

     “Purchase Report” shall have the meaning provided in Section 1.3(c) hereof.

     “Receivable” means any Account or Payment Intangible arising from the sale of Clinical Laboratory Services by a Seller, including, without limitation, the right to payment of any interest or finance charges and other amounts with respect thereto; provided, however, that the term “Receivable” shall not include any (a) Excluded JV Receivable or (b) any Government Receivable except a Specified Government Receivable. Rights to payment arising from any one transaction, including, without limitation, rights to payment represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the rights to payment arising from any other transaction.

     “Records” means, collectively, all Invoices and all other documents, books, records and other information (including, without limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to any Receivable, Related Asset and/or Obligor other than (i) any Contract related thereto, and (ii) any confidential patient information including, without limitation, test results.

     “Related Assets” means (x) with respect to each Receivable, all right, title and interest in and to the following:

     (a) (i) all Collections; (ii) all Records; (iii) all Collection Accounts and all cash, balances and instruments therein from time to time therein; (iv) the goods (including returned or repossessed goods), if any, the sale of which by a Seller gave rise to such Receivable; (v) all supporting obligations; and (vi) all liens and security interests, if any, securing payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise; and

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     (b)all proceeds and insurance proceeds of the foregoing; and

(y) with respect to any Participation Interest, the rights and assets described in clauses (a) and (b) above with respect to the Specified Government Receivable that is the subject to such Participation Interest.

     “Responsible Officer” means, with respect to each Seller, any of its chief executive officer, president, vice president, treasurer or secretary, acting singly.

     “Sale Termination Date” means, as to any Seller, the earliest to occur of the following:

     (i) the date designated by such Seller to the Buyer upon not less than 15 Business Days’ prior written notice,

     (ii) the date on which an Event of Bankruptcy occurs with respect to such Seller;

     (iii) the date on which such Seller is unable to satisfy the applicable conditions precedent to each purchase set forth in Article III hereof;

     (iv) the date on which a Change in Control occurs with respect to Quest Diagnostics, the Buyer or such Seller; and

     (v) the occurrence of the Termination Date under clause (a) or (b) of the definition of such term in the Credit and Security Agreement.

     “Seller” means an Original Seller or a New Seller.

     “Seller Indemnified Amounts” shall have the meaning provided in Section 7.1(a) hereof.

     “Seller Indemnified Party” shall have the meaning provided in Section 7.1(a) hereof.

     “Seller Material Adverse Effect” means, with respect to any Seller, the occurrence of any of the following events, circumstances, occurrences, or conditions:

     (i) any event, circumstance, occurrence or condition which has caused as of any date of determination any of (a) a material adverse effect, or any condition or event that has resulted in a material adverse effect, on the business, operations, consolidated financial condition or assets of the Sellers, taken as a whole (after taking into account indemnification obligations by third parties that are Solvent to the extent that such third party has not disputed (after notice of claim in accordance with the applicable agreement therefor) liability to make such indemnification payment),

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     (ii) any event, circumstance, occurrence or condition which has caused as of any date of determination a material adverse effect on the ability of such Seller to perform its obligations under this Agreement or any other Transaction Document to which such Seller is a party;

     (iii) any event, circumstance, occurrence or condition which has caused as of any date of determination a material adverse effect on the validity or enforceability of this Agreement or any other Transaction Document to which such Seller is a party, or the validity, enforceability or collectibility of a material portion of the Receivables sold by such Seller to the Buyer; or

     (iv) any event, circumstance, occurrence or condition which has caused as of any date of determination a material adverse effect on the validity, perfection, priority or enforceability of the Buyer’s title to the Private Receivables, Participation Interests and respective Related Assets acquired by the Buyer from such Seller.

     “Specified Government Receivable” means a Government Receivable arising under Medicare or Medicaid for covered services rendered to eligible beneficiaries thereunder.

     “Subordinated Loan” means a subordinated revolving loan from a Seller to the Buyer which is evidenced by a Subordinated Note.

     “Subordinated Note” means a subordinated promissory note substantially in the form of Exhibit B hereto issued by the Buyer to a Seller, as it may be amended, supplemented, endorsed or otherwise modified from time to time in substitution therefor or renewal thereof in accordance with the Transaction Documents.

The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

     C. Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.

     D. Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.

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EXHIBIT A
PURCHASE REPORT
OF
[INSERT SELLER NAME], AS SELLER
FOR THE PERIOD BEGINNING [DATE] AND ENDING [DATE]

TO: THE BUYER AND THE ADMINISTRATIVE AGENT

Aggregate Unpaid Net Balance of all Private Receivables and Participation Interests sold during the period:	$ _____________		A
Aggregate Unpaid Net Balance of all Private Receivables and Participation Interests sold during such period which were not Eligible Receivables or Eligible Participation Interests, as applicable, on the date when sold (“Ineligible Assets”):	($ _________)		(B)
Equals: Aggregate Unpaid Net Balance of all Eligible Private Receivables and all Eligible Participation Interest sold during the period (A - B):		$ ___________	=C
Aggregate Unpaid Net Balance of all Private Receivables and Participation Interest (if any) contributed during the period:			D
Aggregate Unpaid Net Balance of all Private Receivables and Participation Interest (if any) contributed during such period which were not Eligible Receivables or Eligible Participation Interests, as applicable, on the date when sold:	($ ____________)		(E)
Equals: Aggregate Unpaid Net Balance of all Eligible Receivables and Eligible Participation Interests (if any) contributed during the period (D - E):		$ ___________	=F
Gross Purchase Price payable during such period with respect to Eligible Receivables and Eligible Participation Interests that were sold by such Seller Less: Purchase Price Discount during the Period with respect to such Eligible Receivables and Eligible Participation Interests:	($ ____________)		G    (H)

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Equals: Gross Purchase Price Payable during the period with respect to such Eligible Receivables and Eligible Participation Interests (G – H)		$____________	=I
Gross Purchase Price payable during such period with respect to Ineligible Assets that were sold by such Seller Less: Purchase Price Discount during the Period with respect to such Ineligible Assets:	($ ____________)		J    (K)
Equals: Gross Purchase Price Payable during the period with respect to such Ineligible Assets (J – K)		$ ___________	=L
Sum of (I) + (L) Less: Total Purchase Price Credits arising during the Period:	($ ____________)		M    (N)
Equals: Net Purchase Price payable during the Period (M - N):		$ ___________	=O
Cash Purchase Price Paid to Seller during the Period:	$ ___________		P
Subordinated Loans made by Seller during the Period:	$ ____________		Q
Less: Repayments of Subordinated Loans received by the Seller during the Period:	($ ____________)		(R)
Equals: Purchase Price paid in Cash or Subordinated Loans during the period (P + Q - R):		$ ___________	=S

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EXHIBIT B
AMENDED AND RESTATED SUBORDINATED NOTE

(Non-Negotiable)

[Date]

     FOR VALUE RECEIVED, the undersigned, Quest Diagnostics Receivables Inc., a Delawarecorporation (the “Buyer”), promises to pay to _______________, a _____________ (the “Seller”), to the extent of the Buyer’s Available Funds and on the terms and subject to the limitations and conditions set forth herein and in the Sale Agreement referred to below, the principal sum of the aggregate unpaid Purchase Price of all Receivables and Participation Interests purchased from time to time by the Buyer from the Seller pursuant to such Sale Agreement, as such unpaid Purchase Price is shown in the records of the Seller. This promissory note (this “Subordinated Note”) amends and restates in its entirety that certain subordinated note dated [Date] made by Buyer in favor of the Seller.

     1. Sale Agreement. This is one of the Subordinated Notes described in, and is subject to the terms and conditions set forth in, that certain Third Amended and Restated Receivables Sale Agreement dated as of December 12, 2008, as the same may be amended or otherwise modified from time to time (the “Sale Agreement”), by and between the Seller and certain of its affiliates and the Buyer. Reference is hereby made to the Sale Agreement for a statement of certain other rights and obligations of the Seller and the Buyer.

     2. Definitions. Capitalized terms used (but not defined) herein have the meanings attributed thereto in the Sale Agreement or, to the extent not defined therein, in the Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008 among Quest Diagnostics Incorporated, as initial Servicer, the Buyer, as borrower, Variable Funding Capital Company LLC, Wachovia Bank, National Association, individually and as VFCC Agent, Gotham Funding Corporation, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., individually, as Gotham Agent and as Administrative Agent (as amended, restated or otherwise modified from time to time, the “Credit and Security Agreement”). In addition, as used herein, the following terms have the following meanings:

     Bankruptcy Proceedings: As defined in clause (b) of paragraph 9 hereof.

     Bloomberg CP Rate: For each day in a calendar month, the rate per annum determined on the CD equivalent yield basis equal to the composite broker/dealer offered rate for 30-day “A1/P1/F1” rated U.S. asset-backed commercial paper, which rate appears on a Bloomberg L.P. terminal, displayed under the address “ACPB030Y <Index> <Go>” effective as of 10:00 a.m., New York time, on the first Business Day of such month, provided that if no such offered rates appear on such page, the Bloomberg CP Rate for such month will be the arithmetic average (rounded upwards, if necessary, to the next higher 1/100th of 1%) of CP Rates being paid by the Buyer under the Credit and Security Agreement as of the first Business Day of such month.

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     Final Maturity Date: The forty-fifth (45th) day following the Final Payout Date.

     Senior Interest: All Obligations (under and as defined in the Credit and Security Agreement).

     Senior Interest Holders: Collectively, the Agents, the Lenders, the other Affected Parties and the Indemnified Parties.

     3. Interest. Prior to the Final Payout Date, the aggregate unpaid Purchase Price owing to the Seller under the Sale Agreement from time to time outstanding shall bear interest at a rate perannum equal to the sum of the Bloomberg CP Rate plus 1%, and from (and including) the Final Payout Date to (but excluding) the date on which the entire aggregate unpaid Purchase Price owing to the Seller under the Sale Agreement is fully paid, the aggregate unpaid Purchase Price owing to the Seller under the Sale Agreement from time to time outstanding shall bear interest at a rate perannum equal to the sum of the Bloomberg CP Rate plus 2%; provided, however, that in no event in excess of the maximum rate permitted by law. In the event that, contrary to the intent of the Seller and the Buyer, the Buyer pays interest hereunder and it is determined that such interest rate was in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal then due hereunder.

     4. Interest Payment Dates. Subject to the provisions set forth below, the Buyer shall pay accrued interest on this Subordinated Note from Available Funds (a) on each Settlement Date, and (b) on the date of each principal payment made in cash on a date other than a Settlement Date.

     5. Basis of Computation. Interest accrued hereunder shall be computed for the actual number of days elapsed on the basis of a 360-day year.

     6. Principal Payment Dates. Subject to the provisions set forth below, payments of the principal amount of this Subordinated Note shall be made from Available Funds as follows:

     (a) The principal amount of this Subordinated Note shall be reduced from time to time in accordance with Section 1.4 of the Sale Agreement;

     (b) The entire remaining Unpaid Net Balance of this Subordinated Note shall be paid on the Final Maturity Date.

Subject to the provisions set forth below, the principal amount of and accrued interest on this Subordinated Note may be prepaid from Available Funds on any Business Day prior to the Seller’s Sale Termination Date without premium or penalty.

     7. Payments. All payments of principal and interest hereunder are to be made in lawful money of the United States of America.

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     8. Enforcement Expenses. In addition to and not in limitation of the foregoing, but subject to the provisions set forth below and to any limitation imposed by applicable law, the Buyer agrees to pay all expenses, including reasonable attorneys’ fees and legal expenses, incurred by the Seller in seeking to collect any amounts payable hereunder which are not paid when due.

     9. Provisions Regarding Restrictions on Payment. The Buyer covenants and agrees, and the Seller, by its acceptance of this Subordinated Note, likewise covenants and agrees on behalf of itself and any holder of this Subordinated Note, that the payment of the principal amount of, and interest on, this Subordinated Note is hereby expressly subject to certain restrictions set forth in the following clauses of this paragraph 9:

     (a) No payment or other distribution of the Buyer’s assets of any kind or character, whether in cash, securities, or other rights or property, shall be made on account of this Subordinated Note except to the extent such payment or other distribution is permitted under the Sale Agreement and the Credit and Security Agreement and is made from Available Funds;

     (b) In the event of (i) the occurrence of such Seller’s Sale Termination Date, or (ii) any dissolution, winding up, liquidation, readjustment, reorganization or other similar event relating to the Buyer, whether voluntary or involuntary, partial or complete, and whether in bankruptcy, insolvency or receivership proceedings, or upon an assignment for the benefit of creditors, or any other marshaling of the assets and liabilities of the Buyer or any sale of all or substantially all of the assets of the Buyer (such proceedings being herein collectively called “BankruptcyProceedings”), the Senior Interest shall first be paid and performed in full and in cash before the Seller shall be entitled to receive and to retain any payment or distribution in respect to this Subordinated Note. In order to implement the foregoing, the Seller hereby irrevocably agrees that the Administrative Agent, in the name of the Seller or otherwise, may demand, sue for, collect, receive and receipt for any and all such payments or distributions, and file, prove and vote or consent in any such Bankruptcy Proceedings with respect to any and all claims of the Seller relating to this Subordinated Note, in each case until the Senior Interests shall have been paid and performed in full and in cash;

     (c) In the event that the Seller receives any payment or other distribution of any kind or character from the Buyer or from other source whatsoever, in respect of this Subordinated Note, other than as expressly permitted by the terms of this Subordinated Note, such payment or other distribution shall be received for the sole benefit of the Senior Interest Holders and shall be turned over by the Seller to the Administrative Agent (for the benefit of the Senior Interest Holders) forthwith;

     (d) Notwithstanding any payments or distributions received by the Senior Interest Holders in respect of this Subordinated Note, while any Bankruptcy Proceedings are pending, the Seller shall not be subrogated to the then existing rights of the Senior Interest Holders in respect of the Senior Interests until the

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Senior Interests have been paid and performed in full and in cash. Upon the occurrence of the Final Payout Date, the Seller shall be subrogated to the then existing rights of the Senior Interest Holders, if any;

     (e) The provisions set forth in this Section 9 are intended solely for the purpose of defining the relative rights of the Seller, on the one hand, and the Senior Interest Holders, on the other hand. Nothing contained in this Subordinated Note is intended to or shall impair, as between the Buyer, its creditors (other than the Senior Interest Holders) and the Seller, the Buyer’s obligation, which is unconditional and absolute, to pay the Seller the principal of and interest on this Subordinated Note as and when the same shall become due and payable in accordance with the terms hereof or to affect then relative rights of the Seller and creditors of the Buyer (other than the Senior Interest Holders);

     (f) The Seller shall not, until the Senior Interests have been paid and performed in full and in cash, transfer, pledge or assign, or commence legal proceedings to enforce or collect this Subordinated Note or any rights in respect hereof;

     (g) The Seller shall not, without the advance written consent of the Administrative Agent, commence, or join with any other Person in commencing, any Bankruptcy Proceedings with respect to the Buyer until at least one year and one day shall have passed since the Final Payout Date shall have occurred;

     (h) If, at any time, any payment (in whole or in part) of any Senior Interest is rescinded or must be restored or returned by a Senior Interest Holder (whether in connection with Bankruptcy Proceedings or otherwise), these provisions shall continue to be effective or shall be reinstated, as the case may be, as though such payment had not been made;

     (i) The Seller hereby waives; (i) notice of acceptance of these provisions by any of the Senior Interest Holders; (ii) notice of the existence, creation, non-payment or non-performance of all or any of the Senior Interests; and (iii) all diligence in enforcement, collection or protection of, or realization upon, the Senior Interests, or any thereof, or any security therefor;

     (j) These provisions constitute a continuing offer from the holder of this Subordinated Note to all Persons who become holders of, or who continue to hold, Senior Interests; and these provisions are made for the benefit of the Senior Interest Holders, and the Administrative Agent may proceed to enforce such provisions on behalf of each of such Persons.

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     10. General.

     (a) No failure or delay on the part of the Seller in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power of right preclude any other or further exercise thereof or the exercise of any other power or right. No amendment, modification or waiver of, or consent with respect to, any provision of this Subordinated Note shall in any event be effective unless (i) the same shall be in writing and signed and delivered by the Buyer and the Seller and (ii) all consent required for such actions under the Transaction Documents shall have been received by the appropriate Persons.

     (b) The Seller hereby agrees that it will not (i) institute against, join any other Person in instituting against or take any action, direct or indirect, in furtherance or contemplation of instituting against, the Buyer any bankruptcy, insolvency, winding up, dissolution, receivership, conservatorship or other similar proceeding or action or (ii) exercise any right of set-off or recoupment, or assert any counterclaim, against the Buyer, in each case so long as there shall not have elapsed one year and one day since the Final Payout Date has occurred.

     (c) The Seller expressly recognizes and agrees that the obligations represented by this Subordinated Note are not secured by any interest in any of the assets of the Buyer, including, without limitation, any Private Receivables, Participation Interests or their respective Related Assets.

     11. No Negotiation. This Subordinated Note is not negotiable and may not be pledged except to a Person who covenants in writing, with the Buyer and the Administrative Agent, that such Person will agree not to initiate or join any proceeding of the type described in Section 8.12 of the Sale Agreement. Any purported sale, transfer, assignment, pledge or negotiation of this Subordinated Note shall be void without the prior written consent of the Agents under the Credit and Security Agreement.

     12. Governing Law. THIS PROMISSORY NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

     13. Captions. Paragraph captions used in this Subordinated Note are for convenience only and shall not affect the meaning or interpretation of any provision of this Subordinated Note.

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     14. Attached Schedule. The Seller is hereby authorized by the Buyer to endorse on the schedule attached to this Subordinated Note an appropriate notation evidencing the date and amount of each Subordinated Loan hereunder, as well as the date of each payment with respect thereto, provided that the failure to make such notation shall not affect any obligation of the Buyer hereunder.

QUEST DIAGNOSTICS RECEIVABLES INC.


By: _____________________________________
Name:
Title:

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SCHEDULE TO SUBORDINATED NOTE OF
QUEST DIAGNOSTICS RECEIVABLES INC.

	Amount of	Amount of	Unpaid
	Subordinated	Principal	Principal	Notation
Date	Loan	Paid	Balance	made by

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EXHIBIT C
CREDIT AND COLLECTION POLICIES

CLIENT COLLECTION POLICY

PURPOSE: The purpose of this policy is to establish consistency of client set-up and collections on a national basis. This policy will significantly improve the control over our accounts receivable as well as reduce write-offs and bad debt. As a result, improved customer service relationships will be experienced.

Pricing Contract

The sales department is responsible for ensuring that all pricing is signed off by the client and the Sales Director. This includes the Client Acknowledgement and Review Process (CARP) and all exclusives for the potential new client. A client will not be activated in the billing system until the necessary approvals are received.

Account Set-up Form

A signed account set-up form must be completed, with a minimum, the following information:

• client demographics

• fax and telephone numbers

• physician office contact person

• start date

• required provider and license numbers including UPIN’s for each physician

• sales representative/territory

• billing mix (payor type)

Local sites may require additional information.

Credit Application Process

The sales department is to obtain a completed and signed credit application including preferably three trade references, current laboratory and banking information for each potential client billed accounts (clients that will receive a monthly bill). The completed credit application (Exhibit 1) is to be forwarded to and processed by the credit department or an appropriate designee before credit terms are extended. This form must be submitted at least 3 working days prior to the start date. The potential client will be assigned a credit risk based on the outcome of the credit check. The procedures outlined below will be used to determine the credit worthiness of a potential client.

1.    Check for duplicate accounts and/or previous bad debt from the company’s national list of bad debt clients.

2.    Contact all credit references to determine the level of risk of a client.

[Signature Page to Third Amended and Restated Receivables Sale Agreement]

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3.      To determine the credibility of a client, call:

          a.      Corporate Commission Office (check for local telephone listing)
              Indicates when a business became licensed and the licensee name. This information is important in collection suits.

          b.      Non Corporation Commission Office (check for local telephone listing)
              Same as the Corporate Commission Office, only for non-incorporated businesses

          c.      D.B.A. Listings (check for local telephone listing)
              Provides information on client aliases

          d.      Board of Medical Examiners (check for local telephone listing)
                   Informs of any tax liens, malpractice suits . . . anything that would create a financial hardship

4. Request a credit report on the potential client.

The Client Collections Manager will determine credit worthiness and depending on the outcome of the investigation of items 1 through 4 listed above, the following will apply:

• Credit references are good to excellent - account is opened with normal credit terms

• Credit references are fair - account is closely monitored at the 30 day level

• Credit references are questionable - account is required to provide a cash “security” deposit equal to one month activity with close scrutiny of payment on subsequent monthly invoices

• Credit references are poor - account is not extended credit terms; account can only be set up as patient/3rd party billing

Please note, there may be cases when some of the trade references are not received/returned prior to the committed 3 day window established for opening new accounts. The following guidelines should be used in these cases: If there is no bad debt experience with any other Quest Diagnostic’s location, no negative information is displayed on the credit report and no negative information is given by references that provide information within the 3 day window, the account may be opened pending receipt of the remaining references. Once the remaining references are received, indicating a favorable response, the account follows normal collection procedures established in this policy. If however, an account is determined to be a bad risk, the sales representative and district manager are responsible for immediately undertaking one of the following actions:

• Convert the account to patient bill

• Receive 30 days’ advance payment

• Shut down the account

Billing Account Set-up

Prior to setting up a new client in the billing system the following is required:

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• Pricing Contract (includes CARP and exclusives) signed by the client and the Sales Director

• A completed account set-up form

• An approved credit application

After receipt of the above information, a “Welcome Letter” (Exhibit 2) must be prepared and mailed to the client. The purpose of this letter is to reiterate our billing terms, advise the client of the billing contact person, the phone number, billing office hours and to encourage clients to contact us with issues immediately. The letter also informs the client that requests to transfer balances to the third party or to the patient must be received within 45 days of the invoice date or the client will be responsible for the charges.

The client check list (Exhibit 3) is signed off and kept on file. Throughout the billing account set-up process, the client check list is completed to ensure the account is properly set-up.

New Accounts

New accounts will be set up in a separate print group. If the site’s billing system can not meet this requirement, a mechanism to isolate the first bill for new accounts must be implemented. The first bill will be sent to the client with a copy sent to the sales department. This will allow the sales department to personally review the statement with the client.

All new accounts are contacted after the second billing cycle to ensure statements have been received and that pricing and any other issues are addressed.

General Collection Activity
Collection activity will be focused in the following manner:
Site’s Client A/R	Collection	Collection
> 90 Day Percentage	Criteria	Activity
20% or less	Balances >$1,000 over 60 days	Telephone contact
	Balances <$999 under 60 days	Letter series
21% or higher	Balances >$1,000 over 90 days	Telephone contact
	Balances <$999 under 90 days	Letter series

In addition to the above activity, all accounts will receive a 30 day and 60 day letter/statement.

The Client Aging Report will be given to the collectors after each month-end close. All accounts on the report that meet the above criteria must be contacted within a 30 day period. Full documentation of all conversations are to be recorded in the billing system client comments area for each account or in a paper file.

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Accounts that are not receiving telephone contact from the Client Collections Department will receive a series of demand letters. (Exhibits 4, 5, 6, 7) The letters will be produced using the following aging criteria:

• 30 days = “Reminder” Notice preferably printed on the client statement

• 60 days = Past Due Notice “Second Reminder” letter/statement message

• 90 days = Demand Letter “Important Notice” letter
            (Refer to Additional 90 Day Action)

• 120 days = Final Notice “Final Notice” letter
            (Inactive accounts on Final Notice. If payment is not received within 14 days, send account to the collection agency or attorney.)
            (Active accounts no response to Final Notice = Refer to Suspension of Service procedure)

Additional 90 Day Action

When an account reaches the 90 day aging status and repeated calls to the client have proven ineffective, (> 3 attempts) the collector contacts sales to intervene. Sales will schedule a personal appointment with the client within 5 to 7 working days after being notified by the collector that assistance is needed. (As the aging of the client A/R improves, this process should take place at the 60 day status rather than 90 days.)

The collector may negotiate reasonable payment plans at this point, if the client shows a good faith effort to pay a material portion of the balance. Refer to the Monthly Payment Policy.

Monthly Payment Policy

The terms of payment are “payment in full immediately” however, the collector may negotiate a payment plan according to the following guidelines:

• Balance less than $2,500 - no payment plan available; payment in full expected

• Balance over $2,500 but under $7,500 - payment plan between two and three months with current services paid in full

• Balances over $7,500 but under $15,000 - payment plan of four to five months with current services paid in full. Collectors will attempt to negotiate a shorter agreement

• Balances over $15,000 - six month payment plan with current services paid in full. Collectors will attempt to negotiate a shorter agreement

This action should be taken on an exceptiononly basis. An acceptable payment arrangement will ensure the balance will be paid in full within 60 to 150 days. A copy of the payment plan agreement will be sent to the Sales Representative, Sales Director, and the Billing Manager.

1.      The client will be advised that the balance must be paid in full within the prescribed number of months. In addition, the current months charges must also accompany the monthly payment.

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2.	The client will be advised that they will receive a letter of agreement (Exhibit 8) which must be signed and returned within the next 10 days. If a signed agreement has not been received, the client will be called and a signed faxed copy will be requested. If the client refuses, the client will be advised that services will be suspended as explained in the letter.
3.	The collector will be responsible for verifying that the client has made a payment within the terms of the payment plan.
4.	If a client fails to follow the payment plan, the collector will take immediate steps to suspend service.

Pricing Disputes

Client Collectors should forward a copy of the aged accounts receivable balance along with a print out of the notes on the account or paper file to the Sales Manager for clients who notify the department (either verbally or through written correspondence) regarding a pricing dispute on their account.

1.	Collectors should request a good faith payment of the full amount of testing not in dispute while the pricing dispute is being resolved.
2.	The Client Collectors will note sales involvement on the billing comment screen or in a paper file and they will mark their calendars for follow up in 2 weeks.
3.	The Sales Manager will forward the information to the appropriate Sales Representative for handling. Response to disputes must be resolved within 2 weeks.
4.	If there is no response received by the end of the 2 week period, a follow up form will be sent by the Client Collector to the Sales Manager and the Client Collections Manager informing them of the situation.
5.	The Sales Manager will be responsible for resolving the problem within a reasonable amount of time, usually 1 to 2 weeks.
6.	If there is no resolution after the specified time period, the Client Collections Manager will contact the Operations Leader and Commercial Leader for resolution within a reasonable amount of time, usually 1 to 2 weeks.
7.	If there is no resolution after the specified time period, the Client Collections Manager will contact the Billing Leader for resolution.

The follow up procedure will be documented on a Microsoft Excel spread sheet. (Exhibit 9)

Suspension of Service

A Suspension of Service Notice (Exhibit 10) is produced by the collector when all other collection activity has been exhausted. The Suspension Notice is processed and signed after all documentation has been reviewed by the Client Collections Manager, the Billing Manager and the Commercial Leader or his/her designee. The Suspension of Service Notice is to be returned to the collector within 5 days of issuance. The Suspension Notice is copied to the following personnel:

• Commercial Leader

• Operations Leader

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• Billing Manager

• Sales Representative

• Sales Manager

• Logistics Manager

• Database Manager (Lab and Billing)

• Director of Client Services

• Controller

Once the Suspension of Service Notice is returned, the client is sent a Suspension of Service letter (Exhibit 11) indicating that laboratory services will cease after 5 business days, unless a signed contract stipulates otherwise. The reason that the client is given 5 days notice is to allow for the client to secure laboratory services from another provider. The Database Manager deactivates the account number in the lab and billing system and flags it as a Bad Debt account.

Approximately 7 to 10 working days after the client has received their final bill, the account is referred to a commercial collection agency or attorney, if payment in full is not received. Correspondence with the agency is maintained by one designated individual in the Client Collections Department. Progress reports are produced by the agency at a minimum of once a month. The Client Collections Manager will evaluate which accounts need legal intervention based on collection probability and court costs.

Service on a bad debt account may not be resumed without prior written approval by the Commercial Leader, Operations Leader and the Billing Manager AND payment in full of undisputed amounts or an arrangement to pay-off in full undisputed amounts. Additionally, a plan to resolve disputed amounts must be developed and approved by the Commercial Leader, Operations Leader and the Billing Manager.

Write off and Referral to Collection Agency or Attorney

Accounts deemed uncollectible are written off the billing system. This will take place at the time the account is referred to the outside collection agency or placed with the attorney.

Bankruptcy

Bankruptcy notices received by the site must be kept on file. The site is responsible for filing a claim with the bankruptcy trustee for amounts outstanding as of the bankruptcy date but must cease collection efforts against the customer for pre-bankruptcy amounts. The site may extend credit terms to the client, provided the client remains current on all charges incurred after the bankruptcy date. The bankruptcy trustee must be notified immediately, if the client defaults on current payment terms.

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PATIENT COLLECTION POLICY

PURPOSE: The purpose of this policy is to establish consistency for patient collections on a national basis. This policy will significantly improve the control over our accounts receivable through automation, as well as monitoring write-offs and bad debt through improved dunning messages and cycles. As a result, accelerated cash flow and improved efficiencies will be experienced. No bills need to be sent for balances that are less than $5.00.

Billing Dunning Cycles

The length of the billing dunning cycles must not extend past 30 days for each cycle. This time period is sufficient for a patient to make a payment or contact the billing correspondence department, either through a telephone call, fax or by mail, before the next bill is generated.

The optimum billing cycle is between 20 and 25 days.

Billing dunning messages should be clear and concise, focusing on receiving payment. Each subsequent dunning cycle message must be stronger than the previous message urging the patient to either make a payment or contact the billing department. Headline phrases such as “IMPORTANT NOTICE”, “URGENT MESSAGE” and “FINAL NOTICE” are appropriate for collection of delinquent patient accounts and should be used to expedite payment.

Number of Billing Dunning Cycles

A maximum number of 4 letters/statements series (1 original, 2 follow-up and 1 pre-collection letter) can be sent to a patient during a normal billing process. For example, if a 30 day dunning cycle is incorporated using the 4 letter/statement series, a patient will be eligible for write off and submission to a collection agency at 120 days.

Payment Plans

Patients who experience difficulty making payments in full on their accounts, may be eligible for relief from payment of some or all of the amounts under the Business Units indigent payment policy or may be placed on payment plans. A payment plan to recover the total payment must be set up ensuring that accounts are paid in full within a reasonable amount of time. The Billing Manager is responsible for monitoring the sub-bill code(s)/FSC(s) containing patient payment plans.

Each payment plan that is established must focus on receiving full payment in the least amount of time possible. Depending upon the outstanding balance, payment terms should not exceed 90 days for total payment. Shorter time limits should be negotiated between the customer service correspondent and the patient. An acceptable payment plan will ensure the balance will be paid in full within 30 to 90 days.

Payment plans should be used on an exceptiononly basis, after the customer service correspondent has exhausted all efforts to have the patient pay in full.

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For patients who default on payment plans, there needs to be a mechanism in place to transfer patients immediately to the collection agency.

Automated Collection Agency Transfers

Once a patient account completes the patient dunning cycle process, with a balance remaining (maximum of 120 days) the record transfers into the collection agency sub-bill code/FSC using a HCFA 1500 file format. Accounts transferred to collection should be written off the A/R system.

Placements with the collection agencies are made either weekly or monthly depending on volume and should be transmitted electronically via modem or by magnetic tape.

Regular placements are to be made with the approved contracted national agency. Additional placements may also be made with another approved contracted national agency or a local agency. The splitting of patient claims may foster competitive collection practices between agencies.

Local collection agency rates must be negotiated to match approved national collection agency rates.

The Collection Manager must monitor the collection agencies’ performances through the monthly review of reports and management of cash recoveries and commissions. Selecting replacement agencies for the weaker performer is essential in maximizing cash collection recoveries.

Automated Payment Remittance

Payments received from patients, whose accounts have been placed with a collection agency, must be reported either weekly or monthly to the agency for processing, depending on the volume of payments received. Transmission of payments to the agencies via modem eliminates the need for manual intervention through report generation and processing.

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Quest Diagnostics Incorporated - (Lab Name)
APPLICATION FOR CREDIT

     This agreement for the extension of credit between Quest Diagnostics Incorporated of (Lab Name) (“Quest Diagnostics”) and the customer named below (“Customer”).

     In consideration of Quest Diagnostics extending credit to the Customer, and for other good and valuable consideration, the receipt of which is hereby acknowledged, Customer, agrees to pay all costs of collection, including, but not limited to, reasonable attorney’s fees and court costs, incurred by Quest Diagnostics in collecting any delinquent account. Customer agrees and represents that all services it anticipates requesting from Quest Diagnostics are for business and not personal uses.

     If at any time Quest Diagnostics deems the Customer to be insolvent, Quest Diagnostics reserves the right to require payment in advance, or such other security or guarantee of prompt payment of invoices as may be appropriate. Customer shall provide adequate assurances of ability to pay within thirty (30) days of any such request. If Customer fails to comply with the terms of payment, or with any other terms of its agreement with Quest Diagnostics, Quest Diagnostics has the right to withhold further services or cancel any services requested but not yet rendered, and all unpaid accounts shall be due and payable without prejudice to any other rights and claims for damages Quest Diagnostics may have.

     Customer states that it believes that it is financially able to meet any commitments it may make and that it expects to pay Quest Diagnostics’ invoices according to the following terms: [insert terms]

     Customer provides the following information and represents that it is true and accurate to the best of its knowledge:

Legal Name d.b.a.
Address	Street	City	State	Zip
	Sole Owner	Corporation	Partnership
Telephone

     If customer is a corporation, including a professional corporation, give the names and addresses of its officers, if a sole owner, give name and social security number of owner and spouse, if partnership, give names and addresses of all partners:

Name	Address	Title	SSN
Name	Address	Title	SSN
Current Clinical Laboratory:

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(This is for informational purposes only. The client’s current laboratory will not be contacted as a reference)

Credit References:

Company Name	Address	City	State	Zip	Phone
Bank Information:
Name	Address	Phone	Checking Account Number

Dated: ___________________, ________ Purchase Order # ____________ Contract Attached

CUSTOMER	Quest Diagnostics Incorporated - (Lab Name)
By: _________________________________________________	By: _________________________________________________
____________________________________________________	Title: _________________________________________________

SIGNATURE OF OWNER, OFFICER OR PARTNER

Revised 1/97

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(Exhibit 2)

Quest Diagnostics Incorporated

[DATE]

[NAME]
[ADDRESS]

ATTENTION: [NAME]

DEAR [NAME]

We would like to take this opportunity to welcome you to Quest Diagnostics Incorporated (Quest Diagnostics).

Statements are mailed the first week of each month and payment is due upon receipt. If you do not receive your statement, please contact us. Please note, our office needs to be notified of any transfers to patient or third party within 45 days of the statement date, or you will be responsible for payment of these services.

Your billing representative is [insert name]. He/She can be reached directly at[insert phone number]. Our billing department hours are 8:00 a.m. to 6:00 p.m., Monday through Friday.

As always, Quest Diagnostics strives for quality customer service and satisfaction. If at any time during our relationship you have questions or concerns regarding your billing, please do not hesitate to call us.

We look forward to a long relationship and feel confident you will be pleased with our service. Thank you for making Quest Diagnostics your choice of laboratories.

Sincerely yours,

NAME
Billing Manager

cc: Commercial Leader

[Signature Page to Third Amended and Restated Receivables Sale Agreement]

(Exhibit 3)

Quest Diagnostics

CLIENT CHECKLIST

DATE RECEIVED: ______________________________

DATE COMPLETED: ____________________________

AUTHORIZED APPROVAL : ____________________________________

CHECKLIST DATE INITIALS

PRICING SIGNOFF & CARP EXCLUSIVES

CHECK FOR DUPLICATE ACCOUNTS/
(INTERNALLY AND OTHER QUEST DIAGNOSTICS SITES)

CHECK FOR PREVIOUS BAD DEBT

CHECK CREDIT REFERENCES

VERIFY LICENSE OF EACH PHYSICIAN/CUSTOMER

VERIFY BUSINESS STANDINGS

D & B CREDIT REPORTS

ACCOUNT SET UP

WELCOME LETTER SENT

61

(Exhibit 4)

REMINDER

[ DATE ]

[NAME]
[ADDRESS]

RE: ACCOUNT NUMBER:
       BALANCE OWED:

DEAR [INSERT NAME]

This letter is a reminder that our payment terms are NET DUE UPON RECEIPT of invoice. We have not yet received full payment for last month’s invoice. If adjustments were submitted after the 20th of last month, in the amount of the past due balance, you may disregard this letter.

All charges that should be billed to your patients or your patients’ insurance, need to be submitted within 45 days of the invoice date, or you will be responsible for payment of these charges.

Thank you for your prompt attention in this matter.

Sincerely,

[YOUR NAME]
Collections Department
[INSERT NUMBER]

62

(Exhibit 5)

SECOND REMINDER

[ DATE ]

[NAME]
[ADDRESS]

RE: ACCOUNT NUMBER:
      BALANCE OWED:

DEAR [INSERT NAME]

This is our second reminder that your account balance with us is past due. Our credit terms are NET DUE UPON RECEIPT of invoice.

In order to continue our current working relationship, we must receive payment in full by [DATE]. In the future, we expect that you will remain current with your payments.

If you have a dispute regarding the amount owed or if you would like to request a payment arrangement, please contact me immediately.

Thank you for your prompt attention in this matter.

Sincerely,

[YOUR NAME]
Collections Department
[INSERT NUMBER]

cc: Sales Director

63

(Exhibit 6)

IMPORTANT NOTICE

[ DATE ]

[NAME]
[ADDRESS]

RE: ACCOUNT NUMBER:
       BALANCE OWED:

DEAR [INSERT NAME]

A review of our records indicate that your account is seriously past due. Our payment terms are NET DUE UPON RECEIPT of invoice.

Previous attempts to collect this debt have failed. To prevent further collection actions against you, such as discontinuing laboratory services, we must receive payment in full by [ DATE ].

Thank you for your prompt attention in this matter.

Sincerely,

[YOUR NAME]
Collections Department
[ INSERT NUMBER]

64

(Exhibit 7)

FINAL NOTICE

[ DATE ]

[NAME]
[ ADDRESS]

RE: ACCOUNT NUMBER:

BALANCE OWED:

DEAR [INSERT NAME]

Our previous requests for payment on your seriously delinquent account have been ignored. We have been unsuccessful in our attempts to amicably settle the balance owed. Therefore, you have forced us to take stronger collection measures.

If we do not receive the BALANCE OWED by [ DATE ], we will begin proceedings to stop laboratory service to your account, after which your account will be sent to our attorney for legal action.

Sincerely,

[YOUR NAME]
Collections Department
[INSERT NUMBER]

65

(Exhibit 8)

PAYMENT PLAN

[ DATE ]

[CLIENT NAME]
[CLIENT ADDRESS]
[CITY, STATE ZIP]

RE: ACCOUNT NUMBER: XXXXX
      BALANCE OWED: [AMOUNT]

Dear [ CLIENT NAME ]:

Per our telephone conversation, the following payment plan has been established for your account:

[AMOUNT] due by [ DATE ]

[AMOUNT] per month plus current charges until [DATE]

Please note that failure to follow this payment plan will cause your account to be in default. Further collection procedures will ensue including termination of laboratory services and referring your account to a collection agency or to legal counsel.

Sincerely,

[YOUR NAME] Collections Department
[INSERT NUMBER] I have read and will abide by the terms set above.
Name	Date
[Sign and return by mail or fax to [insert number]
cc: Sales Department

66

(Exhibit 9)

Adjusters/

$

Sales/ASR

Date

Sales Mgr

Date

CL/OL

Date

Collectors

Client

Client

In

Key

Initial

Response

Initial

Response

Initial

Response

RCG

Initials

Rep/ASR

Number

Name

Question

Code

Date

Required

Date

Required

Date

Required

Date

Key*:	P = Pricing Dispute	O = Other Reason Code	A = Placed with C.A./Atty
	C = Collection Efforts	I = Need Billing Info
	S = Suspended Service	N = Client Needs Visit

67

(Exhibit 10)

Date of Notice: __________________________

SUSPENSION OF SERVICE

The client listed below has not made satisfactory payments to their account(s) and it is recommended that laboratory services be permanently suspended.

Account Number(s): ___________________________________

Account Name: _______________________________________

Account Address: _____________________________________

                            _____________________________________

                            _____________________________________

Sales/Serv Rep: ______________________________________

Amount(s) Owed: $___________________________________

Approvals for Suspension of Service:
(Forward to Collections Department when complete)

Collections Manager: _______________________________________________________________________________________
Approved __________	Denied __________	Date __________
Billing Manager: ___________________________________________________________________________________________
Approved __________	Denied __________	Date __________
Commercial Leader: ________________________________________________________________________________________
Approved __________	Denied __________	Date __________

*************************************************************************************

* Activation Date for Suspension of Service: ____________________*
*************************************************************************************

Routing List:

Commercial Leader	_____	Sales/Serv Rep	_____	Collections Mgr	_____
Operations Leader	_____	Logistics Manager	_____	Controller	_____
Billing Manager	_____	Director of Client Svs	_____	Database Manager	_____
Purchasing	_____

68

(Exhibit 11)

SUSPENSION OF SERVICE NOTICE

Mailed Certified - Return Receipt Requested

[ DATE ]

[ CLIENT NAME ]
[ ADDRESS ]
[ CITY, STATE ZIP]

RE: ACCOUNT NUMBER:      XXXXX
       BALANCE OWED:        AMOUNT

Dear [ CLIENT NAME ]:

Since you have not complied with our requests for full payment on your account, laboratory services will be permanently suspended effective [DATE].

A final bill will be printed containing all charges up through the suspension date and will be sent to you, by certified mail. If payment in full is not received within 10 days, your account will be referred to our collection agency or to our attorney for further legal action.

Sincerely,

[ YOUR NAME ]
Collections Department

[INSERT NUMBER]
cc: Sales Department

69

EXHIBIT D
FORM OF JOINDER AGREEMENT

     --------
JOINDER AGREEMENT

     THIS JOINDER AGREEMENT is executed and delivered by _______________________, a _______________ (“New Seller”) in favor of Quest Diagnostics Receivables Inc., a Delaware corporation, as purchaser (the “Buyer”), with respect to that certain Third Amended and Restated Receivables Sale Agreement dated as of December 12, 2008 by and between Quest Diagnostics Incorporated and certain of its wholly-owned subsidiaries from time to time party thereto as “Sellers” and the Buyer (as amended, supplemented, joined, restated and/or otherwise modified from time to time, the “Sale Agreement”). Capitalized terms used and not otherwise defined herein are used with the meanings attributed thereto in the Sale Agreement.

     Subject to receipt of counterparts hereof signed by the Administrative Agent and the Buyer, by its signature below, New Seller hereby absolutely and unconditionally agrees to become a party to the Sale Agreement as a Seller thereunder and to be bound by the provisions thereof, including, without limitation, the provisions of Section 8.12 thereof.

     Attached hereto [is/are] [an] amended and restated version[s] of [Exhibit C and] Schedule 2.1(o) to the Sale Agreement. After giving effect to the amendment[s] and restatement[s] embodied therein, each of the representations and warranties contained in Article II of the Sale Agreement will be true and correct as to New Seller.

     The “Responsible Officers” of the New Seller will be any of its __________, _________ or ______________, acting singly.

     Delivered herewith are each of the documents, certificates and opinions required to be delivered by New Seller pursuant to Article V of the Sale Agreement.

     The provisions of Article VIII of the Sale Agreement are incorporated in this Joinder Agreement by this reference with the same force and effect as if set forth in full herein except that references in such Article VIII to “this Agreement” shall be deemed to refer to “this Joinder Agreement and to the Sale Agreement is modified by this Joinder Agreement.”

     Please acknowledge your consent to New Seller’s joinder in the Sale Agreement by signing the enclosed copy hereof in the appropriate space provided below and faxing a copy of such counterpart to (a) the Administrative Agent, at fax no. (212) 782-6998, Attention: Securitization Group, and (b) to New Seller at the fax no. set forth below its signature hereto.

70

     IN WITNESS WHEREOF, New Seller has executed this Joinder Agreement as of the ___ day of _______________.

By: ________________________________________

       Title:

            [Address for Notices, including fax no.]

Each of the undersigned hereby consents
to New Seller’s joinder in the Sale Agreement:

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as Gotham Agent and Administrative Agent

By: ________________________________

                   Name:

                   Title:

CALYON NEW YORK BRANCH, as Atlantic Agent

By: ________________________________

                   Name:

                   Title:

QUEST DIAGNOSTICS RECEIVABLES INC., as Buyer

By: ________________________________

                   Name:

                   Title:

71

SCHEDULE 2.1(o)
SELLERS’ FEDERAL TAXPAYER ID NUMBERS; CHIEF EXECUTIVE OFFICE
ADDRESSES; PRINCIPAL LABORATORIES AND
BILLING CENTERS, AND
LOCATION(S) WHERE RECORDS ARE KEPT

A. Corporate Offices
Location	Federal EIN	Legal Name of Seller	Fictitious Name	Prior Legal Name1
			(DBA)
3 Giralda Farms	16-1387862	Quest Diagnostics	N/A	N/A
Madison, NJ 079402		Incorporated (DE)3
3 Giralda Farms	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Madison, NJ 07940		Laboratories, Inc. (DE)

B. Clinical Laboratory Business

(1) Principal Laboratories⁴

Location	Federal EIN	Legal Name of Seller	Fictitious Name	Prior Legal Name1
			(DBA)
3714 Northgate Boulevard	71-0897031	Unilab Corporation (DE)	Quest Diagnostics	N/A
Sacramento, CA 95834
967 Mabury Road	71-0897031	Unilab Corporation (DE)	Quest Diagnostics	N/A
San Jose, CA 95133
33608 Ortega Highway	95-2701802	Quest Diagnostics Nichols	Nichols Institute	Quest Diagnostics
San Juan Capistrano, CA 92675		Institute (CA)		Incorporated (CA);
				N/A

¹ No prior legal names within the past five years, except Quest Diagnostics Nichols Institute, a California corporation and the merger of Central Plains Laboratories, LLC, which merged into LabOne, Inc.
² This location has served as the chief executive office of each Seller since October 2007. The prior executive office (1290 Wall Street West, Lyndhurst, NJ 07071) serves as an administrative office for certain non-billing related functions.
³ State designations represent the states in which entity is incorporated or organized. These designations are not part of the legal corporate name, but are included here for reference purposes only.
⁴ Excludes the former regional laboratories that have been downsized to STAT laboratories or closed.

Location	Federal EIN	Legal Name of Seller	Fictitious Name	Prior Legal Name1
			(DBA)
7600 Tyrone Avenue	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Van Nuys, CA 914055		Laboratories, Inc. (DE)
8403, 8401 and 8511 Fallbrook Avenue	71-8097031	Unilab Corporation (DE)	Quest Diagnostics	N/A
West Hills, CA 913046
695 South Broadway	33-0363116	MetWest Inc. (DE)	Quest Diagnostics	N/A
Denver, CO 80209
3 Sterling Drive	06-0460613	Quest Diagnostics LLC (CT)	N/A	N/A
Wallingford, CT 06492
10200 Commerce Parkway	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Miramar, FL 33025-3938		Laboratories, Inc. (DE)
4225 East Fowler Avenue	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Tampa, FL 33617		Laboratories, Inc. (DE)
1777 Montreal Circle	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Tucker, GA 30084		Laboratories, Inc. (DE)
1355 Mittel Boulevard	36-4257926	Quest Diagnostics LLC (IL)	N/A	N/A
Wood Dale, IL 601917
10101 Renner Boulevard	43-1039532	LabOne, Inc. (MO) 8	Quest Diagnostics	successor by merger
Lenexa, KS 66219				with Central Plains
				Laboratories, LLC, a
				Kansas limited
				liability company

⁵ This location is not a regional laboratory. It only conducts clinical trial operations and performs SAMHSA drug testing.
⁶ The 8401 Fallbrook Avenue facility conducts clinical laboratory operations; the 8403 Fallbrook facility serves as a cytology laboratory; and the 8511 Fallbrook Avenue facility serves as a revenue service center.
⁷ All services performed in Illinois are now billed using the EIN of Quest Diagnostics LLC (IL).
⁸ Operates a regional clinical laboratory in Lenexa, KS; through subsidiaries (see C. “Risk Assessment” below) provides health screening and risk assessment services to life insurance subsidiaries, including clinical laboratory testing performed at the Lenexa, KS facility by LabOne, Inc. In 2007, Central Plains Laboratories, LLC merged into LabOne, Inc. and the facility in Hays, KS was downsized.

Location	Federal EIN	Legal Name of Seller	Fictitious Name	Prior Legal Name1
			(DBA)
4648 S. Interstate10 Service Road	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Metairie, LA 70001-1225		Laboratories, Inc. (DE)
415 Massachusetts Ave.	04-3248020	Quest Diagnostics LLC (MA)	N/A	N/A
Cambridge, MA 02139
1901 Sulphur Spring Road	52-0890739	Quest Diagnostics	N/A	N/A
Baltimore, MD 21227		Incorporated (MD)
4444 Giddings Road	38-1882750	Quest Diagnostics	N/A	N/A
Auburn Hills, MI 48326		Incorporated (MI)
2040 Concourse Drive	38-2084239	Quest Diagnostics Clinical	N/A	N/A
St. Louis, MO 631469		Laboratories, Inc.(DE)
One Malcolm Avenue	16-1387862	Quest Diagnostics	N/A	N/A
Teterboro, NJ 07608		Incorporated (DE)
4230 Burnham Ave	88-0099333	Quest Diagnostics	N/A	N/A
Las Vegas, NV 89119		Incorporated (NV)
575 Underhill Boulevard	38-2084239/	Quest Diagnostics Clinical	N/A	N/A
Syosset, NY 11791	23-277394110	Laboratories, Inc. (DE)
6700 Steger Drive	20-0310967	LabOne of Ohio, Inc. (DE)	Quest Diagnostics	N/A
Cincinnati, OH 4523711
6600 S. W. Hampton St.	33-0363116	MetWest Inc. (DE)	Quest Diagnostics	N/A
Portland, OR 97223

⁹ During the summer of 2008, this facility was downsized and testing transitioned to the Lenexa, KS facility.
¹⁰ Receivables generated from the Syosset laboratory are billed under the 23-2773941 EIN.
¹¹ Testing previously performed at the facility located at 2277 Thunderstick Drive, Lexington, KY was transitioned to the Cincinnati facility in late 2006.

Location	Federal EIN	Legal Name of Seller	Fictitious Name	Prior Legal Name1
			(DBA)
900 Business Center Drive	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Horsham, PA 19044		Laboratories, Inc. (DE)
4 Parkway Center	22-3137283	Quest Diagnostics of	N/A	N/A
875 Greentree Road		Pennsylvania Inc. (DE)
Pittsburgh, PA 15220
525 Mainstream Drive	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Nashville, TN 37228		Laboratories, Inc. (DE)
4770 Regent Boulevard	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Irving, TX 75063		Laboratories, Inc. (DE)
5850 Rogerdale Road	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Houston, TX 77072		Laboratories, Inc. (DE)
14225 Newbook Drive	54-0854787	Quest Diagnostics Nichols	N/A	N/A
Chantilly, VA 20153		Institute, Inc. (VA)
1737 Airport Way South, Suite 200	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Seattle, WA 98134		Laboratories, Inc. (DE)
(2) Laboratory Billing Centers
National Revenue Service Center	16-1387862	Quest Diagnostics	N/A	N/A
2750 Monroe Blvd		Incorporated (DE)
Norristown, PA 19403
Revenue Service Center	71-0897031	Unilab Corporation (DE)	Quest Diagnostics
8511 Fallbrook Avenue
West Hills, CA 91304
(3) Laboratory Data Center (IT)
400 Egypt Road	38-2084239	Quest Diagnostics Clinical	N/A	N/A
Norristown, PA 19403		Laboratories, Inc. (DE)

77

Location	Federal EIN	Legal Name of Seller	Fictitious Name	Prior Legal Name1
			(DBA)
C. Risk Assessment Facilities
(1) Laboratories/Operations
10101 Renner Boulevard	43-1039532	LabOne, Inc. (MO)	Quest Diagnostics
Lenexa, KS 6621912
(2) Billing Centers
800 NW Chipman Road	43-1336549	Systematic Business	N/A
Lee’s Summit, MO 64063		Services, Inc. (MO)
1020 Laurel Oak Road #300	23-2057350	ExamOne World Wide, Inc.	N/A
Voorhees, NJ 08043		(PA)

¹² This facility also serves as a clinical laboratory (see also listing above).

78

EX-10.14

Exhibit 10.14

AMENDED AND RESTATED

Quest Diagnostics Incorporated

Employee Long-Term Incentive Plan

(As amended on October 31, 2008)

1. THE PROGRAM

          a) Purpose. This Amended and Restated Quest Diagnostics Incorporated Employee Long-Term Incentive Plan (the “Program”) is intended to benefit the stockholders of Quest Diagnostics Incorporated (the “Company”) by providing a means to attract, retain and reward individuals who can and do contribute to the longer term financial success of the Company. Further, the recipients of stock-based awards under the Program should identify their success with that of the Company’s stockholders and therefore will be encouraged to increase their proprietary interest in the Company.

          b) Effective Date. To serve this purpose, the Program will become effective upon its approval by the holders of stock entitled to vote at the Company’s 2005 Annual Meeting of Stockholders (the “Effective Date”).

2. ADMINISTRATION

          a) Committee. The Program shall be administered by a Committee, appointed by the Board of Directors of the Company (the “Board”), which shall consist of no less than two of its members, all of whom shall not be (or formerly have been) employees of the Company (the “Committee”); provided, however, that from time to time the Board may assume, at its sole discretion, administration of the Program. Except with regard to awards to employees subject to Section 16 of the Securities Exchange Act of 1934, the Committee may delegate certain responsibilities and powers to any executive officer or officers selected by it. Any such delegation may be revoked by the Committee at any time.

          b) Powers and authority. The Committee’s powers and authority include, but are not limited to: selecting individuals, who are employees of the Company and any subsidiary of the Company or other entity in which the Company has a significant equity or other interest as determined by the Committee, to receive awards; determining the types and terms and conditions of all awards granted, including performance and other earnout and/or vesting contingencies; permitting transferability of awards to eligible third parties; interpreting the Program’s provisions; and administering the Program in a manner that is consistent with its purpose. The Committee’s decision in carrying out the Program and its interpretation and construction of any provisions of the Program or any award granted or agreement or other instrument executed under it shall be final and binding upon all persons. No members of the Board shall be liable for any action or determination made in good faith in administering the Program.

          c) Award Prices. Except for awards made in connection with the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity, all awards denominated or made in Shares shall use as the per Share price the mean between the high and low selling prices of a share of the Common Stock of the Company (“Share”) on the applicable date as reported in The New York Times, or if Shares are not traded on such date, the mean between the high and low selling prices on the next preceding day on which such Shares are traded; provided, however, that the Committee may in its discretion establish a higher price as the per Share price; and provided further, however, that where a “reload” option is issued to an optionee who exercises an option by tendering (either actually or by attestation) Shares previously owned by the optionee, then the per Share exercise price of the reload option (which shall be for the same number of shares tendered for payment) shall be the market price at which the Shares tendered are valued in accordance with Section 4(b). The applicable date shall be the day on which the award is granted. Except as provided for in Section 3(d), the per Share exercise price of any stock option or stock appreciation right may not be decreased after the grant of the award, and a stock option or stock appreciation right may not be surrendered as consideration in exchange for the grant of a new award with a lower per Share exercise price.

1

3. SHARES SUBJECT TO THE PROGRAM AND ADJUSTMENTS

          a) Maximum Shares Available for Delivery. Subject to adjustments under Section 3(d), the maximum number of Shares that may be delivered to participants and their beneficiaries under the Program shall be equal to (i) 48,000,000¹ Shares; (ii) any Shares that were available for future awards under the Company’s 1996 Employee Equity Participation Program (the “Prior Program”) as of June 29, 1999; and (iii) any Shares that were represented by awards granted under the Prior Program of the Company, which are or may be forfeited, which expire or are canceled without the delivery of Shares or which have or may result in the forfeiture of Shares back to the Company after June 29, 1999. In addition, any Shares delivered under the Program or the Prior Program of the Company which are forfeited back to the Company because of the failure to meet an award contingency or condition shall again be available for delivery pursuant to new awards granted under the Program. Any Shares covered by an award (or portion of an award) granted under the Program or the Prior Program of the Company, which is forfeited or canceled, expires or is settled in cash, including the settlement of tax withholding obligations using Shares, shall be deemed not to have been delivered for purposes of determining the maximum number of Shares available for delivery under the Program. Likewise, if any stock option is exercised by tendering Shares, either actually or by attestation, to the Company as full or partial payment for such exercise under this Program or the Prior Program of the Company, only the number of Shares issued net of the Shares tendered shall be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Program. Further, Shares issued under the Program through the settlement, assumption or substitution of outstanding awards or obligations to grant future awards as a condition of the Company acquiring another entity shall not reduce the maximum number of Shares available for delivery under the Program.

          b) Other Program Limits. Subject to adjustment under Section 3(d), the following additional maximums are imposed under the Program. The maximum number of Shares that may be delivered in conjunction with awards granted pursuant to Section 4(d) on or after the Effective Date, shall be 7,000,000. The maximum aggregate number of Shares that may be covered by awards granted to any one individual over the life of the Program pursuant to Sections 4(b) and 4(c) shall not exceed 6,000,000 Shares. The aggregate maximum payments that can be made for awards granted to any one individual pursuant to Section 4(d) on or after the Effective Date shall not exceed 1,200,000 Shares.

          c) Payment Shares. Subject to the overall limitation on the number of Shares that may be delivered under the Program, the Committee may, in addition to granting awards under Section 4, use available Shares as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Company.

          d) Adjustments for Corporate Transactions. In the event of any change in the Shares by reason of any stock split, reverse stock split, stock dividend recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or any similar change affecting the Shares, (i) the number and kind of shares which may be delivered under the Program pursuant to Sections 3(a) and 3(b); (ii) the number and kind of shares subject to outstanding awards; and (iii) the exercise price of outstanding stock options and stock appreciation rights shall be appropriately adjusted consistent with such change in such manner as the Committee may deem equitable to prevent substantial dilution or enlargement of the right granted to, or available for, participants in the Program; provided, however, that no such adjustment shall be required if the Committee determines that such action could cause an option to fail to satisfy the conditions of an applicable exception from the requirements of Section 409A of the Internal Revenue Code (“Section 409A”) or otherwise could subject a participant to the additional tax imposed under Section 409A in respect of an outstanding stock grant. Similar adjustments may be made in situations where the Company assumes or substitutes for outstanding awards held by employees and other persons of an entity acquired by the Company.

¹ All Share totals included in Section 3 and 4 have been adjusted to reflect the two-for-one stock split effective on June 20, 2005.

2

4. TYPES OF AWARDS

          a) General. An award may be granted singularly, in combination with another award(s) or in tandem whereby exercise or vesting of one award held by a participant cancels another award held by the participant. Subject to the limitations of Section 2(c), an award may be granted as an alternative or successor to or replacement of an existing award under the Program or under any other compensation plan or arrangement of the Company, including the plan of any entity acquired by the Company. The types of awards that may be granted under the Program include: 

          b) Stock Option. A stock option represents a right to purchase a specified number of Shares during a specified period at a price per Share which is no less than one hundred percent (100%) of the per Share amount stipulated by Section 2(c). A stock option may be in a form intended to comply with Section 422 or any other similar provision of the Internal Revenue Code (the “Code”) or in another form which may or may not qualify for favorable federal income tax treatment. Each stock option granted on or after the Effective Date shall expire on the applicable date designated by the Committee but in no event may such date be more than seven years from the date the stock option is granted. The Shares covered by a stock option may be purchased by means of a cash payment or such other means as the Committee may from time-to-time permit, including (i) tendering (either actually or by attestation) Shares valued using the market price at the time of exercise, (ii) authorizing a third party to sell Shares (or a sufficient portion thereof) acquired upon exercise of a stock option and to remit to the Company a sufficient portion of the sale proceeds to pay for all the Shares acquired through such exercise and any tax withholding obligations resulting from such exercise; or (iii) any combination of the above. It is intended that any such settlement or deferral shall be implemented in a manner and this Program shall be interpreted and administered so as to comply with Section 409A of the Code and any applicable guidance issued thereunder in order to avoid the imposition of tax to an employee under such Section in respect of any award.

          c) Stock Appreciation Right. A stock appreciation right is a right to receive a payment in cash, Shares or a combination, equal to the excess of the aggregate market price at time of exercise of a specified number of Shares over the aggregate exercise price of the stock appreciation right being exercised. The longest term a stock appreciation right granted on or after the Effective Date may be outstanding shall be seven years. Such exercise price shall be no less than one hundred percent (100%) of the per Share amount stipulated by Section 2(c).

          d) Stock Award. A stock award is a grant of Shares or of a right to receive Shares (or their cash equivalent or a combination of both) in the future. Each stock award shall be earned and vest over such period and shall be governed by such conditions, restrictions and contingencies as the Committee shall determine. These may include continuous service and/or the achievement of performance goals. The performance goals that may be used by the Committee for such awards granted to persons who may become subject to Code Section 162(m) shall consist of operating profits (including EBITDA), net profits, earnings per share, profit returns and margins, revenues, shareholder return and/or value, stock price, customer service and quality metrics. Performance goals may be measured solely on a corporate, subsidiary or business unit basis, or a combination thereof. Further, performance criteria may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure of the selected performance criteria. Profit, earnings and revenues used for any performance goal measurement may exclude: gains or losses on operating asset sales or dispositions; asset write-downs; litigation or claim judgments or settlements; accruals for historic environmental obligations; effect of changes in tax law or rate on deferred tax liabilities; accruals for reorganization and restructuring programs; uninsured catastrophic property losses; the effect of changes in accounting standards; the cumulative effect of changes in accounting principles; and any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and Statement of Financial Accounting Standards No. 145 and/or in management’s discussion and analysis of financial performance appearing in the Company’s annual report to stockholders for the applicable year.

3

5. AWARD SETTLEMENTS AND PAYMENTS

          a) Dividends and Dividend Equivalents. An award may contain the right to receive dividends or dividend equivalent payments which may be paid either currently or credited to a participant’s account. Any such crediting of dividends or dividend equivalents may be subject to such conditions, restrictions and contingencies as the Committee shall establish, including the reinvestment of such credited amounts in Share equivalents.

          b) Payments. Awards may be settled through cash payments, the delivery of Shares, the granting of awards or combination thereof as the Committee shall determine. Any award settlement, including payment deferrals, may be subject to such conditions, restrictions and contingencies as the Committee shall determine. The Committee may permit or require the deferral of any award payment, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred Share equivalents.

6. PROGRAM AMENDMENT AND TERMINATION

          a) Amendments. The Board may amend this Program and the Committee may amend any outstanding award in such manner as it deems necessary and appropriate to better achieve the Program’s purpose, provided, however, that (i) except as provided in Section 3(d) (a) the Share and other award limitations set forth in Sections 3(a) and 3(b) cannot be increased and (b) the minimum stock option and stock appreciation right exercise prices set forth in Sections 2(c) and 4(b) and (c) cannot be changed unless such a plan amendment is properly approved by the Company’s stockholders, and (ii) no such amendment shall, without a participant’s consent, materially adversely affect a participant’s rights with respect to any outstanding award. Notwithstanding the foregoing, no action taken by the Committee (x) to settle or adjust an outstanding award pursuant to Section 3(d) or (y) to modify an outstanding award to avoid, in the reasonable, good faith judgment of the Company, the imposition on any participant of any tax, interest or penalty under Section 409A of the Code, shall require the consent of any participant.

          b) Program Suspension and Termination. The Board may suspend or terminate this Program at any time. However, in no event may any awards be granted under the Program after the tenth anniversary of the Effective Date. Any such suspension or termination shall not of itself impair any outstanding award granted under the Program or the applicable participant’s rights regarding such award.

7. MISCELLANEOUS

          a) Assignability. Except by will or by the laws of descent and distribution and, if permitted by the Committee, as a gift to a family member or a trust or similar entity for the benefit of one or more family members, no award granted under the Program shall be assignable or transferable.

          b) No Individual Rights. No person shall have any claim or right to be granted an award under the Program. Neither the Program nor any action taken hereunder shall be construed as giving any employee or other person any right to continue to be employed by or to perform services for the Company, any subsidiary or related entity. The right to terminate the employment of or performance of services by any Program participant at any time and for any reason is specifically reserved to the employing entity. 

          c) Unfunded Program. The Program shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Program shall not establish any fiduciary relationship between the Company and any participant or beneficiary of a participant. To the extent any person holds any obligation of the Company by virtue of an award granted under the Program, such obligation shall merely constitute a general unsecured liability of the Company and accordingly shall not confer upon such person any right, title or interest in any assets of the Company.

          d) Use of Proceeds. Any proceeds from the sale of shares under the Program shall constitute general funds of the Company.

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          e) Other Benefit and Compensation Programs. Unless otherwise specifically determined by the Committee, settlements of awards received by participants under the Program shall not be deemed a part of a participant’s regular, recurring compensation for purposes of calculating payments or benefits from any Company benefit plan or severance program. Further, the Company may adopt any other compensation programs, plans or arrangements as it deems appropriate.

          f) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Program or any award, and the Committee shall determine whether cash shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled.

          g) Governing Law. The validity, construction and effect of the Program and any award, agreement or other instrument issued under it shall be determined in accordance with the laws of the state of New Jersey without reference to principles of conflict of law.

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EX-10.21

Exhibit 10.21

AMENDED AND RESTATED
QUEST DIAGNOSTICS INCORPORATED
LONG-TERM INCENTIVE PLAN FOR
NON-EMPLOYEE DIRECTORS

(As amended as of October 31, 2008)

          Section 1. Purpose. The purpose of the Amended and Restated Quest Diagnostics Incorporated Long-Term Incentive Plan for Non-Employee Directors is to secure for the Company and its stockholders the benefits of the incentive inherent in increased common stock ownership by the members of the Board of Directors who are not employees of the Company or any of its subsidiaries.

          Section 2. Definitions. When used herein, the following terms shall have the following meanings:

          “Administrator” means the Board, or a committee of the Board, duly appointed to administer the Plan.

          “Board” means the Board of Directors of the Corporation.

          “Code” means the Internal Revenue Code of 1986, as amended.

          “Common Stock” means ($.01 par value) common stock of the Corporation.

          “Corporation” means Quest Diagnostics Incorporated, a Delaware corporation.

          “Effective Date” shall mean the date of approval of the Plan by the holders of stock entitled to vote at the Corporation’s 2005 Annual Meeting of Stockholders.

          “Exercise Price” means the price per share specified in the Option agreement at which the Participant may purchase Common Stock through the exercise of his/her Option, as the same may be adjusted in accordance with Section 9.

          “Fair Market Value” means, as of any date, the mean of the high and low sales price of a share of Common Stock on The New York Stock Exchange Composite list on such date (or if no sale took place on such exchange on such date, the mean between the high and the low on such exchange on the most recent preceding date on which a sale took place); provided, however, that for the purposes of Section 7(d), if on the date of exercise of an Option, a Participant sells through a broker designated by the Corporation any of the shares purchased as a result of the exercise of the Option, then the shares shall be valued at the average sales price of such shares sold on such date as reported to the Corporation by such broker.

          “Option” means a right granted under the Plan to a Participant to purchase shares of Common Stock as a Nonqualified Stock Option which is not intended to qualify as an Incentive Stock Option under Section 422 of the Code.

          “Option Period” means the period within which the Option may be exercised pursuant to the Plan.

          “Participant” means a member of the Board of Directors of Quest Diagnostics Incorporated who is not an employee of Quest Diagnostics Incorporated or any subsidiary thereof.

          “Plan” means the Amended and Restated Quest Diagnostics Incorporated Long-Term Incentive Plan for Non-Employee Directors.

           “Stock Awards” means a grant under the Plan to a Participant of shares of Common Stock or of a right to receive shares of Common Stock (or their cash equivalent or a combination of both) in the future.

          Section 3. Administration. The Plan shall be administered by the Administrator who shall establish from time to time regulations for the administration of the Plan, interpret the Plan, delegate in writing administrative matters to committees of the Board or to other persons, and make such other determinations and take such other action as it deems necessary or advisable for the administration of the Plan. All decisions, actions and interpretations of the Administrator shall be final, conclusive and binding upon all parties.

          Section 4. Participation. All Non-Employee Directors who become members of the Board shall automatically be Participants in the Plan.

          Section 5. Shares Subject to the Plan. The maximum number of shares of Common Stock that may be delivered in conjunction with grants of Options and Stock Awards under the Plan shall be 2,000,000,¹ and 2,000,000 shares of Common Stock shall be reserved for this purpose under the Plan (subject to adjustment as provided in Section 9). The shares issued upon the grant of Stock Awards or exercise of Options granted under the Plan may be authorized and unissued shares or shares held in the treasury of the Corporation including shares purchased on the open market by the Corporation (at such time or times and in such manner as it may determine). The Corporation shall be under no obligation to acquire Common Stock for distribution to Participants before payment in shares of Common Stock is due. If any Stock Award or Option granted under the Plan shall be canceled or expire, new Stock Awards or Options may thereafter be granted covering such shares.

¹ All Share totals included in Sections 5 and 6 have been adjusted to reflect the two-for-one stock split effective on June 20, 2005.

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          Section 6. Grants of Options and Stock Awards.

          (a) On the Effective Date and on the date of the Annual Meeting of Shareholders of each year commencing on January 1, 2006, the Administrator may grant to each Participant an Option and/or a Stock Award, in such proportions as the Administrator may determine, covering an aggregate of not more than 20,000 shares of Common Stock. In the event that a Participant is elected as a director of the Company other than on the date of the Annual Meeting of Shareholders, the Board may grant to such director, on his/her election, an Option and/or a Stock Award, in such proportions as the Administrator may determine, covering such number of shares of Common Stock (not to exceed 20,000) that is proportional to the fraction of a year remaining until the next Annual Meeting of Shareholders. In addition, upon a Participant’s initial election as a director of the Company by the Board, the Administrator may make a one-time grant to such Participant of an Option and/or a Stock Award, in such proportions as the Administrator may determine, covering an aggregate of not more than 40,000 shares of Common Stock.

          (b) Each Stock Award shall be earned and vest over such period and shall be governed by such conditions, restrictions and contingencies as the Administrator shall determine. These may include the achievement of performance goals.

          (c) As may be permitted from time to time by the Administrator, each Participant may elect to receive an Option or Stock Award in lieu of the cash compensation payable to such director in any year. The number of shares of Common Stock underlying the Option available to such director shall be computed using the same option valuation methodology (or any subsequent methodology as may be adopted by the Company) as is used for reporting compensation expense in the Company’s financial statements so as to achieve a value equal to the cash compensation that would otherwise have been paid. Any such election shall be irrevocable and shall be made by December 31, effective for the fees payable during the following year and with an Option being granted on each day on which the fees would otherwise have been payable (generally expected to be the first day of each calendar quarter).

          Section 7. Terms and Conditions of Options. Each Option granted under the Plan shall be evidenced by a written agreement, in form approved by the Administrator and executed by the Chairman of the Board, President, Vice President of Human Resources or Secretary of the Corporation, which shall be subject to the following express terms and conditions and to such other terms and conditions as the Administrator may deem appropriate. Options may be granted singularly or in combination with a Stock Award.

          (a) Option Period. Each Option agreement entered into on or after the Effective Date shall specify that the Option granted thereunder is granted for a period of seven (7) years from the date of grant and shall provide that the Option shall expire on such seven-year anniversary.

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          (b) Exercise Price. The Exercise Price per share shall be the Fair Market Value at the time the Option is granted.

          (c) Exercise of Option. Subject to Section 7(e), Options granted under Section 6(a) hereof shall become exercisable in three equal annual installments beginning on the first anniversary of the date of grant. Options granted under Section 6(c) vest and become exercisable immediately on the date of grant. The exercisability of these Options may be limited by the Corporation’s restrictions on exercise resulting from provisions of its non-employee director stock ownership guidelines program.

          (d) Payment of Exercise Price Upon Exercise. The Exercise Price of the shares as to which an Option shall be exercised shall be paid to the Corporation at such time (but in no event later than the date on which any shares are issued on exercise of an Option) as is determined by the Administrator. The Administrator may authorize in its sole discretion, the payment of the Exercise Price by (i) delivering Common Stock of the Corporation already owned by the Participant and having a total Fair Market Value on the date of such delivery equal to the Exercise Price, (ii) delivering a combination of cash and Common Stock of the Corporation having a total Fair Market Value on the date of such delivery equal to the Exercise Price, or (iii) by delivery of a notice of cancellation of vested Options held by the Participant having a spread equal to the Exercise Price of the number of shares being exercised, including any taxes required to be withheld by the corporation in connection with such exercise. For purposes of the preceding sentence “spread” shall mean the difference between the Fair Market Value of the Common Stock on the date of exercise and the Exercise Price multiplied by the number of shares covered by the vested Options being canceled.

          (e) Termination of Service on the Board. In the event service on the Board of a Participant terminates for any reason, all Options previously granted to such Participant under the Plan may be exercised by the Participant (or, if the Participant is deceased, by his/her representative) at any time, from time to time, for the remaining term of the Option.

          (f) Transferability of Options. No Option granted under the Plan and no right arising under such Option shall be transferable other than by will or by the laws of descent and distribution. During the lifetime of the optionee, an Option shall be exercisable only by him/her.

          (g) Participants to Have No Rights as Stockholders. No Participant shall have any rights as a stockholder with respect to any shares subject to his or her Option prior to the date on which he or she is recorded as the holder of such shares on the records of the Corporation.

          (h) Other Option Provisions. The form of Option agreement authorized by the Plan may contain such other provisions as the Board may, from time to time, determine.

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          Section 8. Terms and Conditions of Stock Awards. Each Stock Award granted under the Plan shall be evidenced by a written agreement, in form approved by the Administrator and executed by the Chairman of the Board, President, Vice President of Human Resources or Secretary of the Corporation, which shall be subject to the following express terms and conditions and to such other terms and conditions as the Administrator may deem appropriate. Stock Awards may be granted singularly or in combination with an Option.

          (a) Dividends and Dividend Equivalents. A grant of Stock Awards may contain the right to receive dividends or dividend equivalent payments which may be paid either currently or credited to a Participant’s account. Any such crediting of dividends or dividend equivalents may be subject to such conditions, restrictions and contingencies as the Administrator shall establish, including the reinvestment of such credited amounts in Common Stock equivalents.

          (b) Payments. Stock Awards may be settled through cash payments, the delivery of shares of Common Stock, the granting of Stock Awards or Options or combination thereof as the Administrator shall determine. Any Stock Award settlement, including payment deferrals, may be subject to such conditions, restrictions and contingencies as the Administrator shall determine. The Administrator may permit or require the deferral of any award payment, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred share equivalents.

          (c) Transferability of Stock Awards. Except by will or by the laws of descent and distribution and, if permitted by the Administrator, as a gift to a family member or a trust or similar entity for the benefit of one or more family members, no Stock Award granted under the Plan shall be assignable or transferable.

          (d) Participants to Have No Rights as Stockholders. No Participant shall have any rights as a stockholder with respect to any shares subject to his or her Stock Award prior to the date on which he or she is recorded as the holder of such shares on the records of the Corporation.

          (e) Other Stock Award Provisions. The form of Stock Award agreement authorized by the Plan may contain such other provisions as the Board may, from time to time, determine.

          Section 9. Adjustments in Event of Change in Common Stock. In the event of any change in the Common Stock by reason of any stock split, reverse stock split, stock dividend recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares which thereafter may be optioned, awarded and sold under the Plan and the number and kind of shares subject to Stock Awards in outstanding Stock Award Agreements or subject to Option in outstanding Option agreements and the Exercise Price per share of such Options shall be appropriately

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adjusted consistent with such change in such manner as the Administrator may deem equitable to prevent substantial dilution or enlargement of the right granted to, or available for, Participants in the Plan; provided, however, that no such adjustment shall be required if the Administrator determines that such action could cause an Option to fail to satisfy the conditions of an applicable exception from the requirements of Section 409A (as defined below) or otherwise could subject a Participant to the additional tax imposed under Section 409A in respect of an outstanding Stock Award..

          Section 10. Listing and Qualification of Shares. The Plan, the grant of Stock Awards, the grant and exercise of Options thereunder, and the obligation of the Corporation to sell and deliver shares under such Stock Awards and Options, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation, in its discretion, may postpone the issuance or delivery of shares upon any grant of a Stock Award or exercise of an Option until completion of any stock exchange listing, or other qualification of such shares under any state or federal law, rule or regulation as the Corporation may consider appropriate, and may require any Participant, beneficiary or legal representative to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws, rules and regulations.

          Section 11. Taxes. The Corporation may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state, local and other taxes required by law to be withheld with respect to Options and Stock Awards granted under the Plan including, but not limited to (a) reducing the number of shares of Common Stock otherwise deliverable to permit deduction of the amount of any such withholding taxes from the amount otherwise payable under the Plan, (b) deducting the amount of any such withholding taxes from any other amount then or thereafter payable to a Participant, or (c) requiring a Participant, beneficiary or legal representative to pay in cash to the Corporation the amount required to be withheld or to execute such documents as the Corporation deems necessary or desirable to enable it to satisfy its withholding obligations as a condition of releasing the Common Stock. The Plan is intended and shall be construed to comply with Section 409A of the Code, including any amendments or successor provisions to that Section any regulations and other administrative guidance thereunder, in each case as they, from time to time, may be amended or interpreted through further administrative guidance (collectively, “Section 409A”). In this regard, and without limiting the previous sentence, any election made with respect to Sections 6(a), 6(c) and 8(b) shall be conformed to the requirements of Section 409A to the extent applicable.

          Section 12. No Liability of Board Members. No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his/her capacity as a member of the Board or the Administrator nor for any mistake of judgment made in good faith, and the Corporation shall indemnify and hold harmless to the fullest extent permitted by the Corporation’s

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Restated Certificate of Incorporation and By-Laws and Delaware General Corporation Law, each employee, officer or director of the Corporation to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with the Plan.

          Section 13. Amendment or Termination. The Board may, with prospective or retroactive effect, amend, suspend or terminate the Plan or any portion thereof at any time; provided, however, that no amendment, suspension or termination of the Plan shall deprive any Participant of any right with respect to any Stock Award or Option granted under the Plan without his written consent; and provided, further, that unless duly approved by the holders of stock entitled to vote thereon at a meeting (which may be the annual meeting) duly called and held for such purpose, except as provided in Section 9, no amendment or change shall be made in the Plan (i) increasing the total number of shares which may be issued or transferred under the Plan; (ii) changing the exercise price specified for the shares subject to Options; (iii) changing the maximum period during which Options may be exercised; (iv) extending the period during which Options or Stock Awards may be granted under the Plan; or (v) expanding the class of individuals eligible to receive Stock Awards or Options under the Plan.

          Section 14. Captions. The captions preceding the sections of the Plan have been inserted solely as a matter of convenience and shall not in any manner define or limit the scope or intent of any provisions of the Plan.

          Section 15. Governing Law. The Plan and all rights thereunder shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within such State.

          Section 16. Effective Date and Duration of Plan. The Plan shall become effective as of the Effective Date. This Plan shall terminate on the tenth anniversary of the Effective Date, and no Stock Awards or Option may be granted under the Plan after such date, but such termination shall not affect any Stock Award or Option previously granted.

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EX-10.22

Exhibit 10.22

QUEST DIAGNOSTICS INCORPORATED
AMENDED AND RESTATED DEFERRED COMPENSATION PLAN
FOR DIRECTORS

(As amended as of October 31, 2008)

Section 1. Effective Date

The effective date of the Plan is January 1, 1997.

Section 2. Eligibility

Any Director of Quest Diagnostics Incorporated (the “Corporation”) who is not an officer or employee of the Corporation or a subsidiary thereof is eligible to participate in the Plan.

Section 3. Deferred Compensation Accounts

There shall be established for each participant a deferred compensation account or accounts in the participant’s name.

Section 4. Amount of Deferral

(a) Cash Compensation. A participant may elect to defer receipt, for any calendar year, all or any portion of the cash compensation payable to the participant for serving on the Board of Directors of the Corporation and Committees of the Board of Directors.

(b) Stock Awards. A deferral election may also be made in respect of all or any portion of any Stock Awards (as such term is defined in the Corporation’s Long-Term Incentive Plan for Non-Employee Directors (the “Incentive Plan”)) granted to the participant under the Incentive Plan for serving on the Board of Directors of the Corporation and Committees of the Board of Directors. No deferral may be made with respect to stock options granted under the Incentive Plan.

Section 5. Notional Investment of Deferred Amounts

(a) General. A participant may designate, in increments of 10%, the cash compensation to be deferred or cash compensation already deferred to be allocated to a cash account and a market value account or any combination of such accounts. Any such designation may be made no later than the 15th day of December of any calendar year to be effective on the January 1 following such notification.

(b) Cash Account. The amount, if any, in the participant’s deferred compensation cash account shall be credited with interest, to be compounded quarterly, calculated for each calendar quarter at a rate equal to the prime rate of Citibank, N.A. in effect on the first date of such calendar quarter.

(c) Market Value Account. The amount, if any, in or allocated to the participant’s deferred compensation market value account on each date compensation would have been paid in accordance with the Corporation’s normal practice but for the election to defer shall be expressed in units, the number of which shall be equal to such amount divided by the closing price of shares of the Corporation’s Common Stock as reported in The Wall Street Journal (hereinafter referred to as “Market Value”) on such date or on the trading day next preceding such date if such date is not a trading day. On each date that the Corporation pays a regular cash dividend on shares of its Common Stock outstanding, the participant’s market value account shall be credited with a number of units equal to the amount of such dividend per share multiplied by the number of units in the participant’s account on such date divided by the Market Value on such dividend date or on the trading day next preceding such date if the dividend payment date is not a trading day. The value of the units in the participant’s market value account on any given date shall be determined by reference to the Market Value on such date. All units in the market value account shall be rounded to the nearest 0.01 of a whole share of the Corporation’s Common Stock.

(d) Re-allocation between Cash Account and Market Value Account. A participant may reallocate the manner (i.e., between the cash account and market value account) in which future cash compensation is to be deferred by notice given no later than 45 days prior to the date that cash compensation would otherwise have been paid. In addition, a participant may re-allocate any balances held in the cash account to the market value account (or any balances held in the market value account to the cash account) as of the last day of a calendar quarter by notice given no later than 45 days prior to the last date of such calendar quarter. In such event, the value of the units in the participant’s market value account shall be determined by reference to the Market Value on the last day of such calendar quarter or on the trading day next preceding such date if such date is not a trading day.

(e) Stock Awards. A participant may designate, in increments of 10%, the Stock Awards to be deferred and credited to the participant’s stock award account. Any such designation must be made no later than the 15th day of December of any calendar year, to be effective with respect to Stock Awards granted in the following calendar year. On each date that the Corporation pays a regular cash dividend on shares of its Common Stock outstanding, the participant’s cash account shall be credited with the amount of such dividend.

(f) Recapitalization. The number of units in the participant’s market value account and the number of Stock Awards in the participant’s stock award account shall be proportionally adjusted for any increase or decrease in the number of issued shares of Common Stock of the Corporation resulting from a subdivision or consolidation of shares or other capital adjustment, or the payment of a stock dividend or other increase or decrease in such shares effected without receipt of consideration by the Corporation, or any distribution or spin-off of assets (other than cash) to the stockholders of the Corporation.

Section 6. Period of Deferral

A participant may elect to defer receipt of compensation either (a) until a specified year in the future or (b) until the participant’s termination of service as a Director of the Corporation or

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(c) on the first to occur of (a) or (b). If alternative (a) is elected, actual payment will be made or will commence on the first business day of the year specified or as soon as practicable thereafter. If alternative (b) is elected, payment will be made or will commence on the first day of the calendar month after the participant terminated services as a Director of the Corporation or as soon thereafter as practicable. If alternative (c) is selected, payment will be made as applicable. Notwithstanding the foregoing, no Stock Awards in the participant’s stock award account shall be distributed until (and in such case as soon as practicable after) the Stock Award has vested in accordance with the terms of the Incentive Plan.

Section 7. Form of Payment

A participant may elect to receive the cash compensation deferred under the Plan in either (a) a lump sum or (b) a number of annual installments as specified by the participant. All amounts credited to the participant’s cash and market value accounts shall be paid in cash. Cash payments from the participant’s market value account will be determined based on the Market Value on the last trading date preceding the date of payment. All Stock Awards deferred under the Plan shall be paid in Common Stock of the Corporation. In the case of any election to receive Stock Awards in installments, the distributions shall be based on the aggregate number of Stock Awards deferred (as opposed to the Market Value of the Stock Awards as of the date any installment is due).

Section 8. Death or Disability Prior to Receipt

In the event that a participant dies or becomes totally and permanently disabled (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended) prior to receipt of any or all of the amounts payable to the participant pursuant to the Plan, any amounts remaining in the participant’s deferred compensation account may be paid to his/her estate or personal representative in a lump sum within sixty (60) days (or in the case of Stock Awards, in Common Stock) following the Corporation’s notification of the participant’s death or disability.

Section 9. Time of Election of Deferral

An election to defer compensation may be made by a person then currently serving as a Director for the next calendar year no later than the 15^th day of December preceding such year.

Section 10. Manner of Electing Deferral

A participant may elect to defer compensation by giving written notice to the Secretary of the Corporation on a form provided by the Corporation, which notice shall include the amount to be deferred, the accounts to which such amounts are to be allocated and the percentage (in increments of 10%) of such amounts to be allocated to each account, the period of deferral, and the form of payment, including the number of installments, if applicable.

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Section 11. Effect of Election

An election to defer compensation shall be irrevocable once the calendar year to which it applies has commenced, and may be revoked or modified only upon demonstration of substantial and prolonged hardship and with the concurrence of the Chairman of the Board of the Corporation. Any election shall, once effective and unless otherwise specified, apply to future calendar years. An election may be revoked or modified with respect to any future calendar year by notifying the Secretary of the Corporation in writing at least fifteen (15) days prior to the commencement of such calendar year.

Section 12. Participant’s Rights Unsecured

The right of any participant to receive future payments under the provisions of the Plan shall be an unsecured claim against the general assets of the Corporation. No participant shall have any rights of a shareholder of the Corporation in connection with any amounts credited to his accounts under the Plan until actual delivery of shares of Common Stock of the Corporation pursuant to the Plan.

Section 13. Statement of Accounts

Statements will be sent to each participant within 30 days after the end of each calendar quarter as to the value of the participant’s deferred compensation accounts as of the end of the preceding calendar quarter.

Section 14. Assignability

No right to receive payments hereunder shall be transferable or assignable by a participant, except by will or by the laws of descent and distribution. The participant may not sell, assign, transfer, pledge or otherwise encumber any interest in the participant’s deferred compensation account and any attempt to do so shall be void against, and shall not be recognized by, the Corporation.

Section 15. Administration

The Plan shall be administered by the Corporation (the “Administrator”), which shall have the authority to adopt rules and regulations for carrying out the Plan. The Compensation Committee of the Board of Directors of the Corporation shall have the authority to interpret, construe and implement the provisions of the Plan.

Section 16. Amendment

The Plan may at any time or from time to time be amended, modified or terminated by the Corporation. No amendment, modification or termination shall, without the consent of the participant, adversely affect accruals in such participant’s deferred compensation account.

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Section 17. Section 409A

The Plan is intended and shall be construed to comply with Section 409A, including any amendments or successor provisions to that Section any regulations and other administrative guidance thereunder, in each case as they, from time to time, may be amended or interpreted through further administrative guidance (collectively, “Section 409A”). To the extent a participant would otherwise be entitled to any payment under this Plan and that if paid during the six months beginning on the participant’s termination of service would be subject to the Section 409A additional tax because the participant is a “specified employee” (within the meaning of Section 409A and as determined by the Corporation), the payment will be paid to the participant on the earlier of the six-month anniversary of the participant’s termination of employment or death. For purposes of the Plan, “termination of service” shall mean “separation from service”, within the meaning of Section 409A.

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FORM OF ELECTION

QUEST DIAGNOSTICS INCORPORATED

DEFERRED COMPENSATION PLAN FOR DIRECTORS

Secretary

In accordance with the terms of the Deferred Compensation Plan for Directors (the “Plan”), I hereby elect to defer compensation to be earned by me in the future as a Director of Quest Diagnostics Incorporated (the “Corporation”) as indicated below:

1.	CASH AMOUNT TO BE EARNED (check one)
	a)	All cash compensation received as a Director	_______
	b)	A portion of cash compensation received as a Director (Indicate amount)	_______
2.	ACCOUNTS TO WHICH CASH DEFERRED AMOUNTS ARE TO BE ALLOCATED
	a)	Cash account	_______	%
	b)	Market value account	_______	%
		NOTE: Entries must be in multiples of 10% and must total:	100	%
3.	STOCK AWARD TO BE GRANTED (check one)
	a)	All Stock Awards received as a Director	_______
	b)	A portion of Stock Awards received as a Director (Indicate amount)	_______	%
4.	PERIOD OF DEFERRAL (complete and check one)
	a)	For the following calendar year	_______
	b)	Beginning January 1, 200_ and until the termination of my services as a Director of the Corporation	_______

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5.	DISTRIBUTION ELECTION (complete and check one)
	a)	Specify year in future in which payments should be made or commence	_______
	b)	Upon termination of service as a Director	_______
	c)	The earlier of (a) and (b) above	_______
6.	FORMS OF PAYMENT OF CASH DEFERRED COMPENSATION PLUS INTEREST CREDITED THEREON AND OF DEFERRED STOCK AWARDS (check one)
	a)	In one lump sum	_______
	b)	In annual installments (number of annual installments requested)	_______

I understand that in the event of my death or total and permanent disability prior to receipt of all amounts payable to me pursuant to the Plan, the balance shown in my Deferred Compensation Account may be paid to my estate or to my personal representative in a lump sum (or in the case of Stock Awards, in a single issuance of Common Stock of Quest Diagnostics).

I understand that an election to defer compensation shall be irrevocable once the calendar year to which it applies has commenced, and may be revoked or modified only upon demonstration of substantial and prolonged hardship and with the concurrence of the Chairman of the Board of Quest Diagnostics Incorporated. I further understand that an election may be revoked or modified with respect to any future calendar year(s) by notifying the Secretary of the Corporation in writing at least fifteen (15) days prior to the commencement of such calendar year.

(Date) (Director)

-7-

EX-10.23

Exhibit 10.23

Amended and Restated

Employment Agreement

Between

Surya N. Mohapatra

and

Quest Diagnostics Incorporated

Dated as of November 7, 2008

Table of Contents

			Page
1.	Employment		1
2.	Term		2
3.	Duties		2
4.	Place of Performance		3
5.	Cash Compensation		3
	(a)	Base Salary	3
	(b)	Annual Bonus	3
	(c)	Deferral	3
	(d)	Incentive Award Modifications	3
	(e)	Signing Bonus	4
6.	Equity Awards		4
	(a)	Option Grant	4
	(b)	Additional Compensation	4
	(c)	Restrictions on Option Shares	5
7.	Employee Benefits		5
	(a)	General Provisions	5
	(b)	Supplemental Executive Retirement Plan	5
	(c)	Vacation and Sick Leave	5
8.	Applicable Taxes		6
9.	Miscellaneous Benefits		6
	(a)	Business Travel and Expenses	6
	(b)	Executive Driver	6
	(c)	Relocation Expenses	6
	(d)	Non-Exclusivity	6
10.	Termination of Employment		6
	(a)	Termination by the Company for Cause	6
	(b)	Disability	7
	(c)	Death	7
	(d)	Termination by the Executive for Good Reason	7
	(e)	Other Terminations	9
	(f)	Notice of Termination	9
	(g)	Resignation	9
11.	Compensation upon Termination or During Disability		9
	(a)	Disability	9
	(b)	Death	10

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	(c)	Termination for Cause; Termination by the Executive other than for Good Reason or Disability	10
	(d)	Termination Resulting from Non-Renewal of this Agreement	11
	(e)	All Other Terminations	11
	(f)	Other Severance Provisions	13
	(g)	Change in Control Protections and Excise Tax Gross-Up	13
	(h)	Change in Control	15
12.	Non-Solicitation and Non-Competition		16
	(a)	Term of Non-Compete	16
	(b)	Term of Non-Solicitation of Customers	17
	(c)	Term of Non-Solicitation of Employees	17
	(d)	Term of Non-Compete, Non-Solicitation Automatically Extended	17
	(e)	Definitions Applicable to Section 12	17
	(f)	Expedited Arbitration Applicable to Section 12	18
	(g)	Exclusive Property	18
	(h)	Injunctive Relief	18
13.	Arbitration		19
14.	Confidentiality		19
15.	Other Matters		20
	(a)	Entire Agreement	20
	(b)	Assignment	20
	(c)	Notices	20
	(d)	Amendment/Waiver	20
	(e)	Applicable Law	20
	(f)	Severability	20
	(g)	Successor in Interest	21
	(h)	No Mitigation/No Offset	21
	(i)	Joint Participation in Drafting	21
	(j)	Section 409A	21
16.	Indemnification		22
17.	Authority		23

ii

Amended and Restated

Employment Agreement

Between

Surya N. Mohapatra

and

Quest Diagnostics Incorporated

          This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) between QUEST DIAGNOSTICS INCORPORATED (the “Company”), a Delaware corporation having its principal place of business at 1290 Wall Street West, Lyndhurst, NJ 07071 and SURYA N. MOHAPATRA (the “Executive”) is entered into on the date it has been executed by both parties.

          WHEREAS, the Executive is currently employed as the Company’s President and Chief Executive Officer and is a member of the Company’s Board of Directors and its Chairman; and

          WHEREAS, the Company considers the services of the Executive to be unique and essential to the success of the Company’s business; and

          WHEREAS the Company and the Executive had previously entered into an employment agreement dated November 9, 2003 (the “Prior Agreement”); and

          WHEREAS, the Company and the Executive previously entered into this Agreement, as of August 1, 2006 (the “Effective Date”), on the terms and conditions set forth herein, which, except as otherwise provided herein, shall constitute the sole and exclusive agreement relating to the employment of the Executive by the Company; and

          WHEREAS, the Company and the Executive wish to further amend and restate this Agreement as of November 7, 2008, to cause this Agreement to comply with the terms of Section 409A of the Internal Revenue Code of 1986, as amended.

          NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants, terms and conditions set forth herein, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed between the Company and the Executive that his Prior Agreement shall be amended and restated in its entirety as follows:

1. Employment. During the Employment Term, the Company shall continue to employ the Executive in a full-time capacity as President and Chief Executive Officer (“CEO”) of the Company, reporting directly to the Board of Directors of the Company (the “Board”), and the Executive shall accept such continued employment upon the terms and conditions set forth herein. The Executive has been elected to the Board and is its Chairman. If re-elected to the Board, the Executive shall continue to be its Chairman during the

	Employment Term. During the Employment Term, the Board shall nominate the Executive as a director of the Company and shall use its best efforts to have the Executive re-elected to the Board for the duration of the Employment Term.
2.	Term. The term of the Executive’s employment under this Agreement, as amended, shall commence as of August 1, 2006 and continue through December 31, 2011 (the “Employment Term”). Subject to six (6) months written notice of non-renewal by either party to the other, this Agreement will be automatically renewed for successive one-year terms on December 31, 2011 and on each December 31st thereafter. For purposes of this Agreement, the “Employment Term” shall mean the period from August 1, 2006 to the earlier to occur of (i) the scheduled expiration of the Employment Term, including any extension thereof, or (ii) the termination of the Executive’s employment in accordance herewith.
3.	Duties. During the Employment Term, the Executive shall, subject to the supervising powers of the Board, have those powers and duties consistent with the position of President and CEO in a company the size and nature of the Company, which powers shall in all cases include, without limitation, the power of supervision and control over, and responsibility for, the general management and operations of the Company (including the hiring and firing of employees and the appointment and termination of senior officers), development and implementation of a comprehensive strategic business plan, supervision of the day-to-day executive management process, and acting as spokesperson for the Company. During such period described in Section 1 as the Executive acts as Chairman, he shall have those powers and duties consistent with the position of Chairman. All senior officers and other officers with direct operational responsibilities shall report directly to the Executive unless the Executive in his sole discretion delegates such reporting responsibilities, in whole or in part, to another executive. It is the intention of the parties that the provisions of this Section 3 shall be applied in a manner consistent with the Sarbanes-Oxley Act of 2002, as amended from time to time. The Executive agrees to devote substantially all his working time and attention to the business of the Company. The Executive shall not, without the prior consent of the Company’s Board of Directors, be directly or indirectly engaged in any other trade, business or occupation for compensation requiring his personal services during the Employment Term. Nothing in this Agreement shall preclude the Executive from (i) engaging in charitable and community activities or from managing his personal investments, or (ii) serving as a member of the board of directors of an unaffiliated company not in competition with the Company, subject, however, with respect to each such board membership, to approval by the Company’s Board (not to be unreasonably withheld). During the Employment Term, the Executive shall be nominated for re-election as a member of the Board.

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4.	Place of Performance. The principal place of employment of the Executive shall be at the Company’s principal executive offices in Teterboro, New Jersey; Lyndhurst, New Jersey; or New York, New York.
5.	Cash Compensation. The Executive shall be compensated for services rendered during the Employment Term as follows:
	(a)	Base Salary. During the Employment Term, including all of fiscal year 2006, the Executive shall be compensated at an annual base salary of no less than $1,023,000 (the base salary, at the rate in effect from time to time, is hereinafter referred to as the “Base Salary”). The Board, or a committee thereof, shall review and may, if appropriate, at its discretion, increase (but not decrease) the annual Base Salary during the Employment Term. Base Salary shall be reviewed annually and be adjusted to reflect (among other factors) increases generally granted to other senior executives of the Company and the Executive’s performance consistent with Company pay practices. The Base Salary shall be payable in equal bi-weekly installments.
	(b)	Annual Bonus. In addition to the Base Salary provided for in Section 5(a) above, the Company will provide annual cash bonus awards to the Executive under its Management Incentive Plan (MIP) in accordance with the plan and any financial performance targets thereunder (“Annual Bonus”) each year during the Employment Term. Any Annual Bonus payable hereunder shall be paid between January 1st and March 15th of the year immediately following the year to which such Annual Bonus relates. During the portion of the Employment Term commencing January 1, 2007, the Executive’s target incentive opportunity under the Company’s MIP will be no less than 150% of Base Salary (the target bonus as a percentage of Base Salary, as in effect from time to time, is hereinafter referred to as the “Target Bonus”). The Target Bonus as a percentage of Base Salary shall be reviewed annually for increase (but not decrease) by the Board or a committee thereof.
	(c)	Deferral. Pursuant to the terms of the Company’s Supplemental Deferred Compensation Plan (“SDCP”), the Executive may elect to defer from payments of Base Salary and Annual Bonus and any other eligible compensation amounts as provided for under the SDCP; provided that pursuant to Section 3.1(d) of the Company’s Supplemental Executive Retirement Plan (“SERP”) the Executive waived the Company’s match credit under the SDCP for fiscal year 2005 and thereafter.
	(d)	Incentive Award Modifications. Any equity and option awards made to the Executive on or prior to the Effective Date and any equity and option awards that may be made to the Executive during the Employment Term shall be subject to, and shall benefit from, any amendments or revisions to the terms and conditions of any of the Company’s Incentive Compensation Programs that may be implemented on or after the Effective Date; provided that no amendments or

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		revisions shall be made without the Executive’s written consent to any outstanding equity awards if such amendment or revision would subject the Executive to additional tax, interest or penalties under Section 409A of the Internal Revenue Code of 1986, as amended from time to time and its implementing regulations (“Section 409A”).
	(e)	Signing Bonus. At the end of the next regular payroll period following the Effective Date, the Company paid the Executive a one-time lump sum cash payment in the amount of $100,000, less applicable tax withholding, which bonus shall be deemed to be part of the Annual Bonus (as defined in the SERP) earned by the Executive for 2006 for purposes of the SERP.
6.	Equity Awards.
	(a)	Option Grant.
		(i)	On or about the February 19, 2004 meeting of the Company’s Board of Directors (the “Option Grant Date”), except as noted below, the Executive was awarded options to purchase a total of 170,000 (one hundred seventy thousand) shares of the Company’s common stock (the “Option Shares”) at an exercise price equal to the average of the quoted high and low price per share of such common stock on the date of the award (the “Option Grant”). Except as otherwise provided herein, such options were granted in accordance with those provisions (including exercisability) established by the Board of Directors at the time such option was granted and applicable to other senior executives of the Company.
		(ii)	Subject to Section 6(a)(v), the Option Shares shall vest as to 1/3rd thereof on each anniversary of the Option Grant Date, provided, that (A) on the applicable vesting date, the Executive is then still in the employ of the Company, or (B) the provisions of Section 11(g)(i) apply;
		(iii)	Except as otherwise provided for in this Agreement, vested Option Shares may not be exercised after the expiration of the 10-year term of applicable Option Agreement.
		(iv)	In the event that the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason or upon the Executive’s death or Disability, or if the Executive is receiving severance pursuant to Section 11(d) hereof (for non-renewal of the Employment Term), the Option Shares shall be treated in accordance with the applicable termination provision of Section 11 relating to the treatment of stock options upon such termination.
	(b)	Additional Compensation. The Executive may be awarded additional compensation pursuant to the present or any future incentive compensation or

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		long-term compensation program established for the senior executive officers of the Company (collectively the “Incentive Compensation Programs”), in an appropriate manner for the position occupied by the Executive and his performance therein relative to other Company senior executive officers and consistent with Company pay practices, provided that in all events the Executive shall be treated on a basis no less favorable than other senior executives are treated. Except as otherwise provided herein, compensation granted under such plans will be subject to the actual provisions and conditions applicable to such plans.
	(c)	Restrictions on Option Shares. The Executive agrees in respect of the Option Shares that he shall not (i) sell, transfer or otherwise dispose of any Option Shares or any interest therein other than in compliance with the Company’s 1999 Employee Equity Participation Program, the stock option agreement between the Company and The Executive relating to such Option Shares, and the Company’s Policy for Purchasing and Selling Securities, (ii) enter into any transaction that is expected to result in a financial benefit arising from a decline in the value of the Company’s stock or (iii) enter into any hedging transactions, including, but not limited to the use of financial derivatives, short sales or any other similar transactions, without the prior written consent of the Board of Directors, in each case with respect to Subsections (i), (ii) and (iii) until the Option Shares are vested to the fullest extent provided for under this Agreement, and all restrictions against exercise of such Option Shares have expired or been terminated.
7.	Employee Benefits.
	(a)	General Provisions. Except as expressly provided in this Agreement, the Executive shall be eligible to participate in all employee benefit and welfare plans offered by the Company to its senior executive officers (e.g., Life Insurance, Medical & Dental Insurance, Travel, Accident, STD & LTD, Flexible Spending Accounts, Regular and Supplemental AD&D, Optional/Supplemental Life Insurance, Profit Sharing, the 401(k) Plan and Employee Stock Purchase Plan) (collectively referred to as the “Benefit Plans”) on a basis that is no less favorable to the Executive than that made available to other senior executive officers of the Company, provided that the Executive shall be reimbursed, in accordance with Section 15(j) hereof, for the costs of his annual participation in a comprehensive executive health assessment at a leading medical institution of his choice.
	(b)	Supplemental Executive Retirement Plan. During the Employment Term, the Executive shall be entitled to participate in the Company’s SERP, as in effect from time to time in accordance with its terms.
	(c)	Vacation and Sick Leave. The Executive shall be entitled to vacation and sick leave in accordance with the vacation and sick leave policies adopted by the Company from time to time, provided that the Executive shall be entitled to no less than five (5) weeks of paid vacation each calendar year. Any vacation shall

5

		be at such time and for such periods as shall be mutually agreed upon between the Executive and the Company. The Executive shall be entitled to all public holidays observed by the Company.
8.	Applicable Taxes. There shall be deducted from any compensation payments made under this Agreement any federal, state, and local taxes or other amounts required to be withheld under applicable law.
9.	Miscellaneous Benefits. During the Employment Term, the Executive shall be entitled to perquisites at least as favorable as those provided other senior executives of the Company. In all events, the Company shall provide the Executive with the following additional benefits:
	(a)	Business Travel and Expenses. The Executive shall be reimbursed by the Company for reasonable and other business expenses, as approved by the Company, that are incurred and accounted for in accordance with the Company’s normal practices and procedures for reimbursement of expenses.
	(b)	Executive Driver. In order to ensure the accessibility and safety of the Executive during the Employment Term, the Company will reimburse the Executive for the costs of an executive driver for business purposes only (including transportation to and from work). The Company shall directly cover the costs of all other business-related transportation.
	(c)	Relocation Expenses. The Company shall reimburse the Executive limited relocation expenses, to include home sale (including any sale on or after December 31, 2006, but not after December 31, 2007), purchase and moving expenses, but not including third party buy-out of existing residence, in accordance with the Company’s relocation policy if the Executive moves within the greater New York/New Jersey area prior to the expiration of the initial Employment Term of the Prior Agreement on December 31, 2006.
	(d)	Non-Exclusivity. Nothing in this Agreement shall prevent the Executive from being entitled to receive any additional compensation or benefits as approved by the Company’s Board of Directors; provided, however, that in no event shall the Company make any loans to the Executive that are in violation of the Sarbanes-Oxley Act of 2002, as such act may be amended or supplemented from time to time, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder.
10.	Termination of Employment. Notwithstanding any other provisions of this Agreement to the contrary, the employment of the Executive pursuant to this Agreement may be terminated as follows:
	(a)	Termination by the Company for Cause. The Executive’s employment may be terminated for “Cause” by the Company as provided below. As used herein, the

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	term “Cause” shall mean (i) conviction of the Executive for a felony; or (ii) the commission by the Executive of fraud or theft against, or embezzlement from, the Company. For purposes of this section, no act or failure to act on the Executive’s part shall be considered to be reason for termination for Cause if done, or omitted to be done, by the Executive in good faith and with the reasonable belief that the action or omission was in the best interests of the Company. Cause shall not exist unless and until there shall have been delivered to the Executive a copy of a resolution, duly adopted by the affirmative vote of not less than two thirds of the entire membership of the Board at a meeting of the Board held for the purpose (after no less than ten (10) days’ prior written notice to the Executive of such meeting and the purpose thereof and an opportunity for him, together with his counsel, to be heard before the Board at such meeting), of finding that in the good faith opinion of the Board, the Executive was guilty of the conduct set forth above in this Section 10(a) and specifying the particulars thereof in detail. The Date of Termination shall be the date the Board resolution specified herein is delivered to the Executive. Anything herein to the contrary notwithstanding, if, following a termination of the Executive’s employment by the Company for Cause based upon the conviction of the Executive for a felony, such conviction is overturned in a final determination on appeal, the Executive shall be entitled to the payments and the economic equivalent of the benefits the Executive would have received if his employment had been terminated by the Company without Cause.
(b)	Disability. The Executive’s employment may be terminated by the Company or the Executive upon the Executive’s Disability. For purposes of this Agreement, “Disability” shall mean the Executive’s inability, due to physical or mental incapacity, to substantially perform his duties for the Company for a period exceeding 120 consecutive days. Any question as to the existence of the Disability of the Executive as to which the Executive (or his guardian) and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive (or his guardian) and the Company. If the Executive (or his guardian) and the Company cannot agree as to a qualified independent physician, each shall appoint a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made by such medical doctor in writing to the Company and the Executive (or his guardian) shall be final and conclusive for all purposes of the Agreement and the Date of Termination shall be the date the notice of such determination is delivered to the Executive.
(c)	Death. The Executive’s employment shall terminate upon his death, and the date of his death shall be the Date of Termination for purposes of this Agreement.
(d)	Termination by the Executive for Good Reason. The Executive may terminate his employment hereunder for “Good Reason,” provided that the Executive shall have delivered a Notice of Termination within ninety (90) days after the occurrence of the event of Good Reason giving rise to such termination. For

7

	purposes of this Agreement, “Good Reason” shall not mean a termination resulting from non-renewal of this Agreement. “Good Reason” shall mean the occurrence of one or more of the following circumstances, without the Executive’s express written consent (except in the case of a Change in Control as provided in Section 10(d)(viii) hereof), and which are not remedied by the Company within thirty (30) days of receipt of the Executive’s Notice of Termination except in the event of a Change in Control:
	(i)	an assignment to the Executive of any duties materially inconsistent with his position, duties, responsibilities, and status with the Company, or any material limitation of the powers of the Executive not consistent with the powers of the Executive contemplated by Section 3 hereof;
	(ii)	any removal of the Executive from, or any failure to appoint or elect, or re-elect, the Executive to any position specified in Section 1 of this Agreement (subject to the last sentence of Section 1);
	(iii)	any change of the Executive’s title(s) as specified in Section 1 of this Agreement;
	(iv)	the Company’s requiring the Executive, without his written consent, to be based at any office or location more than 75 miles commuting distance from the locations referred to in Section 4 of this Agreement;
	(v)	a reduction in the Executive’s Base Salary or Annual Bonus target incentive opportunity as in effect from time to time, without his written consent;
	(vi)	the failure of the Company to continue in effect any material Benefit Plan that was in effect on the Effective Date or provide the Executive with substantially equivalent benefits without his written consent;
	(vii)	any other material breach by the Company of this Agreement;
	(viii)	“Change in Control” as defined in Section 11(h) of this Agreement (whether or not the Executive consents to such Change in Control);
	(ix)	a failure of the Company to secure a written assumption by any successor company as provided in Section 15(g) hereof; or
	(x)	any amendment to (or the termination of) the SERP that adversely impacts or otherwise reduces the Executive’s entitlements thereunder.
In the event of a termination for Good Reason, except as otherwise provided herein, the Date of Termination shall be the date specified in the Notice of Termination, and shall not be more than thirty (30) days after the Notice of Termination.

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	(e)	Other Terminations. Notwithstanding the foregoing, the Company or the Executive may terminate the Executive’s employment under this Agreement at any time, subject to the provisions of Section 10(f) hereof. If the Executive’s employment is terminated hereunder for any reason other than as set forth in Sections 10(a) through 10(d) hereof, the date on which a Notice of Termination is given or any later date (within 30 days) set forth in such Notice of Termination shall be the Date of Termination.
	(f)	Notice of Termination. Any termination of the Executive’s employment hereunder by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provisions so indicated and a date of termination.
	(g)	Resignation. Upon the Date of Termination for any reason (other than an expiration of the Employment Term), the Executive shall be deemed to have resigned as a director and/or officer of the Company; provided, however, that in the case of a non-renewal by the Company of the Employment Term in accordance with Section 2 hereof, the Date of Termination shall be the last day of the applicable Employment Term.
11.	Compensation upon Termination or During Disability.
	(a)	Disability. During any period (“Disability Period”), during the Employment Term that the Executive fails to perform his duties hereunder as a result of Disability, the Executive shall continue to (i) receive his full Base Salary and bonus otherwise payable for that period of the Employment Term including the Disability Period and (ii) participate in the Benefit Plans. In the event the Executive’s employment is terminated upon Disability (as defined in Section 10(b) hereof), the Executive shall be entitled to: (1) the payments and benefits provided in Section 11(e)(i), (ii) and (iii), provided that the severance (Base Salary and Target Bonus) and benefit continuation period shall be three years, (2) a Pro-Rata Target Bonus (as defined herein) for the year in which termination for Disability occurs, payable in a lump-sum within 30 days following the Date of Termination (with the actual payment date during such 30-day period to be determined in the Company’s sole discretion), and any earned and unpaid bonus relating to services performed by the Executive in the year preceding his termination due to Disability, (3) immediate vesting of all outstanding stock options, including the Option Shares, with all vested stock options remaining exercisable for the remainder of their original terms (and in the event there are any restrictions on exercising such options after vesting, the Executive shall be entitled to exercise any vested options as of the earlier of (i) one year after the option shares vested or (ii) one year after the Date of Termination).

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	Notwithstanding the foregoing, any cash payments made to the Executive during any calendar year pursuant to this provision after termination due to Disability shall be reduced by the sum of the amounts, if any, payable to the Executive during such calendar year under disability benefit plans of the Company or under the Social Security disability insurance program, where such amounts were not previously applied to reduce any such payment (provided the Company has paid the premiums associated with such plans; provided no such reduction shall occur unless it is permissible under Treas. Reg. 1.409A-3(i)(1)(ii)(A) without any additional tax, interest or penalties being imposed on the Executive under Section 409A). For purposes hereof, “Pro-Rata Target Bonus” means the Executive’s Target Bonus for the year in which the Date of Termination occurs multiplied by a fraction, the numerator of which is the number of days in the year ending on the Executive’s Date of Termination and the denominator of which is 365.
(b)	Death. If the Executive’s employment hereunder is terminated as a result of his death, then: (i) the Company shall pay the Executive’s estate or designated beneficiary, as soon as practicable after the Date of Termination (but in any event prior to the end of the calendar year in which the Executive’s death occurs or such later date as may be permitted under Section 409A of the Code without the Executive incurring any taxes or interest or penalties thereunder), a lump sum payment equal to (1) any Base Salary installments due in the month of death and any reimbursable expenses accrued or owing the Executive hereunder as of the Date of Termination, (2) a Pro-Rata Target Bonus (as defined in Section 11(a) hereof), payable in a lump-sum within 30 days following the Date of Termination, and any earned and unpaid bonus relating to services performed by the Executive in the year preceding his death, and (3) the severance benefits set forth in Section 11(e)(i), (ii) and (iii) (provided that the severance (Base Salary and Target Bonus) and benefit continuation period on which such lump-sum payment is determined shall be three years), and (ii) all outstanding stock options, earned shares of incentive stock, and other awards granted to the Executive under the Incentive Compensation Programs shall immediately become fully vested as of the Date of Termination and all transfer restrictions shall lapse and all vested stock options, including the Option Shares, shall remain exercisable for the remainder of their original terms (and in the event there are any restrictions on exercising such options after vesting, the Executive shall be entitled to exercise any vested options as of the earlier of (i) one year after the option shares vested or (ii) one year after the Date of Termination, provided that the Board may, upon the written request of the Executive’s personal representative, waive or modify the restrictions on the exercise of any vested stock options).
(c)	Termination for Cause; Termination by the Executive other than for Good Reason or Disability. If the Executive’s employment hereunder is terminated by the Company for Cause or by the Executive (other than for Good Reason or Disability), then (i) the Company shall pay the Executive, as soon as practicable

10

	after the Date of Termination, any Base Salary and any reimbursable expenses accrued or owing the Executive hereunder for services as of the Date of Termination; and (ii) the Executive shall immediately forfeit any unvested stock options. In the event of termination by the Company for Cause, the Executive shall have the right to exercise the vested unexercised portion of all outstanding stock option and stock awards prior to the Date of Termination, and the unexercised portion of any such award shall be forfeited thereafter and shall remain subject to the terms of each grant. In the event of termination by the Executive other than for Good Reason, the Executive shall have the right to exercise the vested unexercised portion of all outstanding stock options then held by the Executive for such period following the Date of Termination as shall be provided for under the terms of each grant.
(d)	Termination Resulting from Non-Renewal of this Agreement. If this Agreement is not renewed by the Company in accordance with Section 2 hereof, expiration of the Employment Term following such non-renewal (or any earlier termination date specified by the Company on or after July 1st of the year in which the Employment Term expires) shall be deemed to be a termination of the Executive’s employment without Cause by the Company and the Executive shall be entitled to the payments, benefits and entitlements pursuant to Section 11(e) hereof (except that Section 11(e)(iv) hereof shall not apply, in this case, to any stock option granted prior to August 1, 2006) (with any notice of non-renewal made in connection with a Change in Control (either 90 days before a Change in Control or on or within 2 years following a Change in Control) being treated as a CIC Severance Event (as defined in Section 11(e)(i) hereof)), with any amounts payable under Section 11(e)(i) or (ii) paid in accordance with such clauses. For the avoidance of doubt, if this Section 11(d) is applicable, (i) any stock options granted prior to August 1, 2006 shall be treated in accordance with the terms of the applicable equity-based award plan and award agreement, including any applicable retirement provisions, and (ii) any stock options granted to the Executive on or after August 1, 2006 shall be treated in accordance with Section 11(e)(iv). Notwithstanding anything herein to the contrary, any notice of non-renewal provided pursuant to Section 2 hereof on or after June 30, 2014, and the subsequent expiration of the Employment Term after such notice of non-renewal (y) shall not be deemed to be a termination hereunder by the Company without Cause or by the Executive for Good Reason, and (z) shall not in and of itself entitle the Executive to receive any severance payments under this Agreement, the Company’s Executive Officer Severance Plan or any other severance plan of the Company, as in effect from time to time.
(e)	All Other Terminations. The Executive’s employment may be terminated without Cause by the Board or the Company or by the Executive for Good Reason, provided that in such event:

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(i)

The Executive shall be entitled to receive, in equal monthly installments, his Base Salary and Target Bonus as established pursuant to Sections 5(a) and (b) of this Agreement, for the greater of (x) the remaining period of the Employment Term minus twenty-four (24) months or (y) for a period of two (2) years, provided that if the Executive terminates pursuant to Section 10(d)(viii) hereof or if the Executive’s employment is terminated without Cause or for Good Reason within 90 days prior to a Change in Control or upon or within two (2) years following a Change in Control (as hereinafter defined), (“CIC Severance Event”), the Executive shall be entitled to three (3) times Base Salary and Target Bonus, payable in accordance with the next sentence. If the Executive terminates his employment pursuant to Section 10(d)(viii) hereof or if the Executive’s employment is terminated upon or within two (2) years of a Change in Control and the Change in Control qualifies as a “change in control event” within the meaning of Treas. Reg. 1.409A-3(i)(5)(i), then the severance of three (3) times the sum of Base Salary and Target Bonus shall be paid to the Executive in a cash lump sum within 30 days following such termination. If the Executive’s employment is terminated without Cause or for Good Reason (A) within 90 days prior to a Change in Control or (B) upon or within two (2) years following a Change in Control, or (C) the Executive terminates his employment pursuant to Section l0(d)(viii) hereof, and in the case of clauses (B) and (C) only, the Change in Control does not qualify as a “change in control event” within the meaning of Treas. Reg. 1.409A-3(i)(5)(i), the severance of three (3) times the sum of Base Salary and Target Bonus shall be paid to the Executive in 24 equal monthly installments and a trust that is in compliance with Rev. Proc. 92-64, which may, but need not be, the trust established under the Company’s Supplemental Deferred Compensation Plan, shall be funded by the date the first such monthly payment is due in an amount equal to the aggregate monthly installment payments due hereunder.

(ii)

The Executive shall be entitled to receive, in monthly installments (net of appropriate withholding), for the remaining period of this Agreement, his target Annual Bonus Award (including the stock and cash components) earned during the Employment Term of this Agreement and any earned and unpaid bonus relating to services performed by the Executive in the year preceding his termination by the Company without Cause or his termination for Good Reason provided that the bonus payment pursuant to this Section 11(e)(ii) shall not duplicate any bonus payments previously paid to the Executive. If the Executive terminates his employment pursuant to Section l0(d)(viii) hereof or if the Executive’s employment is terminated upon or within two (2) years of a Change in Control and the Change in Control qualifies as a “change in control event” within the meaning of Treas. Reg. 1.409A-3(i)(5)(i), then the payments due under this clause (ii) shall be paid to the Executive in a cash lump sum within 30

12

		days following such termination. If the Executive’s employment is terminated without Cause or for Good Reason (A) within 90 days prior to a Change in Control or (B) upon or within two (2) years following a Change in Control, or (C) the Executive terminates his employment pursuant to Section l0(d)(viii) hereof, and in the case of clauses (B) and (C) only, the Change in Control does not qualify as a “change in control event” within the meaning of Treas. Reg. 1.409A-3(i)(5)(i), then the payments due under this clause (ii) shall be paid to the Executive in monthly installments for the remaining period of this Agreement and a trust that is in compliance with Rev. Proc. 92-64, which may, but need not be, the trust established under the Company’s Supplemental Deferred Compensation Plan, shall be funded by the date the first such monthly payment is due in an amount equal to the aggregate monthly installment payments due hereunder.
	(iii)	The Executive and his eligible dependents shall be entitled to continue participation in the Company’s Benefit Plans at the same cost as other Company senior executives until the second anniversary of the Date of Termination (or the third anniversary of such date if the proviso in clause (i) of this Section 11(e) applies) or until such time as the Executive and his eligible dependents are covered by a successor employer’s comparable benefit plans, whichever is sooner; provided that to the extent that any Benefit Plan does not permit continuation of the Executive’s or his eligible dependents’ participation throughout such period, the Company shall provide the Executive, on the first business day of each calendar quarter, in advance, with an amount which is equal to the Company’s cost of providing such benefits;
	(iv)	Any outstanding stock options shall continue to vest until the second anniversary of the Date of Termination (or the third anniversary of such date if the proviso in clause (i) of this Section 11(e) applies), with all vested options remaining exercisable for the remainder of their original terms (and in the event there are any restrictions on exercising such options after vesting, the Executive shall be entitled to exercise any vested options as of the earlier of (i) one year after the option shares vested or (ii) one year after the Date of Termination).
(f)	Other Severance Provisions. In the event of any termination, the Executive shall be entitled to any other payments, benefits or rights in accordance with this Agreement or any applicable plan, program, policy, arrangement of, or other agreements with, the Company or any affiliate (provided that in no event shall the Executive be entitled to duplication of any payment or benefit).
(g)	Change in Control Protections and Excise Tax Gross-Up.

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(i)

Upon a Change in Control, the Executive’s outstanding equity awards (including, but not limited to, stock options) shall immediately vest and all vested stock options shall remain exercisable for the remainder of their original terms (provided that any restrictions on exercising such stock options shall lapse).

(ii)

In the event that the Executive receives any payment, benefit, distribution or entitlement (including but not limited to the payment, benefits, distributions or entitlements pursuant to Section 11 of this Agreement) (a “Payment”) that would be subject to the excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall pay to the Executive, as soon thereafter as practicable (but in any event no later than by the end of the Executive’s taxable year next following the taxable year in which the Excise Tax is remitted), an additional amount (a “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction of any Excise Tax imposed upon the Payment and any federal, state, and local income tax and Excise Tax imposed upon the Gross-Up Payment, shall be equal to the Payment. The determination of whether an Excise Tax is due in respect to any payment, benefit, distribution or entitlement, the amount of the Excise Tax and the amount of the Gross-Up Payment shall be made by an independent auditor (the “Auditor”) jointly selected by the Company and the Executive and paid by the Company. If the Executive and the Company cannot agree on the firm to serve as the Auditor, then the Executive and the Company shall each select one nationally recognized accounting firm and those two firms shall jointly select one nationally recognized accounting firm to serve as the Auditor. Notwithstanding the Payment, (i) any other payments, benefits, distributions or entitlements received or to be received by the Executive in connection with a Change in Control or the Executive’s termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement, or agreement with the Company, any person whose actions result in a Change in Control or any person affiliated with the Company or such person) shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G of the Code shall be treated as subject to the Excise Tax, unless in the opinion of the tax counsel selected by the Auditor, such other payments or benefits (in whole or in part) do not constitute parachute payments, or are otherwise not subject to the Excise Tax, and (ii) the Executive shall be deemed to pay federal income tax at the highest marginal rate applicable in the calendar year in which the Gross-Up Payment is made, and state and local income taxes at the highest marginal

14

		rate of taxation in the state and locality of the Executive’s residence on the date the Gross-Up Payment is made, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. In the event the actual Excise Tax or such income tax is determined by a non-appealable decision of the Internal Revenue Service to be more or less than the amount used to calculate the Gross-Up Payment, the Executive or the Company, as the case may be, shall pay to the other an amount reflecting the actual Excise Tax or such income tax within 30 days of such determination.
(h)	Change in Control. For purposes of this Agreement, “Change in Control” of the Company shall be deemed to have occurred if:
	(i)	the Company’s shareholders approve any transaction that is contemplated to result in a “Qualifying Merger or Consolidation,” sale or disposition of all or substantially all of the Company’s assets or business or a plan of partial or complete liquidation, share exchange, amalgamation, recapitalization or similar transaction and such transaction is completed substantially in accordance with the terms approved by the shareholders; provided that notwithstanding anything to the contrary in this subsection (h)(i), no such merger, consolidation, sale or disposition shall be deemed to constitute a “Change in Control” if such transaction or series of transactions requires the Executive to be identified in any United States securities law filing solely as a result of his being a “person” (as such term is used in Section 3(a)(9) and 13(d) of the Act) or a member of any “group” (as defined in Section 14(d)(2) of the Act) acquiring, holding or disposing of beneficial ownership of the Company’s securities and/or assets (but excluding any filing such as a Form 4 required as a result of being an officer or shareholder of the Company) and effecting a “Change in Control” as defined in this subclause (h)(i); or
	(ii)	during any period of not more than two (2) consecutive years (not including any period prior to the date of this Agreement), individuals who at the beginning of such period constitute the Board of Directors of the Company, and any new director (other than a director designated by a “person” (as hereinabove defined) who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii) or (iv) of this Section) whose election was approved in a resolution of the Board by the Executive or whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (including approval by the Executive in a resolution of the Board), cease for any reason to constitute at least a majority of the Board; or

15

		(iii)	any third-party (or any third parties acting as a “group,” as defined herein) acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Act) of securities representing at least 40% of the Company’s Voting Power in a transaction that is not part of a Qualifying Merger or Consolidation (a “Share Acquisition”) and subsequent to such Share Acquisition either (1) the Company is no longer a public company for U.S. securities law purposes, or (2) there is a material diminution of the Executive’s position, duties or responsibilities (including, without limitation, a termination of the Executive’s employment by the Company) or any other breach of this Agreement by the Company or event giving rise to a Good Reason termination by the Executive. Notwithstanding the provisions of the immediately preceding sentence, in the event that the Executive ceases to be the CEO within the 90-day period prior to the Share Acquisition as a result of the termination of his employment by the Company without Cause or by the Executive for Good Reason, the provisions of clause (1) and (2) shall not apply.
		(iv)	For purposes of this Section (h), (x) “Qualifying Merger or Consolidation” shall mean any of the following: (1) any merger or consolidation between the Company or a subsidiary thereof and any entity in which the surviving entity (whether or not the Company) is not a publicly traded entity and the Executive is not CEO of the publicly traded parent (if any) of the surviving entity, (2) any merger or consolidation between the Company or any subsidiary thereof and any entity in which the surviving entity (whether or not the Company) is publicly traded and the Executive is not CEO of such surviving entity, or (3) any merger or consolidation between the Company or a subsidiary thereof and any entity if the shareholders of the Company immediately prior to the merger or consolidation hold, directly or indirectly, less than 50% of the Voting Power of the Company (or the ultimate parent corporation of the Company) (there being excluded from the number of shares held by such shareholders, but not from the Voting Shares of the combined company, any shares received by Affiliates of such other company in exchange for stock of such other company) immediately after such merger or consolidation, “Voting Power” means the total voting power of all outstanding securities having general voting power to elect the directors of the specified corporation, (y) “Act” means the Securities Exchange Act of 1934, as amended and (z) “Affiliate” means a person or other entity that directly or indirectly controls, is controlled by, or is under common control with, the company with respect to which the transaction is taking place.
12.	Non-Solicitation and Non-Competition.
	(a)	Term of Non-Compete. Subject to Section 12(d), during his employment with the Company and for a period of one (1) year following the Date of Termination, the

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	Executive will not provide services, in any capacity, whether as an employee, consultant, independent contractor, or otherwise, to any person or entity that provides products or services that compete with the Business of the Company, including but not limited to: Laboratory Corporation of America Holdings, Inc.; Mayo Laboratory; ARUP; Bio Reference Laboratories; ENZO, Inc.; Sonic Healthcare Limited; or their successors or assigns, except that after the termination of Executive’s employment this restriction shall only apply to North America. If so requested in writing by the Executive, the Company shall advise the Executive promptly in writing in advance (but in no case later than 30 calendar days) as to whether, in the exercise of its reasonable judgment, the Company views any proposed activity contemplated by the Executive as constituting a competing “Business,” provided that nothing herein shall prevent the Executive from, after the termination of his employment, being a passive owner of not more than five percent (5%) of the outstanding stock of any class of a corporation that is publicly traded.
(b)	Term of Non-Solicitation of Customers. Subject to Section 12(d), for a period of one (1) year following the Date of Termination, the Executive will not directly or indirectly solicit the Business of any customer of the Company during the one (1) year period prior to the termination of the employment relationship with the Company for any purpose other than to obtain, maintain and/or service the customer’s Business for the Company.
(c)	Term of Non-Solicitation of Employees. Subject to Section 12(d), for a period of one (1) year following the Date of Termination, the Executive agrees not to, directly or indirectly, recruit, solicit or hire any employees of the Company to work for the Executive or any other person or entity.
(d)	Term of Non-Compete, Non-Solicitation Automatically Extended. Notwithstanding the provisions of Sections 12(a), 12(b), and 12(c), in the event that the Employment Term is not renewed by the Company and the Executive is receiving severance pursuant to Section 11(d) hereof, the period of (1) one year referred to in the said Sections shall automatically be deemed to be 18 (eighteen) months following the expiration of the Employment Term.
(e)	Definitions Applicable to Section 12. As used in this Section, the following terms shall have their respective definitions:
	(i)	“Business” shall include (A) clinical laboratory, pathology, toxicology, pharmaceutical testing, clinical trials, (B) Clinical Laboratory Medical Information Services, (C) clinical laboratory testing kits; and (D) any other product or service which the Company planned, provided or discussed during the (1) one; year period prior to the termination of the Executive’s employment.

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	(ii)	“Clinical Laboratory Medical Information Services” shall mean medical information services which contain a substantial clinical laboratory data component.
	(iii)	“Indirectly solicit” shall include, but is not to be limited to, providing any of the Company’s proprietary information to another individual, or entity, or allowing the use of the Executive’s name by any company (or any employees of any other company) other than the Company, in the solicitation of the Business of Company’s customers.
(f)	Expedited Arbitration Applicable to Section 12. In the event there is a dispute under this Section, the parties agree to hold an expedited hearing in the City of New York, New York, before an arbitrator under American Arbitration Association Rules.
(g)	Exclusive Property. The Executive confirms that all confidential information is and shall remain the exclusive property of the Company. All business records, papers and documents kept or made by the Executive relating to the business of the Company, its affiliates and subsidiaries (other than his personal records) shall be and remain the property of the Company. Upon the termination of his employment with the Company or upon the request of the Company at any time, the Executive shall promptly deliver to the Company, and shall not without the consent of the Board retain copies of, any written materials not previously made available to the public, or records and documents made by the Executive in his possession concerning the business or affairs of the Company or any of its affiliates or subsidiaries (other than his personal records); provided, however, that subsequent to any such termination, the Company shall provide the Executive with copies (the cost of which shall be borne by the Executive) of any documents that are requested by the Executive and that the Executive has determined in good faith are (i) required to establish a defense to a claim that the Executive has not complied with his duties hereunder or (ii) necessary to the Executive in order to comply with applicable law.
(h)	Injunctive Relief. Without intending to limit the remedies available to the Company, the Executive acknowledges that a breach of any of the covenants contained in this Section 12 may result in material irreparable injury to the Company or its affiliates or subsidiaries for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining the Executive from engaging in activities prohibited by this Section 12 or such other relief as may be required to specifically enforce any of the covenants in this Section 12. The Executive hereby agrees that the Company shall not be required to post any bond or other security in connection with any such equitable relief. Without intending to limit the remedies available to the

18

		Executive, the Executive shall be entitled to seek specific performance of the Company’s obligations under this Agreement.
13.	Arbitration. In the event of any difference of opinion or dispute between the Executive and the Company with respect to the construction or interpretation of this Agreement or the alleged breach thereof (including the SERP), which cannot be settled amicably by agreement of the parties, then such dispute shall be submitted to and determined by arbitration by a single arbitrator in the city of New York, New York in accordance with the rules then in effect of the Commercial Arbitration Panel of the American Arbitration Association (the “AAA”), and judgment upon the award rendered shall be final, binding and conclusive upon the parties and may be entered in the highest court, state or federal, having jurisdiction. Each party shall bear its own costs and expenses of the arbitration, including its own attorneys’ fees, and its allocable share of the costs and expenses of the arbitrator; provided, however, that following a Change in Control, the Executive shall be entitled to be reimbursed by the Company for his costs and expenses in connection with any dispute relating to this Agreement (including the SERP) to the same extent and in the same manner as a participant would be reimbursed pursuant to Section 9 of the Executive Officer Severance Plan as in effect from time to time; provided that if such costs are not reimbursed in connection with a dispute exempt from Section 409A pursuant to Treas. Reg. 1.409A-1(b)(11) then such payment shall be made by the Company to the Executive no later than the end of the year following the year in which the dispute is resolved.
14.	Confidentiality. During the Employment Term, and except as otherwise required by law, the Executive shall not disclose or make accessible to any business, person or entity, or make use of (other than in the course of the business of the Company) any trade secrets, proprietary knowledge or confidential information, which he shall have obtained during his employment by the Company and which shall not be generally known to or recognized by the general public. All information regarding or relating to any aspect of either the Company’s business, including but not limited to that relating to existing or contemplated business plans, activities or procedures, current or prospective clients, current or prospective contracts or other business arrangements, current or prospective products, facilities and methods, manuals, intellectual property, price lists, financial information (including the revenues, costs, or profits associated with any of the Company’s products or services), or any other information acquired because of the Executive’s employment by the Company, shall be conclusively presumed to be confidential; provided, however, that: Confidential Information shall not include any information known generally to the public; (other than as a result of unauthorized disclosure by the Executive) or any specific information or type of information generally not considered information disclosed by the Company or any officer thereof to a third party without restrictions on the disclosure of such information. The Executive’s obligations under this Section 14 shall be in addition to any other confidentiality or nondisclosure obligations of the Executive of the Company at law or under any other agreements.

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15.	Other Matters.
	(a)	Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Executive relating to the subject matter hereof, and supersedes any previous agreements, commitments and understandings, written or oral, with respect to the matters provided herein other than any equity award agreements. As used in this Agreement, terms such as “herein,” “hereof,” “hereto” and similar language shall be construed to refer to this entire instrument and not merely the paragraph or sentence in which they appear, unless so limited by express language. In the event of any inconsistency between this Agreement and the provisions of any plan, policy, program, arrangement or other agreement, the provisions most favorable to the Executive shall control. Any reference to the employment agreement between the Executive and the Company in any Company plan, program, arrangement or other agreement shall be deemed to be a reference to this Agreement, as amended, and, as such, any reference to a section of the Prior Agreement shall be interpreted to mean the appropriate section of this Agreement.
	(b)	Assignment. Except as set forth below, this Agreement and the rights and obligations contained herein shall not be assignable or otherwise transferable by either party to this Agreement without the prior written consent of the other party to this Agreement. Notwithstanding the foregoing, any amounts owing to the Executive upon his death shall inure to the benefit of his heirs, legatees, personal representatives, executor or administrator.
	(c)	Notices. Any and all notices provided for under this Agreement shall be in writing and hand delivered or sent by first class registered or certified mail, postage prepaid, return receipt requested, addressed to the Executive at his residence or to the Company at its usual place of business, and all such notices shall be deemed effective at the time of delivery or at the time delivery is refused by the addressee upon presentation.
	(d)	Amendment/Waiver. No provision of this Agreement may be amended, waived, modified, extended or discharged unless such amendment, waiver, extension or discharge is agreed to in writing signed by both the Company and the Executive.
	(e)	Applicable Law. This Agreement and the rights and obligations of the parties hereunder shall be construed, interpreted, and enforced in accordance with the laws of the State of New York (applicable to contracts to be performed wholly within such State).
	(f)	Severability. The Executive hereby expressly agrees that all of the covenants in this Agreement are reasonable and necessary in order to protect the Company and its business. If any provision or any part of any provision of this Agreement shall be invalid or unenforceable under applicable law, such part shall be ineffective only to the extent of such invalidity or unenforceability and shall not affect in any

20

	way the validity or enforceability of the remaining provisions of this Agreement, or the remaining parts of such provision.
(g)	Successor in Interest. In the event the Company merges or consolidates with or into any other corporation or corporations, or sells or otherwise transfers substantially all of its assets to another corporation or other entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving or resulting from the merger or consolidation or to which the assets are sold or transferred and, prior to the consummation of any such event, the Company shall obtain the express written assumption of this Agreement by the other entity (other than in the case of a merger after which the Company is the surviving entity). All references herein to the Company refer with equal force and effect to any corporate or other successor of the entity that acquires directly or indirectly by merger, consolidation, purchase or otherwise, all or substantially all of the assets of the Company.
(h)	No Mitigation/No Offset. In the event of any termination of employment, the Executive shall be under no obligation to seek other employment, and there shall be no offset against entitlements, amounts or benefits due him under this Agreement or otherwise on account of any remuneration attributable to any subsequent employer or claims asserted by the Company or any affiliate.
(i)	Joint Participation in Drafting. Each party to this Agreement has participated in the negotiation and drafting hereof. As such, the language used herein shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party to this Agreement.
(j)	Section 409A.
	(i)	Notwithstanding anything to the contrary in this Agreement or elsewhere, if the Executive is a “specified employee” as determined pursuant to Section 409A of the Code as of the date of the Executive’s “separation from service” (within the meaning of Treas. Reg. 1.409A-1(h)) and if any payment or benefit provided for in this Agreement or otherwise both (x) constitutes a “deferral of compensation” within the meaning of Section 409A and (y) cannot be paid or provided in the manner otherwise provided without subjecting the Executive to “additional tax”, interest or penalties under Section 409A, then any such payment or benefit that is payable during the first six months following the Executive’s “separation from service” shall be paid or provided to the Executive in a cash lump-sum, with interest at the “Interest Rate”, on the first business day of the seventh calendar month following the month in which the Executive’s “separation from service” occurs. The “Interest Rate” shall be the six (6) month LIBOR rate published in The Wall Street Journal in the Borrowing Benchmark Table (or similar compilation) on the date of the Executive’s

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			“separation from service” (or if such date is not a business day, the next preceding business day), and will be calculated for the actual number of days elapsed from the date of the Executive’s “separation from service” through the date of payment; provided that if such rate is not available in The Wall Street Journal, then the “Interest Rate” shall be such similar rate as the Company and the Executive agree.
		(ii)	Any payment or benefit due upon a termination of the Executive’s employment that represents a “deferral of compensation” within the meaning of Section 409A shall only be paid or provided to the Executive upon a “separation from service”. Notwithstanding anything to the contrary in Section 11 of this Agreement or elsewhere, any payment or benefit under Section 11 or otherwise that is exempt from Section 409A pursuant to Treas. Reg. 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Executive only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second taxable year of the Executive following the taxable year of the Executive in which the “separation from service” occurs; and provided further that such expenses are reimbursed no later than the last day of the third taxable year following the taxable year of the Executive in which the “separation from service” occurs.
		(iii)	Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.
		(iv)	For the purposes of this Agreement, each payment made pursuant to Section 11(e)(i) and (ii) shall be deemed to be separate payments, amounts payable under Section 11 of this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treasury Regulation Sections 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation Section 1.409A-1 through A-6.
16.	Indemnification. The Company shall indemnify the Executive to the full extent permitted by law and the By-laws of the Company for all expenses, costs, liabilities and legal fees

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(collectively, “Damages”) that the Executive may incur in the discharge of all his duties hereunder, including, without limitation, the right to be paid in advance by the Company for his expenses in defending a civil or criminal action, proceeding or investigation prior to the final disposition thereof. The Executive shall be insured under the Company’s Directors’ and Officers’ Liability Insurance Policy as in effect from time to time. Notwithstanding any other provision of this Agreement to the contrary, any termination of the Executive’s employment or of this Agreement shall have no effect on the continuing operations of this Section 16.

17.

Authority. The execution, delivery and performance of this Agreement has been duly authorized by the Company and this Agreement represents the valid, legal and binding obligation of the Company, enforceable against the Company according to its terms.

[signature page to follow]

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[Employment Agreement Signature Page]

          IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its own behalf and has caused its corporate seal to be affixed, and the Executive has executed this Agreement on his own behalf intending to be legally bound, as of the date first written above.

QUEST DIAGNOSTICS INCORPORATED
By:	/s/ David W. Norgard
Name:	David W. Norgard
Title:	Vice President Human Resources
Date:	November 7, 2008

ATTEST:

Secretary
/s/ William J. O'Shaughnessy, Jr.

EXECUTIVE

/s/ Surya N. Mohapatra

Surya N. Mohapatra

Date: November 7, 2008

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EX-10.24

EXHIBIT 10.24

QUEST DIAGNOSTICS

SUPPLEMENTAL DEFERRED COMPENSATION PLAN

(POST – 2004)

AMENDED DECEMBER 30, 2008

PREAMBLE

Effective as of January 1, 1999, Quest Diagnostics adopted the Quest Diagnostics Supplemental Deferred Compensation Plan for the benefit of certain of its Employees. As a result of the enactment in 2004 of Section 409A of the Internal Revenue Code of 1986, as amended, Quest Diagnostics has adopted this document, the Quest Diagnostics Supplemental Deferred Compensation Plan (Post – 2004), to reflect the terms that will govern amounts that are deferred (within the meaning of Treas. Reg. §1.409A-6(a)(1)) under the Plan in taxable years beginning on and after January 1, 2005. The terms of the Plan as in effect on October 3, 2004 will continue to govern amounts under the Plan that were deferred (within the meaning of Treas. Reg. §1.409A-6(a)(1)) during taxable years beginning prior to January 1, 2005. For these purposes, an amount is considered deferred before January 1, 2005, if before such date, the Participant had a legally binding right to be paid the amount (within the meaning of Treas. Reg. §1.409A-1(b)(1)), and the right to the amount was earned and vested (within the meaning of Treas. Reg. §1.409A-6(a)). The purpose of the Plan is to provide supplemental retirement income and to permit eligible Employees the option to defer receipt of Compensation, pursuant to the terms of the Plan. The Plan is intended to be an unfunded deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees under Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Subtitle B of Title I of ERISA to the maximum extent permissible under the provisions thereof.

TABLE OF CONTENTS

ARTICLE 1.          DEFINITIONS		1
1.1	Definitions	1
ARTICLE 2.          PARTICIPATION		4
2.1	Commencement of Participation	4
2.2	Resumption of Participation Following Reemployment	4
2.3	Change in Employment Status	4
ARTICLE 3.          CONTRIBUTIONS		5
3.1	Deferral Contributions	5
3.2	Participating Employer Contributions	6
3.3	Transfer of Funds	7
ARTICLE 4.          PARTICIPANTS’ ACCOUNTS		8
4.1	Individual Accounts	8
4.2	Accounting for Payments	8
ARTICLE 5.          INVESTMENT OF CONTRIBUTIONS		9
5.1	Manner of Investment	9
5.2	Investment Decisions	9
ARTICLE 6.          PAYMENT OF ACCOUNT		10
6.1	Payment on Specified Date	10
6.2	Distribution of Vested Account upon Termination of Employment	10
6.3	Distribution upon Death; Beneficiaries	10
6.4	Payment Due to an Unforeseen Emergency	11
6.5	Adjustment for Investment Experience During Installment Plan	11
6.6	Section 409A and Payment Dates	11
6.7	Payment in the Event of Taxation	11
6.8	Valuations	11
6.9	Spendthrift Provision	11
6.10	Facility of Payment	12
6.11	Discharge of Obligations	12
6.12	Taxes	12
ARTICLE 7.          AMENDMENT AND TERMINATION		13
7.1	Amendment by Quest Diagnostics	13
7.2	Retroactive Amendments	13
7.3	Plan Termination	13

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7.4	Payment upon Termination of the Plan	13
ARTICLE 8.          THE TRUST		14
8.1	Establishment of Trust	14
ARTICLE 9.          MISCELLANEOUS		15
9.1	Limitation of Rights	15
9.2	Furnishing Information	15
9.3	Information between the Administrator and Trustee	15
9.4	Notices	15
9.5	Writings and Electronic Communications	15
9.6	Governing Law	15
9.7	Construction	15
9.8	Section 409A Compliance	16
ARTICLE 10.        PLAN ADMINISTRATION		17
10.1	Powers and Responsibilities of the Administrator	17
10.2	Claims and Review Procedures	17
10.3	Plan’s Administrative Costs	18

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Article 1. Definitions.

1.1 Definitions. Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise. Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

(a) “Account” means an account established on the books of a Participant’s Employer for the purpose of recording Deferral Contributions, Employer Contributions and Supplemental Contributions credited on behalf of a Participant in respect of compensation for services to such Employer and any notional income, expenses, gains or losses related thereto. For purposes of this Plan document, “Account” shall include only amounts that are deferred within the meaning of Treas. Reg. §1.409A-6(a)(1)) during taxable years beginning on and after January 1, 2005. The Administrator may establish such subaccounts as it deems appropriate for the administration of the Plan.

(b) “Administrator” means Quest Diagnostics acting through its officers and employees.

(c) “Appeals Committee” means the Quest Diagnostics Appeals Committee, which is designated from time to time by the Administrator to administer the claims and review procedures specified in Section 10.2.

(d) “Beneficiary” means the person or persons entitled under Section 6.3 to receive benefits under the Plan upon the death of a Participant.

(e) “Bonus” means the cash bonus that is payable each March (if not deferred pursuant to Section 3.1) under the Senior Management Incentive Plan, the Quest Diagnostics Incorporated Management Incentive Plan or the pursuant to a Goalsharing Plan.

(f) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(g) “Compensation” shall have the meaning ascribed to the term “Deferral Compensation” by the Profit Sharing Plan; provided that any exclusion attributable to (i) deferred compensation deferred pursuant to this Plan or (ii) limits imposed by Code Section 401(a)(17) shall not apply.

(h) “Deferral Contributions” means those amounts credited to a Participant’s Account pursuant to Section 3.1.

(i) “Eligible Employee” means an Employee of an Employer who is determined by the Administrator to be among a select group of management or highly compensated Employees and who is designated by the Administrator as an Eligible Employee for purposes of the Plan.

(j) “Employee” means any employee of an Employer.

(k) “Employer” means Quest Diagnostics and any successors and assigns unless otherwise provided herein, and shall include any Related Employer or other affiliated employer adopting this Plan.

(l) “Employer Contributions” means amounts credited to a Participant’s Account pursuant to Section 3.2.

(m) “Employer Stock” means any class of common stock of Quest Diagnostics or the preferred stock of Quest Diagnostics that is convertible into common stock.

(n) “ERISA” means the Employee Retirement Income Security Act of 1974, as from time to time amended.

(o) “Goalsharing Plan” mean a Goalsharing Plan, as in effect from time to time.

(p) “Participant” means any Eligible Employee who has filed in accordance with Article 2 an election to defer Compensation pursuant to Section 3.1.

(q) “Plan” means the Quest Diagnostics Supplemental Deferred Compensation Plan as in effect from time to time.

(r) “Plan Year” means the calendar year.

(s) “Profit Sharing Plan” means the Profit Sharing Plan of Quest Diagnostics Incorporated, as amended from time to time.

(t) “Quest Diagnostics” means Quest Diagnostics Incorporated.

(u) “Quest Diagnostics Incorporated Management Incentive Plan” means the Quest Diagnostics Incorporated Management Incentive Plan, as in effect from time to time.

(v) “Related Employer” means any employer other than Quest Diagnostics, if Quest Diagnostics and such other employer are members of a controlled group of corporations (as defined in Section 414(b) of the Code) or an affiliated service group (as defined in Code Section 414(m)), or are trades or businesses (whether or not incorporated) which are under common control (as defined in Code Section 414(c)), or such other employer is required to be aggregated with Quest Diagnostics pursuant to regulations issued under Code Section 414(o).

(w) “Section 401(a)(17) Limit” means the maximum amount of annual compensation that can be taken into account by the Profit Sharing Plan pursuant to Code Section 401(a)(17).

(x) “Section 409A Regulations” means the regulations and other administrative guidance issued under Code Section 409A.

(y) “Senior Management Incentive Plan” means the Quest Diagnostics Incorporated Senior Management Incentive Plan, as in effect from time to time.

(z) “Signing Bonus” means a bonus that is negotiated with an Employee prior to the commencement of his employment and that is designated a “signing bonus”.

(aa) “SMIP Bonus Subaccount” means the portion of a Participant’s Account that may be established and maintained by the Administrator on behalf of each Participant who elects to defer

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a portion of his Bonus payable under the Senior Management Incentive Plan and any other plan intended to pay performance-based compensation within the meaning of Code Section 162(m)(4)(c).

(bb) “Supplemental Contribution” means an additional discretionary Employer Contribution credited to a Participant’s Account pursuant to Section 3.2.

(cc) “Trust” means the trust fund established pursuant to the terms of the Plan.

(dd) “Trust Agreement” means the agreement by and among the Trustee and each Employer establishing the Trust.

(ee) “Trustee” means the corporation or individuals named in the Trust Agreement and such successor and/or additional trustees as may be named in accordance with the Trust Agreement.

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Article 2. Participation.

2.1 Commencement of Participation. Each Eligible Employee who has an election in effect to defer Compensation in accordance with Section 3.1 or has an Account is a Participant in this Plan. Each other Eligible Employee shall become a Participant in this Plan after he has timely filed an election to defer Compensation pursuant to Section 3.1 that has become irrevocable or has a Supplemental Contribution credited to his Account.

2.2 Resumption of Participation Following Reemployment. If a Participant ceases to be an Employee and thereafter returns to the employ of an Employer, he may again become a Participant following his reemployment, provided he is an Eligible Employee and has timely filed an election to defer Compensation pursuant to Section 3.1.

2.3 Change in Employment Status. If any Participant continues in the employ of an Employer but ceases to be an Eligible Employee, he shall continue to be a Participant until the entire amount of the value of his Account is paid; provided, however, he shall not be entitled to make Deferral Contributions or receive an allocation of Employer Contributions or Supplemental Contributions after the end of the Plan Year in which he ceases to be an Eligible Employee and during the remainder of the period that he is not an Eligible Employee.

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Article 3. Contributions.

3.1 Deferral Contributions.

(a) Participant deferral elections. Each Participant may elect to defer (1) up to fifty (50) percent (in whole percentages) of his regular salary to the extent his Compensation that is taken into account under the Profit Sharing Plan for the Plan Year in which his regular salary is earned exceeds the Section 401(a)(17) Limit (no portion of any bonus payment, including the Bonus, shall be eligible for deferral under this provision), (2) up to ninety-five (95) percent (in whole percentages) of his Bonus to the extent his Compensation that is taken into account under the Profit Sharing Plan for the Plan Year in which the Bonus is paid exceeds the Section 401(a)(17) Limit and (3) up to one hundred (100) percent (in whole percentages) of his Signing Bonus, regardless of whether his Compensation is in excess of the Section 401(a)(17) Limit.

(b) Timing of deferral elections.

(1) In general. An election to defer Compensation will be timely if it is filed in accordance with procedures established by the Administrator which shall require elections to be filed no later than December 31 of the Plan Year prior to the Plan Year to which the deferral election applies.

(2) First year of eligibility. If an individual is designated by the Administrator as an Eligible Employee during the Plan Year, such Employee may file an election to defer Compensation within 30 days following the date of such designation; provided, however, that such Employee is not already participating in another elective nonqualified deferred compensation plan that would be aggregated with this Plan under the Section 409A Regulations, and provided further that such election shall apply only to Compensation earned for periods after the election is made in accordance with the Section 409A Regulations.

(c) Effectiveness of deferral election. An election made in accordance with Section 3.1(b)(1), shall become effective on the first day of the Plan Year following the Plan Year in which the deferral election is made. It will apply only to Compensation earned and payable with respect to services rendered after such date. Thus, for example, an election that becomes irrevocable on December 31, 2009 will apply to defer any salary to be earned in 2010 or a Bonus that will be earned in 2010 and paid in early 2011. An election made in accordance with Section 3.1(b)(2) will apply on the first day of the first payroll period that follows receipt by the Administrator of such election and shall apply to defer Compensation relating to all services performed from the date that it becomes effective through the balance of the Plan Year (unless such election expressly extends beyond such time). Once an election becomes irrevocable, it will apply to all covered Compensation for services performed through the end of the Plan Year (except as provided in Section 3.1(f)).

(d) Commencement of deferrals.

(1) Deferrals made pursuant to Sections 3.1(a)(1) and 3.1(a)(2). For a Participant who has a deferral election solely under 3.1(a)(1), deferrals shall commence as of the payroll period next following the payroll

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period in which the Participant’s Compensation exceeds the Section 401(a)(17) Limit. If a Participant’s Compensation for a Plan Year exceeds the Section 401(a)(17) Limit on account of payment of Bonus and the Participant has made a deferral election pursuant to Section 3.1(a)(2), then deferrals shall commence as of the payroll period coincident with the payroll period in which the Bonus is paid.

(2) Deferrals made pursuant to Sections 3.1(a)(3). Deferrals of Signing Bonus pursuant to Sections 3.1(a)(3) shall be made in the payroll period in which the Signing Bonus otherwise would have been paid.

(e) Crediting to Account. An Employer shall credit to the Account maintained on behalf of a Participant the amount of Compensation deferred pursuant to such Participant’s election under Section 3.1(a).

(f) Election irrevocable except as required pursuant to Profit Sharing Plan. A Participant who has made a hardship withdrawal under the Profit Sharing Plan shall have his deferral election cancelled, may not defer Compensation under this Plan for a period of at least six months from the date of the withdrawal and must make an election as specified pursuant to Section 3.1(b)(1) in order to resume deferrals under the Plan.

(g) Election forms. All Participant elections pursuant to this Section 3.1 shall be on forms prescribed by the Administrator.

(h) Vesting of Deferral Contributions. A Participant shall be fully vested in the Deferral Contributions credited to his Account.

3.2 Participating Employer Contributions.

(a) Employer Contributions. An Employer shall credit an Employer Contribution to the Account maintained on behalf of each Participant who had Deferral Contributions credited to his Account for a payroll period; provided, that such Employer Contributions shall only be credited on Compensation that is in excess of the Section 401(a)(17) Limit. Notwithstanding the preceding sentence, no Employer Contribution shall be credited to the Account of a Participant who is also a participant in the Quest Diagnostics Transferee Pension Plan for former Corning Incorporated employees. The amount of the Employer Contribution to be credited on behalf of a Participant shall be equal to the applicable percentage that is specified from time to time in Section 3.2 of the Profit Sharing Plan of the Deferral Contributions made on behalf of the Participant.

(b) Supplemental Contributions. A Participant’s Employer may, from time to time in its sole discretion, credit a Supplemental Contribution to a Participant’s Account in an amount determined by such Employer in its sole discretion and without regard to any Deferral Contribution elected by such Participant.

(c) Vesting of Employer Contributions and Supplemental Contributions. A Participant shall be fully vested in the Employer Contributions credited to his Account. Unless otherwise specified by the Employer at the time the Supplemental Contribution is made, a Participant shall

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be fully vested in the Supplemental Contributions credited to his Account. Any portion of the value of a Participant’s Account attributable to a Supplemental Contribution that is not fully vested at the time he terminates employment shall be forfeited.

3.3 Transfer of Funds. The Administrator shall provide the Trustee with information on the amount to be credited to each Participant’s Account. Each Employer may, as soon as administratively practicable after each payroll period, make a transfer of assets to the Trustee.

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Article 4. Participants’ Accounts.

4.1 Individual Accounts. The Administrator will establish and maintain an Account for each Participant which will reflect Deferral Contributions, Employer Contributions and Supplemental Contributions credited to the Account and any notional earnings, expenses, gains and losses credited thereto attributable to the investments in which the Participant’s Account is treated as invested. The Administrator will establish and maintain such other accounts and records as it decides in its discretion to be reasonably required or appropriate. Participants will be furnished statements of their Account value at least once each Plan Year.

4.2 Accounting for Payments. A payment to the Participant or to the Participant’s Beneficiary(ies) shall be charged to the Participant’s Account as of the date of such payment.

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Article 5. Investment of Contributions.

5.1 Manner of Investment. All amounts credited to the Accounts of Participants shall be treated as though invested in eligible investments offered by the Administrator.

5.2 Investment Decisions. Investments in which the Accounts of Participants shall be treated as invested shall be directed by the Employer, each Participant, or both, as specified pursuant to procedures established by the Administrator from time to time. No portion of the Employer Contributions or Deferrals Contributions credited to a Participant’s Account may be treated as though invested in Employer Stock.

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Article 6. Payment of Account.

6.1 Payment on Specified Date. Concurrently with a Participant’s election to defer Compensation pursuant to Section 3.1 for any Plan Year, the Administrator shall permit a Participant to designate a specific date on which 100% of the value of his Account attributable to such election shall be paid in a lump sum; provided that in the event of such Participant’s termination of employment or death before the specified date, his Account shall be paid in accordance with Section 6.2 or 6.3, as the case may be, and his election under this Section 6.1 shall no longer be effective. Once an election is made pursuant to this Section 6.1, it shall be irrevocable.

6.2 Distribution of Vested Account upon Termination of Employment. (a) In general. Upon a Participant’s termination of employment other than by reason of death, the vested portion of the Participant’s Account shall be paid in a lump sum or, if permitted by the Administrator and specified in the Participant’s election to defer Compensation under Section 3.1, under an installment plan not exceeding 10 years. Unless otherwise required pursuant to Section 6.6, payments shall be made or begin within ninety (90) days of the Participant’s employment termination. The unvested portion, if any, of the Participant’s Account shall be immediately forfeited.

(b) Installments. Distributions under an installment plan must be made in substantially equal annual installments, over a period certain which does not exceed 10 years. Each installment shall be based on the value of the Participant’s Account, as determined prior to the payment of the relevant installment, divided by the remaining number of installments.

6.3 Distribution upon Death; Beneficiaries. (a) Distributions upon death. Upon a Participant’s death prior to the commencement of benefit payments pursuant to Section 6.2, the vested portion of the Participant’s Account shall be paid in a lump sum to the Participant’s Beneficiary or Beneficiaries. Payment shall be made as soon as practicable during the remainder of the calendar year in which the Participant died. The unvested portion, if any, of the Participant’s Account shall be immediately forfeited. Upon a Participant’s death after distributions have begun under an installment plan, no further installments shall be paid and, instead, payment shall be made of the balance of the Participant’s Account as soon as practicable during the remainder of the calendar year in which the Participant died.

(b) Beneficiary designations. A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of Beneficiary or Beneficiaries, by giving notice to the Administrator on a form designated by the Administrator. A Participant’s spouse must consent to his designation of a Beneficiary other than his spouse. If more than one person is designated as the Beneficiary, their respective interests shall be indicated on the designation form. Prior to distribution pursuant to Section 6.3, a copy of the death notice or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the value of the Participant’s Account, such amount will be paid to his surviving spouse or, if none, to his estate (such spouse or estate shall be deemed to be the Beneficiary for purposes of the Plan). If a Beneficiary dies after payment to such Beneficiary has commenced, but before the full value of the Participant’s Account has been paid, and, in the opinion of the Administrator, no person has

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been designated to receive such remaining balance, then such balance shall be paid to the deceased Beneficiary’s estate.

6.4 Payment Due to an Unforeseen Emergency. A Participant shall not be permitted to withdraw any portion of the value of his Account prior to termination of employment or any date specified pursuant to Section 6.1 (whichever occurs first), except that a Participant may apply to the Administrator, in accordance with procedures specified by the Administrator, to withdraw some or all of the value of his Account if such withdrawal is required on account of a financial hardship resulting from an unforeseen emergency. The Administrator shall establish criteria to determine what constitutes financial hardship that are consistent with the Section 409A Regulations. Withdrawals made on account of financial hardship shall be made in a lump sum.

6.5 Adjustment for Investment Experience During Installment Plan. If the total value of a Participant’s Account is not paid in a single sum, the amount remaining in the Account after the first payment will continue to be treated as invested in accordance with Article 5 and will be subject to adjustment until paid to reflect the income, gains and losses on such deemed investment. Unless otherwise permitted by the Administrator, each installment payment shall reduce each investment of the Participant’s Account on a pro-rata basis.

6.6 Section 409A and Payment Dates. Unless otherwise permitted under the Section 409A Regulations, all payments shall be made or commence no later than the end of the calendar year in which the applicable payment date occurs. If a Participant is determined to be a “Specified Employee” within the meaning of Code Section 409A(a)(2)(B)(i) (pursuant to procedures developed by the Administrator consistent with the Section 409A Regulations), then to the extent required in order to comply with Code Section 409A and the Section 409A Regulations, payments under the Plan to such Participant pursuant to Section 6.2 shall be made or commence after the day followng the six month anniversary of the Participant’s termination of employment, subject to earlier payment upon the Participant’s death.

6.7 Payment in the Event of Taxation. If, for any reason, all or any portion of the value of a Participant’s Account under this Plan becomes taxable to the Participant prior to receipt, a Participant may petition the Administrator for a payment of that portion of the value of his Account that has become taxable. Upon the grant of such a petition, a payment shall immediately be made to a Participant in an amount equal to the taxable portion of the value of his Account (which amount shall not exceed the remaining balance of a Participant’s Account). If the petition is granted, the tax liability payment shall be made as soon as practicable after the Participant’s petition is granted in accordance with Treasury Regulation Sections 1.409A-3(j)(4)(vii) and 1.49A-3(j)(4)(xi).

6.8 Valuations. For purposes of this Article 6, the valuation of a Participant’s Account shall be determined as of such valuation dates preceding the payment date as may be determined from time to time by the Administrator.

6.9 Spendthrift Provision. A Participant’s or Beneficiary’s right to payment under the Plan is not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, judgment, seizure, alimony or separate maintenance owed by Participant or his Beneficiary or garnishment by creditors of the Participant or his Beneficiary,

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either voluntarily, involuntarily by operation of law or as a result of property settlement, and any attempt to cause such right to payment to be so subjected will not be recognized, except to such extent as shall be required by law.

6.10 Facility of Payment. In the event the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may make such payments to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient. The receipt by such person or institution of any such payments therefore, and any such payment to the extent thereof, shall discharge the liability of the Employers and the Trust for the payment of benefits hereunder to such recipient.

6.11 Discharge of Obligations. Payment of the value of an Account under the Plan to a person believed in good faith by the Administrator to be a valid Beneficiary shall fully and completely discharge the Employers from all further obligations under this Plan with respect to the Participant. Neither the Administrator nor Quest Diagnostics shall be obliged to search for any Participant or Beneficiary beyond the sending of a registered letter to the Participant’s or Beneficiary’s last known address. If the Administrator notifies any Participant or Beneficiary that he is entitled to an amount under the Plan and the Participant or Beneficiary fails to claim such amount or make his location known to the Administrator within one year thereafter, then, except as otherwise required by law, if the location of one or more of the next of kin of the Participant is known to the Administrator, the Administrator may direct payment of such amount to any one or more or all of such next of kin, and in such proportions as the Administrator determines. If the location of none of the foregoing persons can be determined, the Administrator shall have the right to direct that the amount payable shall be deemed to be forfeited and retained by the Employers, except that the dollar amount of the forfeiture, unadjusted for deemed earnings, gains or losses in the interim, may be paid in full satisfaction of the Employers’ obligations under this Plan in the sole discretion of the Administrator if a claim for payment subsequently is made by the Participant or the Beneficiary to whom it was payable. If any benefit payable to a Participant or Beneficiary who has not been located is subject to escheat pursuant to applicable state law, neither the Administrator nor Quest Diagnostics shall be liable to any person for any payment made in accordance with such law.

6.12 Taxes. There shall be deducted from each payment made under the Plan to the Participant (or Beneficiary) all taxes that Quest Diagnostics determines are required to be withheld or deducted by Quest Diagnostics in respect to such payment or the Plan. Quest Diagnostics shall have the right to reduce any payment by the amount of cash sufficient to provide the amount of such taxes.

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Article 7. Amendment and Termination.

7.1 Amendment by Quest Diagnostics. The Compensation Committee of the Board of Directors of Quest Diagnostics shall have the authority to approve amendments to the Plan at any time and from time to time. Such amendments may amend the Plan in whole or in part. In addition, the Chief Executive Officer and Vice President, Human Resources, of Quest Diagnostics, acting jointly (the “Authorizing Officers”), are hereby authorized, without action by the Board of Directors or any committee thereof, to approve any amendment to the Plan (in whole or in part) at any time and from time to time; provided, however, that such amendment (x) has been recommended to the Authorizing Officers by Quest Diagnostic’s Benefits Committee and (y) does not increase the benefits under the Plan or otherwise materially increase Quest Diagnostic’s costs with respect to the Plan. The Authorizing Officers promptly shall report to the Compensation Committee of the Board of Directors any amendment approved by the Authorizing Officers pursuant to this Section 7.1. Notwithstanding the foregoing, no amendment of the Plan may reduce the value of any Participant’s Account determined as though the Participant terminated his employment as of the date of such amendment.

7.2 Retroactive Amendments. An amendment made by Quest Diagnostics in accordance with Section 7.1 may be made effective on a date prior to the first day of the Plan Year in which it is adopted. Any retroactive amendment by the Employer shall be subject to the provisions of Section 7.1.

7.3 Plan Termination. Neither Quest Diagnostics nor any other Employer has any obligation or liability whatsoever to maintain the Plan for any length of time and may discontinue deferrals under the Plan or terminate the Plan at any time without any liability hereunder for any such discontinuance or termination.

7.4 Payment upon Termination of the Plan. Upon termination of the Plan, no further Deferral Contributions, Employer Contributions or Supplemental Contributions shall be made under the Plan, but Accounts of Participants maintained under the Plan at the time of termination shall continue to be governed by the terms of the Plan until paid out in accordance with the terms of the Plan. In its discretion, and notwithstanding any prior election made by the Participant, Quest Diagnostics may, upon Plan termination or at any time thereafter, cause each Participant to be paid in a single lump sum the value of the Participant’s Account in full satisfaction of all obligations to the Participant under the Plan if such payment would be consistent with the requirements of Code Section 409A.

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Article 8. The Trust

8.1 Establishment of Trust. Quest Diagnostics has established the Trust between each Employer and the Trustee, in accordance with the terms and conditions as set forth in a separate agreement, under which assets are held, administered and managed, subject to the claims of an Employer’s creditors in the event of such Employer’s insolvency, until paid to Participants and their Beneficiaries as specified in the Plan. The Trust is intended to be treated as a grantor trust under the Code, and the establishment of the Trust is not intended to cause Participants to realize current income on amounts contributed thereto or earnings on the Trust’s assets. Notwithstanding the establishment of the Trust, a Participant’s rights under the Plan shall be solely those of a general unsecured creditor of Quest Diagnostics and the Employers.

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Article 9. Miscellaneous.

9.1 Limitation of Rights. None of the establishment of the Plan or the Trust, or any amendment thereof, or the creation of any fund or Account, or the payment of any benefits, will be construed as giving to any Participant or other person any legal or equitable right against an Employer, the Administrator or the Trustee, except as provided herein, and in no event will the terms of employment or service of any Participant be modified or in any way affected hereby.

9.2 Furnishing Information. A Participant or his Beneficiary will cooperate with the Administrator by furnishing any and all information requested by the Administrator and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of amounts hereunder.

9.3 Information between the Administrator and Trustee. The Administrator agrees to furnish the Trustee, and the Trustee agrees to furnish the Administrator, with such information relating to the Plan and Trust as may be required by the other in order to carry out their respective duties hereunder, including without limitation information required under the Code or ERISA and any regulations issued or forms adopted thereunder.

9.4 Notices. Any notice or other communication in connection with this Plan shall be deemed delivered in writing if addressed as provided below and if either actually delivered at said address or, in the case of a letter, three business days shall have elapsed after the same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified:

(a) If it is sent to Quest Diagnostics, an Employer or the Administrator, it will be at the address specified by Quest Diagnostics, such Employer or the Administrator, as the case may be.

(b) If it is sent to the Trustee, it will be sent to the address set forth in the Trust Agreement, or, in each case, at such other address as the addressee shall have specified by written notice delivered in accordance with the foregoing to the addressee’s then-effective notice address.

9.5 Writings and Electronic Communications. All elections, notices and other communication with respect to the Plan, including signatures relating to such documentation, may be executed and stored on paper, electronically or in another medium. Any documentation executed or stored electronically shall comply with the Electronic Signatures Act.

9.6 Governing Law. The Plan will be construed, administered and enforced according to ERISA, and to the extent not preempted thereby, the laws of the State of New Jersey.

9.7 Construction. In the event that it is determined that a Participant or group of Participants does not qualify as a select group of management or highly compensated employees as determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Administrator shall have the right, in its sole discretion, to prevent the Participant from making future elections to defer Compensation. Following such determination the Plan shall constitute two plans, one covering such non-qualifying Participants and one covering the remaining Participants up to the maximum number of participants permissible for an unfunded deferred

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compensation plan maintained for the benefit of a select group of management or highly compensated employees under such sections of ERISA.

9.8 Section 409A Compliance. It is the intent of the Employers that this Plan be considered and interpreted in all respects as a nonqualified deferred compensation plan satisfying the requirements of Code Section 409A and deferring the recognition of income by Participants in respect of Deferrals until amounts are actually paid to them pursuant to Article 6. For purposes of this Plan, a “termination of employment” shall be deemed to have occurred when the Participant has a “separation from service” from all Employers as defined in section 1.409A-1(h) of the Section 409A Regulations. Prior to January 1, 2009, the Company operated the Plan in good faith compliance with Section 409A and certain Internal Revenue Service transitional rules then in effect. Written deferral and distribution elections made during, or with respect to, Plan Years 2005-2008 shall remain in effect hereunder, even to the extent that the specific election choices offered for such years may not be available under the terms of this Plan document and/or specific election choices available under this Plan document may not have been offered, provided that subsequent actions with respect to such elections (e.g., changes thereto, forms of distribution) shall be governed by the terms of this Plan document. The distribution provisions in Article 6 of this Plan document shall apply to the distribution of amounts deferred (within the meaning of Treas. Reg. §1.409A-6(a)(1)) on and after January 1, 2005 that commence on or after January 1, 2009.

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Article 10. Plan Administration.

10.1 Powers and Responsibilities of the Administrator. The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA. The Administrator’s powers and responsibilities include, but are not limited to, the following:

(a) To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;

(b) To interpret the Plan, its interpretation thereof in good faith to be final, conclusive and binding on all persons claiming payment under the Plan;

(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;

(d) To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;

(e) To determine the person or persons to whom such benefits will be paid;

(f) To authorize the payment of benefits;

(g) To comply with applicable requirements of Part 1 of Subtitle B of Title I of ERISA; and

(h) To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan.

10.2 Claims and Review Procedures.

(a) Claims Procedure. If any person believes he is being denied any rights or benefits under the Plan, such person may file a claim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review. Such notification will be given within 90 days after the claim is received by the Administrator (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period). If such notification is not given within such period, the claim will be considered denied as of the last day of such period and such person may request a review of his claim.

(b) Review Procedure. Within 60 days after the date on which a person receives written notice of a denied claim (or, if applicable, within 60 days after the date on which such denial is considered to have occurred), such person (or his duly authorized representative) may (i) file a written request with the Appeals Committee for a review of his denied claim and of pertinent

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documents and (ii) submit issues and comments to the Appeals Committee. The Appeals Committee will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The decision on review will be made within 60 days after the request for review is received by the Appeals Committee (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Appeals Committee to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period). If the decision on review is not made within such period, the claim will be considered denied.

(c) LIMITATIONS ON ACTIONS. NO ACTION (WHETHER AT LAW, IN EQUITY OR OTHERWISE) SHALL BE BROUGHT BY OR ON BEHALF OF ANY PARTICIPANT OR BENEFICIARY FOR OR WITH RESPECT TO PAYMENT DUE UNDER THIS PLAN UNLESS THE PERSON BRINGING SUCH ACTION HAS TIMELY EXHAUSTED THE PLAN’S CLAIM REVIEW PROCEDURE. ANY ACTION (WHETHER AT LAW, IN EQUITY OR OTHERWISE) MUST BE COMMENCED WITHIN ONE YEAR. THIS ONE-YEAR PERIOD SHALL BE COMPUTED FROM THE EARLIER OF (I) THE DATE A FINAL DETERMINATION DENYING SUCH BENEFIT, IN WHOLE OR IN PART, IS ISSUED UNDER THE PLAN’S CLAIM REVIEW PROCEDURE AND (II) THE DATE SUCH INDIVIDUAL’S CAUSE OF ACTION FIRST ACCRUED (AS DETERMINED UNDER THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO PRINCIPLES OF CHOICE OF LAWS).

10.3 Plan’s Administrative Costs.

The Employers shall pay all reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator and the Trustee in administering the Plan and Trust.

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IN WITNESS WHEREOF, Quest Diagnostics has caused this Plan document to be executed by its duly authorized officer, effective as of January 1, 2005.

QUEST DIAGNOSTICS INCORPORATED
By:	/s/ David W. Norgard
	David W. Norgard
	Vice President Human Resources
	December 22, 2008
By:	/s/ Surya N. Mohapatra
	Surya N. Mohapatra
	Chief Executive Officer
	December 22, 2008

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EX-10.25

Exhibit 10.25

QUEST DIAGNOSTICS

SUPPLEMENTAL DEFERRED COMPENSATION PLAN

(PRE – 2005)

AMENDED DECEMBER 30, 2008

PREAMBLE

Effective as of January 1, 1999, Quest Diagnostics adopted this Quest Diagnostics Supplemental Deferred Compensation Plan for the benefit of certain of its Employees. As a result of the enactment in 2004 of Section 409A of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), Quest Diagnostics adopted the Quest Diagnostics Supplemental Deferred Compensation Plan (Post-2004) document to reflect the terms that will govern amounts that were deferred (within the meaning of Treas. Reg. §1.409A-6(a)(1)) under the Plan in taxable years beginning on and after January 1, 2005. Quest Diagnostics hereby desires to amend the Plan document to evidence the intention that, with limited exceptions, amounts that were deferred (within the meaning of Treas. Reg. §1.409A-6(a)(1)) under the Plan in taxable years beginning before January 1, 2005 will be governed by the terms of the Plan as in effect as of October 3, 2004 and that Section 409A will not be applicable to such amounts (including any earnings thereon) and adopts this document, the Quest Diagnostics Supplemental Deferred Compensation Plan (Pre – 2005) for that purpose. Unless otherwise expressly determined by Quest Diagnostics, it is the intent that no amendment to this document be considered a “material modification” within the meaning of Treas. Reg. 1.409A-6(a)(4).

For these purposes, an amount is considered deferred before January 1, 2005, if before such date, the employee had a legally binding right to be paid the amount (within the meaning of Treas. Reg. §1.409A-1(b)(1)), and the right to the amount was earned and vested (within the meaning of Treas. Reg. §1.409A-6(a)).

The purpose of the Plan is to provide supplemental retirement income and to permit eligible Employees the option to defer receipt of Compensation, pursuant to the terms of the Plan. The Plan is intended to be an unfunded deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Subtitle B of Title I of ERISA to the maximum extent permissible under the provisions thereof.

TABLE OF CONTENTS

ARTICLE 1.		DEFINITIONS	1
1.1	Definitions		1
ARTICLE 2.		PARTICIPATION	4
2.1	Participation		4
2.2	Resumption of Participation Following Reemployment		4
2.3	Change in Employment Status		4
ARTICLE 3.		CONTRIBUTIONS	5
3.1	Deferral Contributions		5
3.2	Participating Employer Contributions		6
3.3	Transfer of Funds		6
ARTICLE 4.		PARTICIPANTS’ ACCOUNTS	7
4.1	Individual Accounts		7
4.2	Accounting for Payments		7
ARTICLE 5.		INVESTMENT OF CONTRIBUTIONS	8
5.1	Manner of Investment		8
5.2	Investment Decisions		8
ARTICLE 6.		RIGHT TO BENEFITS	9
6.1	Termination of Employment		9
6.2	Death		9
6.3	Payment on a Designated Future Date		9
6.4	Payment Due to an Unforeseen Emergency		9
6.5	Adjustment for Investment Experience		9
6.6	Forfeiture of Unvested Amounts		10
6.7	Taxes		10
ARTICLE 7.		PAYMENT OF BENEFITS	11
7.1	Payment of Benefits to Participants and Beneficiaries		11
7.2	Determination of Method of Payment		11
7.3	Right of Offset		11
7.4	Payment in the Event of Taxation		11
ARTICLE 8.		AMENDMENT AND TERMINATION	12
8.1	Plan Amendment		12
8.2	Retroactive Amendments		12

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8.3	Plan Termination		12
8.4	Payment upon Termination of the Plan		12
ARTICLE 9.		THE TRUST	13
9.1	Establishment of Trust		13
ARTICLE 10.		MISCELLANEOUS	14
10.1	Limitation of Rights		14
10.2	Spendthrift Provision		14
10.3	Facility of Payment		14
10.4	Discharge of Obligations		14
10.5	Furnishing Information		15
10.6	Information between the Administrator and Trustee		15
10.7	Notices		15
10.8	Writings and Electronic Communications		15
10.9	Governing Law		15
10.10	Construction		15
ARTICLE 11.		PLAN ADMINISTRATION	16
11.1	Powers and Responsibilities of the Administrator		16
11.2	Claims and Review Procedures		16
11.3	Plan’s Administrative Costs		17

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Article 1. Definitions.

1.1 Definitions. Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise. Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

(a) “Account” means an account established on the books of a Participant’s Employer for the purpose of recording Deferral Contributions and Employer Contributions credited on behalf of a Participant in respect of compensation for services to such Employer and any notional income, expenses, gains or losses related thereto. For each Participant who was a participant in the MetPath Inc. Deferred Compensation Plan, a MetPath Plan Subaccount was established as part of the Participant’s Account. For purposes of this Plan document, “Account” shall include only amounts that are deferred within the meaning of Treas. Reg. §1.409A-6(a)(1)) during taxable years before January 1, 2005. An amount is considered deferred before January 1, 2005, if before such date, the Participant had a legally binding right to be paid the amount (within the meaning of Treas. Reg. §1.409A-1(b)(1)), and the right to the amount was earned and vested (within the meaning of Treas. Reg. §1.409A-6(a)).

(b) “Administrator” means Quest Diagnostics acting through its officers and employees.

(c) “Appeals Committee” means the Quest Diagnostics Appeals Committee, which is designated from time to time by the Administrator to administer the claims and review procedures specified in Section 11.2.

(d) “Beneficiary” means the person or persons entitled under Section 6.2 to receive benefits under the Plan upon the death of a Participant.

(e) “Bonus” means the cash bonus that is payable each March (if not deferred pursuant to Section 3.1) under the Senior Management Incentive Plan or the Quest Diagnostics Incorporated Management Incentive Plan.

(f) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(g) “Compensation” shall have the meaning ascribed to the term “Deferral Compensation” by the Profit Sharing Plan; provided that any exclusion attributable to (i) deferred compensation deferred pursuant to this Plan or (ii) limits imposed by Code Section 401(a)(17) shall not apply.

(h) “Deferral Contributions” means those amounts credited to a Participant’s Account pursuant to Section 3.1.

(i) “Eligible Employee” means an Employee of an Employer who is determined by the Administrator to be among a select group of management or highly compensated Employees and who is designated by the Administrator as an Eligible Employee for purposes of the Plan.

(j) “Employee” means any employee of an Employer.

(k) “Employer” means Quest Diagnostics and any successors and assigns unless otherwise provided herein, and shall include any Related Employer or other affiliated employer adopting this Plan.

(l) “Employer Contributions” means amounts credited to a Participant’s Account pursuant to Section 3.2.

(m) “Employer Stock” means any class of common stock of Quest Diagnostics or the preferred stock of Quest Diagnostics that is convertible into common stock.

(n) “ERISA” means the Employee Retirement Income Security Act of 1974, as from time to time amended.

(o) “MetPath Plan Subaccount” means the subaccount established and maintained by the Administrator pursuant to Section 4.1 on behalf of each Participant who was a participant in the MetPath Inc. Deferred Compensation Plan.

(p) “Participant” means any Eligible Employee who has filed in accordance with Article 2 an election to defer Compensation pursuant to Section 3.1.

(q) “Plan” means this Quest Diagnostics Supplemental Deferred Compensation Plan as in effect from time to time.

(r) “Plan Year” means the calendar year.

(s) “Profit Sharing Plan” means the Profit Sharing Plan of Quest Diagnostics Incorporated, as amended from time to time.

(t) “Quest Diagnostics” means Quest Diagnostics Incorporated.

(u) “Related Employer” means any employer other than Quest Diagnostics, if Quest Diagnostics and such other employer are members of a controlled group of corporations (as defined in Section 414(b) of the Code) or an affiliated service group (as defined in Code Section 414(m)), or are trades or businesses (whether or not incorporated) which are under common control (as defined in Section 414(c)), or such other employer is required to be aggregated with Quest Diagnostics pursuant to regulations issued under Code Section 414(o).

(v) “Section 16 Executive” means an Eligible Employee who is designated as such by the Administrator.

(w) “Section 401(a)(17) Limit” means the maximum amount of annual compensation that can be taken into account by the Profit Sharing Plan pursuant to Code Section 401(a)(17).

(x) “Senior Executive” means an Eligible Employee who is designated as such by the Administrator.

(y) “Senior Management Incentive Plan” means the Quest Diagnostics Incorporated Senior Management Incentive Plan, as in effect from time to time.

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(z) “SMIP Bonus Subaccount” means the portion of a Participant’s Account established and maintained by the Administrator on behalf of each Participant who elects to defer a portion of his Bonus payable under the Senior Management Incentive Plan and any other plan intended to pay performance-based compensation within the meaning of Code Section 162(m)(4)(c).

(aa) “Supplemental Contribution” means an additional discretionary Employer Contribution credited to a Participant’s Account pursuant to Section 3.2.

(bb) “Trust” means the trust fund established pursuant to the terms of the Plan.

(cc) “Trust Agreement” means the agreement by and among the Trustee and each Employer establishing the Trust.

(dd) “Trustee” means the corporation or individuals named in the agreement establishing the Trust and such successor and/or additional trustees as may be named in accordance with the Trust Agreement.

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Article 2. Participation.

2.1 Participation. Each Eligible Employee who has an Account is a Participant covered under this Plan document. No other Eligible Employee shall become a Participant covered under this Plan document after December 31, 2004. An election to defer Compensation will be timely if it is filed in accordance with procedures established by the Administrator which shall require elections to be filed no later than January 1 of the Plan Year to which the deferral election applies or, if an individual is designated by the Administrator as an Eligible Employee during the Plan Year, within 30 days following the date of such designation.

2.2 Resumption of Participation Following Reemployment. If a Participant ceases to be an Employee and thereafter returns to the employ of an Employer before December 31, 2004, he may again become a Participant following his reemployment, provided he is an Eligible Employee and has timely filed an election to defer Compensation pursuant to Section 3.1.

2.3 Change in Employment Status. If any Participant continues in the employ of an Employer but ceases to be an Eligible Employee, he shall continue to be a Participant until the entire amount of the value of his Account is paid.

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Article 3. Contributions.

3.1 Deferral Contributions.

(a) Participant deferral elections. Each Participant who is not a Senior Executive may elect to defer up to fifty (50) percent (in whole percentages) of his future Compensation in excess of the Section 401(a)(17) Limit.

(b) Senior Executive deferral elections. Each Participant who is a Senior Executive may elect to defer (1) up to fifty (50) percent (in whole percentages) of his future Compensation (excluding any Bonus deferred pursuant to Section 3.1(b)(2)) in excess of the Section 401(a)(17) Limit; and (2) up to ninety-five (95) percent (in whole percentages) of his future Compensation which constitutes Bonus.

(c) Effectiveness of deferral election. A deferral election shall become effective on the first day of the Plan Year (or for an individual who is designated as an Eligible Employee during the Plan Year and timely files a deferral election, the first day of the first payroll period that follows receipt by the Administrator of such election). The election will be effective to defer Compensation relating to all services performed in the Plan Year subsequent to the time such election becomes effective. Any subsequent election will be effective as of the first day of the following Plan Year and will apply only to Compensation payable with respect to services rendered after such date. Amounts credited to a Participant’s Account prior to the effective date of any subsequent election will not be affected by such subsequent election.

(d) Commencement of deferrals. (i) Deferrals made pursuant to Section 3.1(a) and 3.1(b)(1). If a Participant’s Compensation for a Plan Year exceeds the Section 401(a)(17) Limit on account of payment of Compensation (excluding any Bonus), then deferrals pursuant to his election under Section 3.1(a) or 3.1(b)(1) shall commence as of the payroll period coincident with or next following the payroll period in which the Participant’s Compensation exceeds the Section 401(a)(17) Limit (but deferrals shall be made only on Compensation in excess of the Section 401(a)(17) Limit). If a Participant’s Compensation for a Plan Year exceeds the Section 401(a)(17) Limit on account of payment of Bonus, then deferrals pursuant to his election shall commence as of the payroll period in which the Participant’s Compensation exceeds the Section 401(a)(17) Limit (but deferrals shall be made only on Compensation in excess of the Section 401(a)(17) Limit). (ii) Deferrals made pursuant to Section 3.1(b)(2). Deferrals of Bonus pursuant to Section 3.1(b)(2) shall be made in the payroll period in which the Bonus would otherwise be paid.

(e) Election irrevocable except as required pursuant to Profit Sharing Plan. An Employer shall credit to the Account maintained on behalf of a Participant the amount of Compensation deferred pursuant to such Participant’s election. Under no circumstances may an election to defer Compensation be adopted or effective retroactively. A Participant may not revoke or change an election to defer Compensation for a Plan Year during that year; provided, however, that a Participant who has made a hardship withdrawal under the Profit Sharing Plan may not defer Compensation under this Plan for a period of six months from the date of the withdrawal, unless otherwise determined by the Administrator.

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(f) SMIP Bonus Subaccount. A Participant’s Employer shall credit to the Participant’s SMIP Bonus Subaccount an amount corresponding to the amount of Bonus payable under the Senior Management Incentive Plan deferred pursuant to Section 3.1(b)(2).

(g) Vested Right. Subject to the claims of the Employer’s creditors in the event of the Employer’s insolvency, a Participant shall have a nonforfeitable right to the value of Deferral Contributions credited to his Account.

(h) No Deferral Contributions after 2004. All Deferral Contributions made after 2004 and attributable to periods after 2004 shall be governed by the terms of the Quest Diagnostics Supplemental Deferred Compensation Plan (Post – 2004).

3.2 Participating Employer Contributions.

(a) Employer Contributions. (i) Matching Contribution. An Employer shall credit an Employer Contribution to the Account maintained on behalf of each Participant who had Deferral Contributions credited to his Account for a payroll period. Notwithstanding the preceding sentence, no Employer Contribution shall be credited to the Account of a Participant who is also a participant in the Quest Diagnostics Transferee Pension Plan for former Corning Incorporated employees. The amount of the Employer Contribution to be credited on behalf of a Participant shall be equal to the applicable percentage specified from time to time in Section 3.2 of the Profit Sharing Plan of the Deferral Contributions made on behalf of the Participant with respect to such payroll period. (ii) Vested Right. Subject to the claims of the Employer’s creditors in the event of the Employer’s insolvency, a Participant shall have a nonforfeitable right to the value of Employer Contributions credited to his Account.

(b) Supplemental Contributions. In addition, a Participant’s Employer may, from time to time in its sole discretion, credit a Supplemental Contribution to a Participant’s Account in an amount determined by such Employer in its sole discretion and without regard to any Deferral Contribution elected by such Participant. Unless otherwise specified by the Employer at the time the Supplemental Contribution is made, a Participant shall have a nonforfeitable right to the value of such Supplemental Contribution credited to his Account, subject to the claims of such Employer’s creditors in the event of such Employer’s insolvency.

(c) No Employer Contributions after 2004. All Employer Contributions made after 2004 and attributable to periods after 2004 shall be governed by the terms of the Quest Diagnostics Supplemental Deferred Compensation Plan (Post – 2004).

3.3 Transfer of Funds. Each Employer will, as soon as administratively practicable after each payroll period, make a transfer of assets to the Trustee. The Employers shall provide the Trustee with information on the amount credited to each Participant’s Account.

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Article 4. Participants’ Accounts.

4.1 Individual Accounts. The Administrator will establish and maintain an Account for each Participant which will reflect Deferral Contributions, Employer Contributions and Supplemental Contributions credited to the Account and any notional earnings, expenses, gains and losses credited thereto, attributable to the investments in which the Participant’s Account is treated as invested. For each Participant who was a participant in the MetPath Inc. Deferred Compensation Plan, the Administrator will establish and maintain, as part of such Participant’s Account, a subaccount (the “MetPath Plan Subaccount”) to reflect his participation in the MetPath Inc. Deferred Compensation Plan. The MetPath Plan Subaccount had an opening balance equal to the balance of the Participant’s account under the MetPath Inc. Deferred Compensation Plan on the date the Participant’s balance under the MetPath Inc. Deferred Compensation Plan was transferred to this Plan (with interest credited, pursuant to the terms of the MetPath Inc. Deferred Compensation Plan, from December 31, 1998 to the transfer date). The Administrator will establish and maintain such other accounts and records as it decides in its discretion to be reasonably required or appropriate in order to discharge its duties under the Plan. Participants will be furnished statements of their Account value at least once each Plan Year.

4.2 Accounting for Payments. A payment to the Participant or to the Participant’s Beneficiary(ies) shall be charged to the Participant’s Account as of the date of such payment.

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Article 5. Investment of Contributions.

5.1 Manner of Investment. All amounts credited to the Accounts of Participants shall be treated as though invested and reinvested only in eligible investments selected by the Administrator.

5.2 Investment Decisions. Investments in which the Accounts of Participants shall be treated as invested and reinvested shall be directed by the Employer, each Participant, or both, as specified pursuant to procedures established by the Administrator from time to time. No portion of the Employer Contributions credited to a Participant’s Account on or after January 1, 2003 or Deferral Contributions credited to a Participant’s Account on or after April 1, 2004 may be treated as though invested in Employer Stock, but the portion of the Employer Contributions credited to a Participant’s Account before January 1, 2003 that was treated as though invested in Employer Stock shall continue, on and after January 1, 2003, to be treated as though invested in Employer Stock.

Notwithstanding the preceding provisions of this Section 5.2, in no event may a Section 16 Executive direct that Deferral Contributions made by him on or after January 1, 2000 be treated as though invested in Employer Stock.

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Article 6. Right to Benefits.

6.1 Termination of Employment. If a Participant terminates his employment for any reason, the value of the Participant’s Account will be paid in accordance with Article 7.

6.2 Death. If a Participant dies before payment of the value of his Account has commenced, or before such payment has been completed, his designated Beneficiary or Beneficiaries will be entitled to receive the remaining balance of his Account. Payment to the Beneficiary or Beneficiaries will be made in accordance with Article 7.

A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of Beneficiary or Beneficiaries by giving notice to the Administrator on a form designated by the Administrator. With respect to any Beneficiary designations filed with the Administrator, after December 31, 2003, a Participant’s spouse must consent to his designation of a Beneficiary other than his spouse. If more than one person is designated as the Beneficiary, their respective interests shall be indicated on the designation form. A copy of the death notice or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the value of the Participant’s Account, such amount will be paid to his surviving spouse or, if none, to his estate (such spouse or estate shall be deemed to be the Beneficiary for purposes of the Plan). If a Beneficiary dies after payment to such Beneficiary has commenced, but before the full value of the Participant’s Account has been paid, and, in the opinion of the Administrator, no person has been designated to receive such remaining balance, then such balance shall be paid to the deceased Beneficiary’s estate.

6.3 Payment on a Designated Future Date. Concurrently with a Participant’s election to defer Compensation pursuant to Section 3.1 for any Plan Year (or the making of a Supplemental Contribution by an Employer), the Administrator may permit a Participant to designate a specific date on which a specified amount of the value of his Account attributable to such election (or a Supplemental Contribution that is nonforfeitable) shall be paid in accordance with Article 7; provided that in the event of such Participant’s earlier termination of employment or death, his Account shall be paid in accordance with Section 6.1 or 6.2, as the case may be. Unless otherwise permitted under procedures specified by the Administrator, such election shall be irrevocable.

6.4 Payment Due to an Unforeseen Emergency. A Participant shall not be permitted to withdraw any portion of the value of his Account prior to termination of employment or any date specified pursuant to Section 6.3 (whichever occurs first), except a Participant may apply to the Administrator, in accordance with procedures specified by the Administrator, to withdraw some or all of the value of his Account if such withdrawal is required on account of a financial hardship resulting from an unforeseen emergency. The Administrator shall establish criteria to determine what constitutes financial hardship. Withdrawals made on account of financial hardship shall be made in a lump sum payment in accordance with Article 7.

6.5 Adjustment for Investment Experience. If the total value of a Participant’s Account is not paid in a single sum after the Participant terminates employment, the amount remaining in the Account after the first payment will continue to be treated as invested in an interest-bearing

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money market account and will be subject to adjustment until paid to reflect the income, gains and losses on such deemed investment.

6.6 Forfeiture of Unvested Amounts. Any portion of the value of a Participant’s Account attributable to a Supplemental Contribution that is not fully vested at the time he terminates employment shall be forfeited.

6.7 Taxes. There shall be deducted from each payment made under the Plan to the Participant (or Beneficiary) all taxes that Quest Diagnostics determines are required to be withheld or deducted by Quest Diagnostics in respect to such payment or the Plan. Quest Diagnostics shall have the right to reduce any payment by the amount of cash sufficient to provide the amount of such taxes.

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Article 7. Payment of Benefits.

7.1 Payment of Benefits to Participants and Beneficiaries. (a) Payments under the Plan to a Participant or to the Beneficiary of the Participant shall be made in a lump sum in cash or, if permitted by the Administrator and specified in the Participant’s election to defer Compensation, under a systematic withdrawal plan (installment(s)) not exceeding 5 years, upon termination of employment or death. Notwithstanding the preceding sentence, amounts attributable to that portion of the Employer Contribution credited to a Participant’s Account treated as though invested in Employer Stock pursuant to Section 5.2 shall be paid in Employer Stock following termination of employment, and any amounts attributable to Deferral Contributions credited to a Participant’s Account treated as though invested in Employer Stock shall be paid in cash or Employer Stock, as elected by the Participant. Payments under the Plan shall be made first from the value of the Participant’s SMIP Bonus Subaccount and then from the remaining value of the Participant’s Account.

(b) Payments under a systematic withdrawal plan must be made in substantially equal annual installments, in cash, over a period certain which does not exceed 5 years.

7.2 Determination of Method of Payment. The Participant will determine the method of payment of benefits to himself and the method of payment to his Beneficiary. Unless such determination was made at least one (1) year prior to the date on which a payment is to be made pursuant to Section 6.1, 6.2 or 6.3, the Participant’s prior determination shall govern such payment. If the Participant does not determine the method of payment to him or his Beneficiary within the time frame set forth in the preceding sentence, the method shall be a lump sum.

7.3 Right of Offset. The value of a Participant’s Account to be paid under the Plan may be reduced in accordance with procedures established by the Administrator by any amount the Participant owes his Employer at the time payment is made.

7.4 Payment in the Event of Taxation. If, for any reason, all or any portion of the value of a Participant’s Account under this Plan becomes taxable to the Participant prior to receipt, a Participant may petition the Administrator for a payment of that portion of the value of his Account that has become taxable. Upon the grant of such a petition, a payment shall immediately be made to a Participant in an amount equal to the taxable portion of the value of his Account (which amount shall not exceed the remaining balance of a Participant’s Account). If the petition is granted, the tax liability payment shall be made as soon as practicable after the Participant’s petition is granted.

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Article 8. Amendment and Termination.

8.1 Plan Amendment. The Compensation Committee of the Board of Directors of the Corporation shall have the authority to approve amendments to the Plan at any time and from time to time; such amendments may amend the Plan in whole or in part. In addition, the Chief Executive Officer and Vice President, Human Resources, of the Corporation, acting jointly (the “Authorizing Officers”), are hereby authorized, without action by the Board of Directors or any committee thereof, to approve any amendment to the Plan (in whole or in part) at any time and from time to time; provided, however, that such amendment (x) has been recommended to the Authorizing Officers by the Corporation’s Benefits Committee and (y) does not increase the benefits under the Plan or otherwise materially increase the Corporation’s costs with respect to the Plan. The Authorizing Officers promptly shall report to the Compensation Committee of the Board of Directors any amendment approved by the Authorizing Officers pursuant to this Section 8.1. Notwithstanding the foregoing, no amendment of the Plan may reduce the value of any Participant’s Account determined as though the Participant terminated his employment as of the date of such amendment

8.2 Retroactive Amendments. An amendment made by Quest Diagnostics in accordance with Section 8.1 may be made effective on a date prior to the first day of the Plan Year in which it is adopted. Any retroactive amendment by the Employer shall be subject to the provisions of Section 8.1.

8.3 Plan Termination. Neither Quest Diagnostics nor any other Employer has any obligation or liability whatsoever to maintain the Plan for any length of time and may discontinue deferrals under the Plan or terminate the Plan at any time without any liability hereunder for any such discontinuance or termination.

8.4 Payment upon Termination of the Plan. Upon termination of the Plan, no further Deferral Contributions or Employer Contributions shall be made under the Plan, but Accounts of Participants maintained under the Plan at the time of termination shall continue to be governed by the terms of the Plan until paid out in accordance with the terms of the Plan. In its discretion, and notwithstanding any prior election made by the Participant, Quest Diagnostics may, upon Plan termination or at any time thereafter, cause each Participant to be paid in a single lump sum the value of the Participant’s Account in full satisfaction of all obligations to the Participant under the Plan.

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Article 9. The Trust

9.1 Establishment of Trust. Quest Diagnostics has established the Trust between each Employer and the Trustee, in accordance with the terms and conditions as set forth in a separate agreement, under which assets are held, administered and managed, subject to the claims of an Employer’s creditors in the event of such Employer’s insolvency, until paid to Participants and their Beneficiaries as specified in the Plan. The Trust is intended to be treated as a grantor trust under the Code, and the establishment of the Trust is not intended to cause Participants to realize current income on amounts contributed thereto or earnings on the Trust’s assets.

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Article 10. Miscellaneous.

10.1 Limitation of Rights. None of the establishment of the Plan or the Trust, or any amendment thereof, or the creation of any fund or Account, or the payment of any benefits, will be construed as giving to any Participant or other person any legal or equitable right against an Employer, the Administrator or the Trustee, except as provided herein, and in no event will the terms of employment or service of any Participant be modified or in any way affected hereby.

10.2 Spendthrift Provision. A Participant’s or Beneficiary’s right to payment under the Plan is not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, judgment, seizure, alimony or separate maintenance owed by Participant or his Beneficiary or garnishment by creditors of the Participant or his Beneficiary, either voluntarily, involuntarily by operation of law or as a result of property settlement, and any attempt to cause such right to payment to be so subjected will not be recognized, except to such extent as shall be required by law.

10.3 Facility of Payment. In the event the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may make such payments to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient. The receipt by such person or institution of any such payments therefore, and any such payment to the extent thereof, shall discharge the liability of the Employers and the Trust for the payment of benefits hereunder to such recipient.

10.4 Discharge of Obligations. Payment of the value of an Account under the Plan to a person believed in good faith by the Administrator to be a valid Beneficiary shall fully and completely discharge the Employers from all further obligations under this Plan with respect to the Participant. Neither the Administrator nor Quest Diagnostics shall be obliged to search for any Participant or Beneficiary beyond the sending of a registered letter to the Participant’s or Beneficiary’s last known address. If the Administrator notifies any Participant or Beneficiary that he is entitled to an amount under the Plan and the Participant or Beneficiary fails to claim such amount or make his location known to the Administrator within one year thereafter, then, except as otherwise required by law, if the location of one or more of the next of kin of the Participant is known to the Administrator, the Administrator may direct payment of such amount to any one or more or all of such next of kin, and in such proportions as the Administrator determines. If the location of none of the foregoing persons can be determined, the Administrator shall have the right to direct that the amount payable shall be deemed to be forfeited and retained by the Employers, except that the dollar amount of the forfeiture, unadjusted for deemed earnings, gains or losses in the interim, may be paid in full satisfaction of the Employers’ obligations under this Plan in the sole discretion of the Administrator if a claim for payment subsequently is made by the Participant or the Beneficiary to whom it was payable. If any benefit payable to a Participant or Beneficiary who has not been located is subject to escheat pursuant to applicable state law, neither the Administrator nor Quest Diagnostics shall be liable to any person for any payment made in accordance with such law.

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10.5 Furnishing Information. A Participant or his Beneficiary will cooperate with the Administrator by furnishing any and all information requested by the Administrator and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of amounts hereunder.

10.6 Information between the Administrator and Trustee. The Administrator agrees to furnish the Trustee, and the Trustee agrees to furnish the Administrator, with such information relating to the Plan and Trust as may be required by the other in order to carry out their respective duties hereunder, including without limitation information required under the Code or ERISA and any regulations issued or forms adopted thereunder.

10.7 Notices. Any notice or other communication in connection with this Plan shall be deemed delivered in writing if addressed as provided below and if either actually delivered at said address or, in the case of a letter, three business days shall have elapsed after the same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified:

(a) If it is sent to Quest Diagnostics, an Employer or the Administrator, it will be at the address specified by Quest Diagnostics, such Employer or the Administrator, as the case may be.

(b) If it is sent to the Trustee, it will be sent to the address set forth in the Trust Agreement; or, in each case at such other address as the addressee shall have specified by written notice delivered in accordance with the foregoing to the addressee’s then effective notice address.

10.8 Writings and Electronic Communications. All elections, notices and other communication with respect to the Plan, including signatures relating to such documentation, may be executed and stored on paper, electronically or in another medium. Any documentation executed or stored electronically shall comply with the Electronic Signatures Act.

10.9 Governing Law. The Plan will be construed, administered and enforced according to ERISA, and to the extent not preempted thereby, the laws of the State of New Jersey.

10.10 Construction. In the event that it is determined that a Participant or group of Participants does not qualify as a select group of management or highly compensated employees as determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Administrator shall have the right, in its sole discretion, to (i) terminate any election to defer Compensation made by each such Participant pursuant to Section 3.1 for the remainder of the Plan Year in which the Participant’s status changes, (ii) prevent the Participant from making future elections to defer Compensation and/or (iii) immediately pay the value of the Participant’s Account and terminate the Participant’s participation in the Plan. In any event, following such determination the Plan shall constitute two plans, one covering such non-qualifying Participants and one covering the remaining Participants up to the maximum number of participants permissible for an unfunded deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees under such sections of ERISA.

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Article 11. Plan Administration.

11.1 Powers and Responsibilities of the Administrator. The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA. The Administrator’s powers and responsibilities include, but are not limited to, the following:

(a) To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;

(b) To interpret the Plan, its interpretation thereof in good faith to be final, conclusive and binding on all persons claiming payment under the Plan;

(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;

(d) To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;

(e) To determine the person or persons to whom such benefits will be paid;

(f) To authorize the payment of benefits;

(g) To comply with applicable requirements of Part 1 of Subtitle B of Title I of ERISA; and

(h) To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan.

11.2 Claims and Review Procedures.

(a) Claims Procedure. If any person believes he is being denied any rights or benefits under the Plan, such person may file a claim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review. Such notification will be given within 90 days after the claim is received by the Administrator (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period). If such notification is not given within such period, the claim will be considered denied as of the last day of such period and such person may request a review of his claim.

(b) Review Procedure. Within 60 days after the date on which a person receives written notice of a denied claim (or, if applicable, within 60 days after the date on which such denial is considered to have occurred), such person (or his duly authorized representative) may (i) file a written request with the Appeals Committee for a review of his denied claim and of pertinent

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documents and (ii) submit issues and comments to the Appeals Committee. The Appeals Committee will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The decision on review will be made within 60 days after the request for review is received by the Appeals Committee (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Appeals Committee to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period). If the decision on review is not made within such period, the claim will be considered denied.

(c) LIMITATIONS ON ACTIONS. NO ACTION (WHETHER AT LAW, IN EQUITY OR OTHERWISE) SHALL BE BROUGHT BY OR ON BEHALF OF ANY PARTICIPANT OR BENEFICIARY FOR OR WITH RESPECT TO PAYMENT DUE UNDER THIS PLAN UNLESS THE PERSON BRINGING SUCH ACTION HAS TIMELY EXHAUSTED THE PLAN’S CLAIM REVIEW PROCEDURE. ANY ACTION (WHETHER AT LAW, IN EQUITY OR OTHERWISE) MUST BE COMMENCED WITHIN ONE YEAR. THIS ONE-YEAR PERIOD SHALL BE COMPUTED FROM THE EARLIER OF (I) THE DATE A FINAL DETERMINATION DENYING SUCH BENEFIT, IN WHOLE OR IN PART, IS ISSUED UNDER THE PLAN’S CLAIM REVIEW PROCEDURE AND (II) THE DATE SUCH INDIVIDUAL’S CAUSE OF ACTION FIRST ACCRUED (AS DETERMINED UNDER THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO PRINCIPLES OF CHOICE OF LAWS).

11.3 Plan’s Administrative Costs.

The Employers shall pay all reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator and the Trustee in administering the Plan and Trust.

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IN WITNESS WHEREOF, Quest Diagnostics has caused this Plan document to be executed by its duly authorized officer, effective as of December 31, 2004.

QUEST DIAGNOSTICS INCORPORATED
By:	/s/ David W. Norgard
	David W. Norgard
	Vice President Human Resources
	December 22, 2008
By:	/s/ Surya N. Mohapatra
	Surya N. Mohapatra
	Chief Executive Officer
	December 22, 2008

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EX-10.26

Exhibit 10.26

QUEST DIAGNOSTICS INCORPORATED

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(As Amended and Restated Effective November 7, 2008)

QUEST DIAGNOSTICS INCORPORATED

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

TABLE OF CONTENTS

		Page
	ARTICLE I DEFINITIONS
1.1	Definitions	1
1.2	Rules of Construction	3
ARTICLE II ELIGIBILITY AND PARTICIPATION
2.1	Eligibility	4
2.2	Participation	4
ARTICLE III RETIREMENT BENEFIT AND DEATH BENEFIT
3.1	Retirement Benefit	5
3.2	Death Benefit	6
ARTICLE IV FORM AND TIMING OF RETIREMENT BENEFIT
4.1	Form	8
4.2	Timing	8
ARTICLE V VESTING
5.1	Vesting	9
ARTICLE VI ADMINISTRATION
6.1	Committee	10
6.2	Claims Procedures	10
ARTICLE VII FUNDING
7.1	General Rule	11
ARTICLE VIII AMENDMENT AND TERMINATION
8.1	General Rule	12
ARTICLE IX GENERAL PROVISIONS
9.1	Payments to Minors and Incompetents	13
9.2	No Contract	13
9.3	Non-Alienation of Benefits	13
9.4	Income Tax Withholding	13
9.5	Governing Law	13

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9.6	Captions	13
9.7	Severability	13
9.8	Notices	13
Appendix A – Actuarial Assumptions

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PREAMBLE

                    Effective December 14, 2004, Quest Diagnostics Incorporated (the “Company”) established this nonqualified defined benefit pension plan referred to as the Supplemental Executive Retirement Plan (the “Plan”) for the benefit of the Chief Executive Officer of the Company.

                    The Plan was amended, effective December 14, 2004, to amend certain definitions and the benefit multiplier.

                    The Plan is hereby amended and restated, effective November 7, 2008, to incorporate the foregoing amendment and to reflect amendments to comply with Section 409A of the Code.

                    The Plan is an unfunded nonqualified pension plan that is intended to qualify as a “top hat plan” for purposes of the Employee Retirement Income Security Act of 1974, as amended. Furthermore, the Plan is intended to satisfy and comply with all requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and shall be interpreted accordingly.

ARTICLE I

DEFINITIONS

                    1.1 Definitions. The following words and phrases when used in the Plan shall have the meanings indicated in this Article I.

                    “Actuarial Equivalence” or “Actuarially Equivalent” means a benefit of equal value, determined using the actuarial assumptions set forth in Appendix A.

                    “Annual Bonus” means the regular annual bonus paid (or which would have been paid but for a deferral election by the Participant) under the Company’s Management Incentive Plan (as amended from time to time and any successor thereto).

                    “Annuity Forms of Benefit” means the 50% Joint and Survivor Annuity, the Five-Year Certain Annuity, and the Single Life Annuity. All Annuity Forms of Benefit shall be of Actuarially Equivalent value.

                    “Base Pay” means the monthly salary paid to the Participant by the Company (or which would have been paid but for a deferral election by the Participant).

                    “Beneficiary” means (a) the Participant’s Spouse if the 50% Joint and Survivor Annuity is elected, or (b) any individual designated in accordance with procedures established by the Committee as the beneficiary, where the Participant has elected the Five-Year Certain Annuity.

                    “Benefit Starting Date” means the first day of the calendar month following a Termination from Service Date.

                    “Board” means the Board of Directors of the Company.

                    “Cause” means “Cause” as defined in Section 10(a) of the Employment Agreement.

                    “Chief Executive Officer” or “Participant” means Dr. Surya N. Mohapatra.

                    “Code” means the Internal Revenue Code of 1986, as amended.

                    “Committee” means the committee of the Board designated by the Board to administer the Plan. Unless the Board shall determine otherwise, the Committee shall be the Compensation Committee of the Board.

                    “Company” means Quest Diagnostics Incorporated, a Delaware corporation, and any entity that acquires or succeeds to all or substantially all of the Company’s business or assets and any successor to any such entity.

                    “Credited Service” means all calendar months of employment with the Company, whether or not consecutive. Calendar months in which a Participant was employed during the month shall be treated as a period of Credited Service.

                    “Disability” means “disability” as defined in Section 10(b) of the Employment Agreement.

                    “Earliest Retirement Date” means the first day of the calendar month following the completion of 96 months of Credited Service.

                    “Employment Agreement” is the Employment Agreement Between Surya N. Mohapatra and Quest Diagnostics Incorporated, as amended and restated effective November 7, 2008, and as may be otherwise amended from time to time thereafter in accordance therewith.

                    “Employment Term” means “Employment Term” as defined in the Employment Agreement.

                    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.

                    “50% Joint and Survivor Annuity” means a form of payment whereby the benefit is paid in monthly installments commencing on the Benefit Starting Date and continuing for the lifetime of the Participant, with 50% of such amount being paid to the Spouse of such Participant for as long as the Spouse survives after the Participant’s death.

                    “Final Average Pay” means an annual amount, determined in accordance with the formula P/Y, where “P” is the sum of the Participant’s Base Pay and Annual Bonuses for the highest three complete consecutive calendar years of the Executive’s final five complete calendar years prior to his Termination from Service Date and “Y” is three. For this purpose, each Annual Bonus shall be taken into account in the fiscal year for which it is earned, regardless of when paid.

For purposes of determining Final Average Pay, Base Pay and Annual Bonuses shall be determined including amounts that may have been deferred pursuant to any qualified or nonqualified plan of the Company.

                    “Five-Year Certain Annuity” means a form of payment whereby the benefit is paid in monthly installments commencing on the Benefit Starting Date and continuing for the longer of (a) the lifetime of the Participant or (b) 60 months.

                    “Good Reason” means “Good Reason” as defined in Section 10(d) of the Employment Agreement.

                    “Lump Sum” means the single sum benefit that is the Actuarial Equivalent of an immediately commencing Retirement Benefit.

                    “Normal Retirement Date” means the first of the month coincident with or next following the Participant’s 62^nd anniversary of birth.

                    “Plan” means this Quest Diagnostics Supplemental Executive Retirement Plan, as set forth herein and as amended from time to time in accordance herewith.

                    “Retirement Benefit” has the meaning set forth in Section 3.1.

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                    “Single Life Annuity” means a form of payment whereby the benefit is paid in monthly installments commencing on the Benefit Starting Date and continuing for the lifetime of the Participant.

                    “Spouse” means the person to whom the Participant is legally married on the Benefit Starting Date.

                    “Termination from Service Date” means the date on which the Participant’s employment with the Company terminates; provided, however, for purposes of this Plan with respect to any payment or benefit due upon a termination of the Participant’s employment that represents a “deferral of compensation” within the meaning of Section 409A of the Code, “Termination from Service Date” shall mean the date the Participant has a “separation from service” (within the meaning of Treas. Reg. 1.409A-1(h)).

                    “Years of Credited Service” means (a) the number of completed calendar months of Credited Service from the Participant’s original date of hire (taking into account all consecutive and nonconsecutive periods of employment) times 1.13, divided by (b) 12. However, if (a) the Company provides to the Participant a notice of non-renewal of the Employment Agreement (pursuant to Section 2 thereof) which causes the Employment Term to end before he has attained age 60, or (b) the Participant’s employment is otherwise terminated by the Company other than for Cause or is terminated by the Participant for Good Reason before he has attained age 60, then the multiplier shall be 1.29 rather than 1.13. If the Participant’s employment is terminated by the Company other than for Cause or is terminated by the Participant for Good Reason on or after the date the Participant attains age 60 and before the date he attains age 62, then for purposes of calculating the Participant’s “Years of Credited Service” he shall be credited with additional months of Credited Service equal to the excess, if any, of (i) the number of months of severance benefits the Participant is eligible to receive under Section 11(e)(i) of the Employment Agreement (that is 24 months, or 36 months in the case of a CIC Severance Event, as defined therein) over (ii) the number of months of service the Participant has completed from the date he attained age 60 through the Termination from Service Date.

                    1.2 Rules of Construction. The singular form of a word shall be deemed to include the plural form, unless the context requires otherwise. Unless indicated otherwise, references herein to articles and sections are to articles and sections of the Plan.

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ARTICLE II

ELIGIBILITY AND PARTICIPATION

                  2.1 Eligibility. The Chief Executive Officer is the sole Participant in this Plan.

                  2.2 Participation.

                              (a) Commencement. The Chief Executive Officer shall commence participation on December 14, 2004.

                              (b) Duration. The Participant shall continue to be a Participant as long as he is entitled to a Retirement Benefit under the Plan.

                              (c) Effect of Reemployment.

                         (i) If the Participant incurs a Termination from Service Date for any reason he shall cease to accrue any benefits under this Plan and if he is subsequently reemployed, no Base Salary or Annual Bonus paid after such reemployment nor any Credited Service shall be taken into account in determining any benefit under this Plan.

                         (ii) Notwithstanding anything in the Plan to the contrary, Annuity Forms of Benefit shall not be suspended if the Participant is subsequently reemployed by the Company.

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ARTICLE III

RETIREMENT BENEFIT AND DEATH BENEFIT

                    3.1 Retirement Benefit.

                              (a) Benefit Starting Date on or After Normal Retirement Date. The annual Retirement Benefit payable to the Participant if his Benefit Starting Date occurs on or after his Normal Retirement Date is a life annuity equal to 1.2% times his Final Average Pay times his Years of Credited Service accrued on or before July 31, 2006, and 2.2% times his Final Average Pay times his Years of Credited Service accrued after July 31, 2006.

                              (b) Benefit Starting Date on or After Earliest Retirement Date. The annual Retirement Benefit payable where the Participant’s Benefit Starting Date occurs on or after his Earliest Retirement Date but before his Normal Retirement Date shall be an immediately commencing life annuity equal to 1.2% times the Participant’s Final Average Pay times his Years of Credited Service accrued on or before July 31, 2006, and 2.2% times his Final Average Pay times his Years of Credited Service accrued after July 31, 2006, reduced by 0.5% for each month that the Benefit Starting Date precedes the Normal Retirement Date.

                             (c) Benefit Starting Date Before Earliest Retirement Date. If the Participant’s employment with the Company is terminated before the Earliest Retirement Date (i) by the Company for Cause, or (ii) by the Participant other than for (x) Good Reason, (y) Disability or (z) death, then no benefit shall be payable from this Plan. If the Participant’s employment with the Company is terminated before the Earliest Retirement Date for any other reason (including if the Company provides to the Participant a notice of non-renewal of the Employment Agreement (pursuant to Section 2 thereof) which causes the Employment Term to end), then the Participant’s Retirement Benefit shall be a life annuity payable at the Earliest Retirement Date equal to 1.2% times the Participant’s Final Average Pay (taking into account compensation paid under the remaining term of the Employment Agreement) times the Participant’s Years of Credited Service accrued on or before July 31, 2006, and 2.2% times his Final Average Pay times his Years of Credited Service accrued after July 31, 2006. For purposes of the preceding sentence, Credited Service shall be deemed to be 96 months.

                              (d) One-Time Benefit Election. Before January 1, 2005, the Participant may make an irrevocable written election in accordance with procedures set forth by the Committee to forego the employer matching credit under the Company’s Supplemental Deferred Compensation Plan for 2005 and all later years (matching credits for years prior to 2005 are not impacted), and if such election is made, then the benefit multiplier set forth in this Section 3.1 shall be 1.5% instead of 1.2% in all instances for his Years of Credited Service accrued on or before July 31, 2006. For his Years of Credited Service accrued after July 31, 2006, the benefit multiplier shall be 2.2% in all instances.

                              (e) Disability. In the event of a Disability, the Participant’s Credited Service, Base Pay and Annual Bonus during the disability period will be determined consistent with the first sentence of Section 11(a) of the Employment Agreement and the 0.5% per month reduction for early commencement shall not apply.

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                              (f) No Reduction for Early Commencement. Notwithstanding the preceding paragraphs, if (a) the Company provides to the Participant a notice of non-renewal of the Employment Agreement (pursuant to Section 2 thereof) which causes the Employment Term to end before he has attained his Normal Retirement Date, or (b) the Participant’s employment is otherwise terminated by the Company other than for Cause, or is terminated by the Participant for Good Reason, before the Normal Retirement Date, then the 0.5% per month reduction for early commencement shall not apply.

                    3.2 Death Benefit.

                              (a) Before Benefit Starting Date.

                              (i) If the Participant dies and has not incurred a Benefit Starting Date and, as of the date of death, (x) is married, (y) has attained his Earliest Retirement Date, and (z) is employed by the Company, a Retirement Benefit shall be payable to the Participant’s Spouse commencing on the first day of the month following the Participant’s death, calculated as if the Participant had retired on the date of death, selected the 50% Joint and Survivor Annuity option, and then died. If the Participant dies and has not incurred a Benefit Starting Date and, as of the date of death, (x) is married, (y) has not attained his Earliest Retirement Date, and (z) is employed by the Company, a Retirement Benefit shall be payable to the Participant’s Spouse commencing on the Earliest Retirement Date, calculated as if the Participant had terminated with a benefit described in the second sentence of Section 3.1(c) on the date of death, selected the 50% Joint and Survivor Annuity option, and then died. However, in all cases, the 0.5% per month reduction for early commencement shall not apply to benefits payable under this Section 3.2(a)(i).

                              (ii) Except as otherwise provided in clause (iii) below, if the Participant dies before incurring a Benefit Starting Date and is unmarried, then no death benefit shall be payable from the Plan.

                              (iii) If the Participant incurs a Termination from Service Date, and is eligible for a Retirement Benefit under the Plan upon his Termination from Service Date, but dies after the Termination from Service Date and before the Retirement Benefit begins to be distributed, benefits are payable as if the Participant died immediately after his Retirement Benefit had begun to be distributed. If the Retirement Benefit was to have been paid in a Lump Sum, such Lump Sum will be paid to the Participant’s estate.

                              (b) Following Benefit Starting Date.

                              (i) If the Participant dies after (x) incurring a Benefit Starting Date, (y) electing a Retirement Benefit in the form of a Five-Year Certain Annuity, and (z) has not received 60 monthly installment payments of the Retirement Benefit as of the date of death, the remaining installment payments that would have been payable to the Participant had the Participant survived to the end of the 60-month period shall be payable to such Participant’s Beneficiary. If a Beneficiary who is receiving installment payments from a Five-Year Certain Annuity dies before all remaining installments are paid, the remaining Retirement

6

Benefit shall be paid to the Beneficiary’s estate in the form of an Actuarial Equivalent lump sum. In the event the Participant’s Beneficiary predeceases the Participant or the Participant did not designate a Beneficiary, upon the Participant’s death any remaining Retirement Benefit under this form shall be paid to the Participant’s estate in the form of an Actuarial Equivalent lump sum.

                              (ii) If the Participant dies after (y) incurring a Benefit Starting Date and (z) electing a Retirement Benefit in the form of a 50% Joint and Survivor Annuity, payments shall be made to the surviving Spouse in accordance with the elected form of benefit.

                              (iii) If the Participant dies after incurring a Benefit Starting Date and (w) has received payment of his entire Retirement Benefit, (x) has elected the Single Life Annuity, (y) has elected the Five-Year Certain Annuity and has received 60 or more monthly payments by the date of death, or (z) has elected the 50% Joint and Survivor Annuity where the Spousal Beneficiary predeceased the Participant, no death benefit shall be payable from the Plan.

                              (iv) If the Participant dies after incurring a Benefit Starting Date and has not elected an Annuity Form, the Retirement Benefit will be payable to the Participant’s estate, to the extent not previously been paid.

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ARTICLE IV

FORM AND TIMING OF RETIREMENT BENEFIT

                    4.1 Form.

                              (a) General Rule. The Retirement Benefit shall be paid as an Actuarially Equivalent Lump Sum payment unless the Participant makes an election to receive the Retirement Benefit in another form pursuant to Section 4.1(b) or (c).

                              (b) Changes from Lump Sum to Annuity. The Participant may make a written irrevocable election to the extent permitted by the Committee to receive the Retirement Benefit that otherwise would have been payable in a Lump Sum form in an Annuity Form of Benefit, provided that to the extent required under section 409A of the Code (i) payment of the Retirement Benefit shall not begin until five years after the date the payments under the Plan otherwise would have begun, (ii) the election is made at least 12 months before the original Benefit Starting Date otherwise would have occurred, and (iii) the election is in effect for at least 12 months prior to the new Benefit Starting Date. Such delayed benefit shall be the Actuarial Equivalent of the Retirement Benefit.

                              (c) Annuity Forms of Benefit. A Participant may change any election to receive one Annuity Form of Benefit to another Annuity Form of Benefit before a Benefit Starting Date, only to the extent permitted by section 409A of the Code and procedures established by the Committee. No election to receive an Annuity Form of Benefit may be changed to an election to receive a Lump Sum benefit.

                    4.2 Timing.

                              (a) General Rule. The Participant’s Retirement Benefit shall be paid on the first day of the seventh calendar month following the month that includes his Termination from Service Date, unless a later date is elected pursuant to Section 4.1(b). If the Retirement Benefit is paid in an Actuarially Equivalent Lump Sum, then the payment shall be made on the first day of the seventh calendar month in which the Termination from Service Date occurs and shall include interest for the period from the Benefit Starting Date to the payment date at the rate used to determine Actuarial Equivalence.

                              (b) Death Benefit. A benefit paid under the Plan on account of the death of a Participant shall commence as soon as practicable following the Participant’s date of death, except as otherwise may be provided in Section 3.2(a)(i) and Section 3.2(b).

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ARTICLE V

VESTING

                    5.1 Vesting. The Participant shall be vested in a Retirement Benefit on the attainment of his Earliest Retirement Date and as otherwise provided in the second sentence of Section 3.1(c).

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ARTICLE VI

ADMINISTRATION

                    6.1 Committee.

                    (a) Responsibilities. The Plan shall be administered by the Committee, which shall be responsible for the interpretation of the Plan and establishment of the rules and regulations governing the administration thereof. The Committee shall have full discretion to interpret and administer the Plan. The Committee’s decision in any matter involving the interpretation and application of this Plan shall be final and binding on all parties. Neither the Committee nor any member thereof nor the Company shall be liable for any action or determination made in good faith with respect to the Plan or the rights of any person under the Plan.

                    (b) Authority of Members. The members of the Committee may authorize one or more of their number to execute or deliver any instrument, make any payment or perform any other act that the Plan authorizes or requires the Committee to do, including, without limitation, the retention of counsel and other agents as it may require in carrying out the provisions of the Plan.

                    (c) Authority to Delegate. Any responsibility or authority assigned to the Committee under the Plan may be delegated to any other person or persons, by name or in the case of a delegation to an employee of the Company by title or position with the Company, consistent with the by-laws or other procedures of the Committee; provided that such delegation is revocable by the Committee at any time, in its discretion.

                    (d) Records and Expenses. The Committee or its designees shall keep such records as may be necessary for the administration of the Plan and shall furnish such periodic information to Participants as may be necessary or desirable, in the sole discretion of the Committee. All expenses of administering the Plan shall be paid by the Company and shall not affect a Participant’s right to, or the amount of, benefits.

                    (e) Section 409A of the Code. Notwithstanding any other provisions of the Plan to the contrary and to the extent applicable, it is intended that the Plan be interpreted, construed and administered in accordance with the applicable requirements of Section 409A of the Code.

                    6.2 Claims Procedures. All claims for benefits under the Plan shall be made in writing to the Committee or its designee. The claims procedures hereunder shall be consistent with those established under the Quest Diagnostics Supplemental Deferred Compensation Plan; however, the Committee shall provide adequate written notice to any individual whose claim for benefits under the Plan has been denied, setting forth specific reasons for such denial, written in a manner calculated to be understood by such individual.

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ARTICLE VII

FUNDING

                    7.1 General Rule. The Plan is an unfunded arrangement. No portion of any funds of the Company or any of its subsidiaries shall be required to be set apart for a Participant or Beneficiary. The rights of a Participant or Beneficiary to the payment of the Retirement Benefit shall be limited to those of a general, unsecured creditor of the Company who has a claim equal to the value of the Participant’s Retirement Benefit. Retirement Benefits shall be payable from the general assets of the Company, or from a permissible funding vehicle consistent with the tax deferral objective of this Plan, or both.

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ARTICLE VIII

AMENDMENT AND TERMINATION

                    8.1 General Rule. The Committee shall have the right to amend or terminate the Plan for any reason, at any time and from time to time. However, no amendment or termination of the Plan shall cause, without the Participant’s written consent, a reduction in the Retirement Benefit or other benefits to which the Participant or his beneficiary would have been entitled to under the terms of this Plan absent such amendment or termination, whether such benefits are attributable to periods of employment prior to, on or after the effective date of the Plan amendment or termination; provided, however, that the Company shall not be required to increase or otherwise adjust benefits payable to the Participant or his beneficiary on account of future changes in law. Furthermore, no amendment may result in an acceleration of benefit payment (except as may be permitted by Section 409A of the Code) or an adverse Federal income tax consequence to the Participant. Any action by the Committee to amend or terminate the Plan shall be undertaken by a resolution duly adopted at a meeting of the Committee, or by written consent of the Committee, in lieu of a meeting, as the case may be.

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ARTICLE IX
GENERAL PROVISIONS

                    9.1 Payments to Minors and Incompetents. If the Participant or any Beneficiary entitled to receive any benefits hereunder is a minor or is deemed by the Committee or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, they will be paid to such person or institution as the Committee may designate or to a duly appointed guardian. Such payment shall, to the extent made, be deemed a complete discharge of any such payment under the Plan.

                    9.2 No Contract. This Plan shall not be deemed a contract of employment with the Participant, and no provision hereof shall affect the right of the Company to terminate the Participant’s employment.

                    9.3 Non-Alienation of Benefits. No amount payable to, or held under the Plan for the account of, the Participant or any Beneficiary shall be subject, in any manner, to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void. No amount payable to, or held under the Plan for the account of, the Participant shall be subject to any legal process of levy or attachment.

                    9.4 Income Tax Withholding. The Company may withhold from any payments hereunder such amount as it may be required to withhold under applicable federal, state or other income tax law, and transmit such withheld amounts to the appropriate taxing authority. In lieu thereof, the Company shall have the right, to the extent permitted by law, to withhold the amount of such taxes from any other sums due from the Company to the Participant upon such terms and conditions as the Committee may prescribe.

                    9.5 Governing Law. The provisions of the Plan shall be interpreted, construed and administered under the laws of the State of New Jersey applicable to contracts entered into and performed in such state, without regard to the choice of law provisions thereof and to the extent that ERISA and other federal laws do not apply.

                    9.6 Captions. The captions contained in the Plan are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge or describe the scope or intent of the Plan or in any way affect the construction of any provision of the Plan.

                    9.7 Severability. If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.

                    9.8 Notices. The Participant shall be responsible for furnishing the Committee with the current and proper address for the mailing of notices and delivery of agreements and payments. Any notice required or permitted to be given shall be deemed given if directed to the person to whom addressed at such address and mailed by regular United States first class mail, postage prepaid. If any item mailed to such address is returned as undeliverable to the addressee, mailing shall be suspended until the Participant furnishes the proper address.

                    9.9 Binding Nature; Assignability. This Plan shall be binding upon the successors and assigns of the Company. No rights or obligations of the Company under this

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Plan may be assigned or transferred by the Company without the Participant’s prior written consent, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or a sale, liquidation or other disposition of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and assumes the liabilities, obligations and duties of the Company under this Plan, either contractually or as a matter of law.

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                    IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer as of the 7^th day of November, 2008.

Quest Diagnostics Incorporated

By: /s/ David W. Norgard                   

      David W. Norgard

APPENDIX A

ACTUARIAL ASSUMPTIONS

                    Actuarial Equivalence shall be determined by the following assumptions:

                    (a) Mortality: the GAR 1994 Table.

                    (b) Interest: For determinations made during the period January 1 through June 30 of a given year, the average of the Moody’s Aa High Quality Corporate Bond Yield Average as of each day of the months of September, October and November of the previous year. For determinations made during the period July 1 through December 31 of a given year, the average of the Moody’s Aa High Quality Corporate Bond Yield Average as of each day of the months of March, April and May of the current year.

EX-10.28

Exhibit 10.28

AMENDED AND RESTATED QUEST DIAGNOSTICS INCORPORATED
EXECUTIVE OFFICER SEVERANCE PLAN

                    1. Purpose. The purpose of the Quest Diagnostics Incorporated Executive Officer Severance Plan (together with the attached schedules, appendices and exhibits, the “Plan”) is to secure the continued services of the executive officers of the Company and provide these executives with certain termination benefits in the event of a Qualifying Termination (as defined in Section 2) and to ensure their continued dedication to their duties in the event of any threat or occurrence of a Change in Control of the Company (as defined in Section 2).

                    2. Definitions. As used in this Plan, the following terms shall have the respective meanings set forth below:

                    (a) “Annual Performance Bonus” means the annual cash bonus awarded under the Company’s applicable incentive plans, as in effect from time to time (as of the date of adoption of this Plan the “Bonus” within the meaning of Section 5(a) of the Company’s Senior Management Incentive Plan, effective as of May 13, 2003 and under the Company’s Management Incentive Plan such plans referred to herein as the “Company Incentive Plan”).

                    (b) “Base Salary” means the Participant’s annual rate of base salary as in effect on the Date of Termination, provided, however, that Base Salary for the Termination Period shall mean the Participant’s highest annual rate of base salary during the twelve-month period immediately prior to the Participant’s Date of Termination.

                    (c) “Board” means the Board of Directors of the Company and, after a Change in Control, the “board of directors” of the surviving corporation. References herein to the Board include any committee or person to whom the Board has designated its authority.

                    (d) “Bonus Amount” means the Participant’s target Annual Performance Bonus for the fiscal year in which the Participant’s Date of Termination occurs, provided, however, that if the Participant’s Qualifying Termination is on account of Good Reason pursuant to a reduction in a Participant’s compensation or compensation opportunity under Section 2(k)(ii), “Bonus Amount” shall be the Participant’s target Annual Performance Bonus for the prior fiscal year if higher.

                    (e) “Cause” means (i) the willful and continued failure of the Participant to perform substantially his duties with the Company (other than any such failure resulting from the Participant’s incapacity due to physical or mental illness or any such failure subsequent to the Participant being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason to the Company) after a written demand for substantial performance is delivered to the Participant by or on behalf of the Board which specifically identifies the manner in which the Board believes that the Participant has not substantially performed his duties, (ii) the

willful engaging by the Participant in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company or its affiliates, (iii) the engaging by the Participant in conduct or misconduct that materially harms the reputation or financial position of the Company, (iv) the Participant (x) obstructs or impedes, (y) endeavors to influence, obstruct or impede or (z) fails to materially cooperate with, an Investigation, (v) the commission of a felony by the Participant or (vi) the Participant is found liable in any Securities and Exchange Commission or other civil or criminal securities law action.

                    For purposes of this paragraph (e), no act or failure to act by the Participant shall be considered “willful” unless done or omitted to be done by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interests of the Company or its affiliates. Any act, or failure to act, in accordance with authority duly given by the Board, based upon the advice of counsel for the Company (including counsel employed by the Company) shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company.

                    A Participant who is designated on Schedule A (and, after a Change in Control, a Participant who is designated on Schedule B) shall not be considered to have been terminated for Cause unless and until the Company has delivered to the Participant a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board (excluding the Participant from both the numerator and denominator if the Participant is a Board member) at a meeting of the Board called and held for such purpose (after reasonable notice to the Participant and an opportunity for the Participant, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board an event set forth in clauses (i), (ii), (iii), (iv), (v), or (vi) has occurred and specifying the particulars thereof in detail.

                    Anything herein to the contrary notwithstanding, if, following a termination of the Participant’s employment by the Company for Cause based upon the conviction of the Participant for a felony, such conviction is overturned in a final determination on appeal, the Participant shall be entitled to the payments and the economic equivalent of the benefits the Participant would have received if his employment had been terminated by the Company without Cause.

                    (f) “Change in Control” means the occurrence of any one of the following events:

          (i) any person is or becomes a “beneficial owner” (as defined in Rule 13d 3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 40% of the total voting power of the Company’s

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then outstanding securities generally eligible to vote for the election of directors (the “Company Voting Securities”), provided, however, that any of the following acquisitions shall not be deemed to be a Change in Control: (1) by the Company or any subsidiary or affiliate, (2) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary or affiliate, (3) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (4) pursuant to a Non-Qualifying Transaction (as defined in paragraph (ii));
(ii) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries or affiliates that requires the approval of the Company’s stockholders whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination:
	(A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination,
	(B) no person (other than any employee benefit plan (or any related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of securities of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) representing 40% of the total voting power of the securities then outstanding generally eligible to vote for the election of directors of the Parent Corporation (or the Surviving Corporation), and
	(C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s

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	approval of the execution of the initial agreement providing for such Business Combination;
	(Any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”);
(iii) individuals who, on the effective date of this Plan, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the effective date of this Plan, whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director; or
(iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or the consummation of a sale of all or substantially all of the Company’s assets to an entity that is not an affiliate of the Company (other than pursuant to a Non-Qualifying Transaction).

                    Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 40% of Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.

                    (g) “Company” means Quest Diagnostics Incorporated, a Delaware corporation.

                    (h) “Date of Termination” means (i) the effective date on which the Participant’s employment by the Company terminates as specified in a prior written notice by the Company or the Participant, as the case may be, to the other, delivered

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pursuant to Section 12 or (ii) if the Participant’s employment by the Company terminates by reason of death, the date of death of the Participant.

                    (i) “Disability” shall have the same meaning ascribed to that term in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.

                    (j) “Equity Incentive Compensation” means all equity-based compensation (including stock options, stock appreciation rights, restricted stock and performance shares) awarded under the Company’s incentive plan(s), as in effect from time to time (as of the date of adoption of this Plan the Amended and Restated Employee Long-Term Incentive Plan).

                    (k) “Good Reason” means the occurrence of one or more of the following circumstances, without the Participant’s express written consent, and which circumstance(s) are not remedied by the Company within thirty (30) days of receipt of a written notice from the Participant describing in reasonable detail the Good Reason event that has occurred (which notice must be provided within ninety (90) days of the Participant’s obtaining knowledge of the event):

          (i) (A) any material change in the duties, responsibilities or status (including reporting responsibilities) of the Participant that is inconsistent in any material and adverse respect with the Participant’s position(s), duties, responsibilities or authority with the Company immediately prior to such Change in Control (including any material and adverse diminution of such duties or responsibilities); provided, however, that Good Reason shall not be deemed to occur upon a change in duties, responsibilities (other than reporting responsibilities) or status that is solely and directly a result of the Company no longer being a publicly traded entity and does not involve any other event set forth in this Section 2(k) or (B) a material and adverse change in the Participant’s titles or offices (including, if applicable, membership on the Board) with the Company as in effect immediately prior to such Change in Control;

          (ii) a material reduction by the Company in the Participant’s aggregate rate of annual base salary, Annual Performance Bonus opportunity and Equity Incentive Compensation target opportunity (including any material and adverse change in the formula for such targets) as in effect immediately prior to such Change in Control;

          (iii) the Company’s requiring the Participant to be based at any office or location more than fifty (50) miles from the office where the Participant is located at the time of the Change in Control and as a result causing the

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Participant’s commute from his residence at the time of the Change in Control to the new location to increase by more than fifty (50) miles;

          (iv) the failure of the Company to continue in effect any employee benefit plan, compensation plan, welfare benefit plan or fringe benefit plan in which the Participant is participating immediately prior to such Change in Control or the taking of any action by the Company, in each case which would materially adversely affect the Participant, unless the Participant is permitted to participate in other plans providing the Participant with materially equivalent benefits in the aggregate (at materially equivalent or lower cost with respect to welfare benefit plans); or

          (v) the failure of the Company to obtain the assumption of the Company’s obligations hereunder from any successor as contemplated in Section 11(b).

Notwithstanding the foregoing, an isolated, insubstantial and inadvertent action taken in good faith and which is remedied by the Company within thirty (30) days after receipt of notice thereof given by the Participant shall not constitute Good Reason. The Participant’s right to terminate employment for Good Reason shall not be affected by the Participant’s incapacities due to mental or physical illness and the Participant’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason. The Participant may terminate his employment for a “Good Reason” event that is not reasonably remedied by the Company provided that the Participant shall have delivered a notice of termination within ninety (90) days after delivery of the notice describing the Good Reason event giving rise to such termination.

                    (l) “Investigation” means an investigation authorized by the Board, a self-regulatory organization empowered with self-regulatory responsibilities under federal or state laws or a governmental department or agency.

                    (m) “Participant” means an executive officer of the Company selected, from time to time, by the Board for participation in this Plan and who is designated on Schedule A or B at the applicable time but only if such executive has completed at least one year of continuous employment with the Company and its Subsidiaries at the applicable time (unless such one year employment requirement has been waived in writing by the Board).

                    (n) “Potential Change in Control” means the execution or entering into of any agreement by the Company the consummation of which can be expected to be a Change in Control.

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                    (o) “Qualifying Termination” means a termination of the Participant’s employment with the Company that occurs on or after January 1, 2008 (i) prior to a Change in Control, by the Company other than for Cause and (ii) after a Change in Control, by the Company other than for Cause or by the Participant for Good Reason. Termination of the Participant’s employment on account of death, Disability or Retirement shall not be treated as a Qualifying Termination. Notwithstanding the preceding sentence, the death of the Participant after notice of termination for Good Reason or without Cause has been validly provided shall be deemed to be a Qualifying Termination.

                    (p) “Retirement” means the Participant’s voluntary termination of employment on or after he or she attains age 60 with five (5) years of service.

                    (q) “Subsidiary” means any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors (or members of any similar governing body) or in which the Company has the right to receive 50% or more of the distribution of profits or 50% of the assets or liquidation or dissolution.

                    (r) “Termination Period” means the period of time beginning with a Change in Control and ending two (2) years following such Change in Control. Notwithstanding anything in this Plan to the contrary, if (i) the Participant’s employment is terminated prior to a Change in Control for reasons that would have constituted a Qualifying Termination if they had occurred following a Change in Control; (ii) the Participant reasonably demonstrates that such termination (or Good Reason event) was at the request of a third party who had indicated an intention or taken steps reasonably calculated to effect a Change in Control; and (iii) a Change in Control involving such third party (or a party competing with such third party to effectuate a Change in Control) does occur within six (6) months from the date of such termination, then for purposes of this Plan, the date immediately prior to the date of such termination of employment or event constituting Good Reason shall be treated as a Change in Control. For purposes of determining the timing of payments and benefits to the Participant under Section 5, the date of the actual Change in Control shall be treated as the Participant’s Date of Termination under Section 2(h), and for purposes of determining the amount of payments and benefits owed to the Participant under Section 5, the date the Participant’s employment is actually terminated shall be treated as the Participant’s Date of Termination under Section 2(h).

                    3. Eligibility. (a) The Board shall determine in its sole discretion which executives of the Company shall be Participants in this Plan and whether a Participant shall be designated on Schedule A or B.

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                    (b) The Board may, in its sole discretion, remove any executive from Schedule A and add such executive to Schedule B but may not remove any executive from participation in this Plan entirely; provided, that a Participant who is designated on Schedule A as of immediately prior to a Change in Control may not be removed from such Schedule without his or her prior written consent within the two year period following a Change in Control.

                    (c) The Board may delegate its authority to determine which senior executives of the Company shall be Participants in this Plan, to designate the Participants on Schedule A or B and to remove a Participant from Schedule A to the Compensation Committee (or any successor committee) of the Board.

                    4. Payments Upon Termination of Employment Prior to a Change in Control. If the employment of the Participant is terminated pursuant to a Qualifying Termination, then, subject to the Participant’s execution of a Separation Agreement and Release in the form attached to this Plan as Exhibit A (the “Separation Agreement and Release”) which shall be provided to the Participant no later than two (2) days after the Date of Termination and must be executed by the Participant, become effective and not be revoked by the Participant by the fifty-fifth (55^th) day following the Date of Termination, the Company shall provide to the Participant:

          (a) A cash payment equal to the Participant’s Base Salary multiplied by either (i) 2.00 for a Participant designated on Schedule A or (ii) 1.00 for a Participant designated on Schedule B;

          (b) A cash payment equal to the Bonus Amount times (i) 2.00 for a Participant designated on Schedule A or (ii) 1.00 for a Participant designated on Schedule B;

          (c) For eighteen (18) months for a Participant designated on Schedule A or (ii) twelve (12) months for a Participant designated on Schedule B, following the Date of Termination, group medical and life insurance coverage to the Participant (and his eligible dependents), under the terms prevailing at the time immediately preceding the Date of Termination; the Company shall continue to provide such coverage on the same terms as provided by the Company to similarly situated executives; provided, that the Company shall cease to provide such coverage if the Participant obtains alternate employment and is eligible for substantially comparable group medical or life insurance coverage with such employer; provided further, that the Participant shall notify the Company within 10 days of securing such alternate employment; provided further, that in the event of the disability of the Participant, group medical coverage shall continue for a longer period consistent with the Consolidated Omnibus Budget Reconciliation

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Act of 1986 (“COBRA”) and, provided, further, to the extent that any plan does not permit continuation of the Participant’s or his eligible dependents’ participation throughout such period, the Company shall pay the Participant an amount, on an after-tax basis, equal to the Company’s cost of providing such benefits;

          (d) For one (1) year following the Date of Termination, the Participant will be entitled to receive executive outplacement assistance from Lee Hecht Harrison or an equivalent career placement firm at the Company’s expense and in accordance with the Company’s policies for similarly situated executives; and

          (e) A cash payment equal to any matching contributions made by the Company on behalf of the Participant to the Company’s 401(k) plan and the Company’s Supplemental Deferred Compensation Plan during the year preceding the Date of Termination.

                    The cash payments specified in paragraphs (a), (b), (c) and (e) of this Section 4 shall be paid no later than the sixtieth (60^th) day (or the next following business day if the sixtieth day is not a business day) following the Date of Termination, but may be made earlier provided that the Separation Agreement has been executed by the Participant and the revocation period thereunder has lapsed. Each such cash payment shall be deemed to be a separate payment for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

                    5. Payments Upon Termination of Employment After a Change in Control. If during the Termination Period the employment of the Participant is terminated pursuant to a Qualifying Termination, then, subject to the Participant’s execution of a Separation Agreement and Release which shall be provided to the Participant no later than two (2) days after the Date of Termination and must be executed by the Participant, become effective and not be revoked by the Participant by the fifty-fifth (55^th) day following the Date of Termination, the Company shall provide to the Participant:

          (a) A cash payment equal to the result of multiplying the sum of the Participant’s Base Salary plus the Participant’s Bonus Amount by (i) either 3.00 for a Participant designated on Schedule A or (ii) 2.00 for a Participant designated on Schedule B; and

          (b) A cash payment equal to the Participant’s target Annual Performance Bonus for the fiscal year in which the Participant’s Date of Termination occurs, multiplied by a fraction the numerator of which shall be the number of days the Participant was employed by the Company during the fiscal

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year in which the Date of Termination occurred and the denominator of which is 365;

          (c) The benefits and payments specified in paragraphs (c), (d) and (e) of Section 4.

          (d) To the extent provided in Appendix A, if the Participant is subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Excise Tax”), a gross-up payment in accordance with the provisions of Appendix A.

                    The cash payments specified in paragraphs (a), (b) and (c) of this Section 5 shall be paid no later than the sixtieth (60^th) day (or the next following business day if the sixtieth day is not a business day) following the Date of Termination, but may be made earlier provided that the Separation Agreement has been executed by the Participant and the revocation period thereunder has lapsed. Each such cash payment shall be deemed to be a separate payment for purposes of Section 409A of the Code.

                    6. Key Employees. It is the intent of the Company that no payments or benefits provided under this Plan shall be considered “non-qualified deferred compensation” within the meaning of Section 409A of the Code and the Plan shall be interpreted accordingly. If and to the extent that any payment or benefit is determined by the Company (a) to constitute “non-qualified deferred compensation” subject to Section 409A of the Code, (b) such payment or benefit is provided to a Participant who is a “specified employee” (within the meaning of Section 409A of the Code and as determined pursuant to procedures established by the Company) and (c) such payment or benefit must be delayed for six months from the Participant’s Date of Termination (or an earlier date) in order to comply with Section 409A(a)(2)(B)(i) of the Code and not cause the Participant to incur any additional tax under Section 409A of the Code, then the Company will delay making any such payment or providing such benefit until the expiration of such six month period. The Company shall set aside those payments that would have been made but for payment delay required by the preceding sentence in a trust that is in compliance with Rev. Proc. 92-64 which may, but need not be, the trust established under the Company’s Supplemental Deferred Compensation Plan; provided, however, that no payment will be made to the Rabbi Trust if it would be contrary to law or cause the Participant to incur additional tax under Section 409A.

                    7. Participant’s Obligations. The Participant agrees that:

          (a) Without the consent of the Company, the Participant will not terminate employment with the Company without giving 30 days prior notice to the Company, and during such 30-day period the Participant will assist the

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Company, as and to the extent reasonably requested by the Company, to effect an orderly transition of the Participant’s duties and responsibilities with the Company.
(b) In the event that the Participant has received any benefits from the Company under Section 4 of this Agreement, then, during the period of 36 months following the Date of Termination, the Participant, upon request by the Company:
	(i) Will consult with one or more of the executive officers concerning the business and affairs of the Company for not to exceed four hours in any month at times and places selected by the Participant as being convenient to him or her, all without compensation other than what is provided for in Section 4 of this Agreement; and
	(ii) Will testify as a witness on behalf of the Company in any legal proceedings involving the Company which arise out of events or circumstances that occurred or existed prior to the Date of Termination (except for any such proceedings relating to this Plan), without compensation other than what is provided for in Section 4 of this Agreement; provided, that all out-of-pocket expenses incurred by the Participant in connection with serving as a witness shall be paid by the Company.

                    The Participant shall not be required to perform the Participant’s obligations under this Section 7 if and so long as the Company is in default with respect to performance of any of its obligations under this Agreement.

                    8. Withholding Taxes. The Company may withhold from all payments due to the Participant (or his beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.

                    9. Reimbursement of Expenses. Following a Change in Control, if any contest or dispute shall arise under this Plan involving termination of a Participant’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall reimburse the Participant on a current basis for all reasonable legal fees and related expenses, if any, incurred by the Participant in connection with such contest or dispute (regardless of the result thereof), together with interest in an amount equal to the prime rate as reported in The Wall Street Journal, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue thirty (30) days from the date the Company

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receives the Participant’s statement for such fees and expenses through the date of payment thereof, regardless of whether or not the Participant’s claim is upheld by a court of competent jurisdiction or an arbitration panel; provided, however, that the Participant shall be required to repay immediately any such amounts to the Company to the extent that a court or an arbitration panel issues a final and non-appealable order setting forth the determination that the position taken by the Participant was frivolous or advanced by the Participant in bad faith.

                    10. No Guarantee of Employment. Nothing in this Plan shall be deemed to entitle the Participant to continued employment with the Company or its Subsidiaries.

                    11. Successors; Binding Agreement. (a) This Plan shall not be terminated by any Business Combination. In the event of any Business Combination, the provisions of this Plan shall be binding upon the Surviving Corporation, and such Surviving Corporation shall be treated as the Company hereunder.

                    (b) The Company agrees that in connection with any Business Combination, it will cause any successor entity to the Company unconditionally to assume all of the obligations of the Company hereunder. Failure of the Company to obtain such assumption prior to the effectiveness of any such Business Combination that constitutes a Change in Control, shall be a breach of this Plan and shall constitute Good Reason hereunder and shall entitle the Participant to compensation and other benefits from the Company in the same amount and on the same terms as the Participant would be entitled hereunder if the Participant’s employment were terminated following a Change in Control by reason of a Qualifying Termination. For purposes of implementing the foregoing, the date on which any such Business Combination becomes effective shall be deemed the date Good Reason occurs, and shall be the Date of Termination if requested by a Participant.

                    (c) The benefits provided under this Plan shall inure to the benefit of and be enforceable by the Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Participant shall die while any amounts would be payable to the Participant hereunder had the Participant continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to such person or persons appointed in writing by the Participant to receive such amounts or, if no person is so appointed, to the Participant’s estate.

                    12. Notice. (a) For purposes of this Plan, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed

-12-

to have been duly given when delivered or five (5) days after deposit in the United States mail, certified and return receipt requested, postage prepaid, addressed as follows:

                    If to the Participant: the address listed as the Participant’s address in the Company’s personnel files.

If to the Company:

Quest Diagnostics Incorporated

3 Giralda Farms

Madison, NJ 07071

Attention: General Counsel

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

                    (b) A written notice of the Participant’s Date of Termination by the Company or the Participant, as the case may be, to the other, shall (i) indicate the specific termination provision in this Plan relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated and (iii) specify the date of termination, which date shall be not less than fifteen (15) nor more than sixty (60) days after the giving of such notice; provided, however, that the Company may in its sole discretion accelerate such date to an earlier date or, alternatively, place the Participant on paid leave during such period. The failure by the Participant or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Participant or the Company hereunder or preclude the Participant or the Company from asserting such fact or circumstance in enforcing the Participant’s or the Company’s rights hereunder.

                    13. Full Settlement; Resolution of Disputes and Costs. (a) The Company’s obligation to make any payments provided for in this Plan and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other severance payments to the Participant under any other severance or employment agreement between the Participant and the Company, and any severance plan of the Company. In no event shall the Participant be obligated to seek other employment or take other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan and, except as provided in the Separation Agreement and Release, such amounts shall not be reduced whether or not the Participant obtains other employment.

-13-

                    (b) Any dispute or controversy arising under or in connection with this Plan shall be settled exclusively by arbitration in New Jersey by three arbitrators in accordance with the commercial arbitration rules of the American Arbitration Association (“AAA”) then in effect. One arbitrator shall be selected by the Company, the other by the Participant and the third jointly by these arbitrators (or if they are unable to agree within thirty (30) days of the commencement of arbitration the third arbitrator will be appointed by the AAA). Judgment may be entered on the arbitrators’ award in any court having jurisdiction. In the event of any such dispute or controversy arising during a Termination Period, the Company shall bear all costs and expenses arising in connection with any arbitration proceeding on the same terms as set forth in Section 9 of this Plan.

                    14. Employment with Subsidiaries. Employment with the Company for purposes of this Plan shall include employment with any Subsidiary.

                    15. Survival. The respective obligations and benefits afforded to the Company and the Participant as provided in Sections 4 (to the extent that payments or benefits are owed as a result of a termination of employment that occurs during the term of this Plan) 5, 6, 8(c) and 10 shall survive the termination of this Plan.

                    16. GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS PLAN SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW JERSEY, WITHOUT REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS, AND APPLICABLE FEDERAL LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS PLAN SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS PLAN, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

                    17. Amendment and Termination. The Board may amend or terminate the Plan at any time; provided, however, that (i) Sections 3(b), 4(a) and 4(b) may not be amended in a manner which is materially adverse to any Participant then listed on Schedule A or B without such Participant’s written consent, (ii) during the period commencing on a Change in Control and ending on the second anniversary of the Change in Control, the Plan (including, for the avoidance of doubt, any Schedules, Appendices and Exhibits) may not be amended or terminated by the Board in any manner which is materially adverse to any Participant then listed on Schedule A or B without such Participant’s written consent and (iii) any termination or amendments to the Plan (including, for the avoidance of doubt, any Schedules, Appendices and Exhibits) that are materially adverse to the interests of any Participant then listed on Schedule A or B, and that occur during the period of time beginning on a date three (3) months prior to a Potential Change in Control and ending on the termination of the agreement that

-14-

constituted the Potential Change in Control, shall be void unless consented to in writing by the affected Participant.

                    18. Interpretation and Administration. The Plan shall be administered by the Board. The Board may delegate any of its powers under the Plan to the Compensation Committee of the Board (or any successor committee). With respect to those Participants who are not subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Committee may delegate any of its powers under the Plan to the Chief Executive Officer of the Company. The Board, the Compensation Committee (or any successor committee) and the Chief Executive Officer (to the extent of the powers delegated to him) shall have the authority in its sole and absolute discretion to: (i) exercise all of the powers granted to it under this Plan; (ii) construe, interpret and implement this Plan; (iii) prescribe, amend and rescind rules and regulations relating to this Plan, including rules and regulations governing its own operations; (iv) make all determinations necessary or advisable in administering this Plan; (v) correct any defect, supply any omission and reconcile any inconsistency in this Plan; and (vi) amend this Plan to reflect changes in or interpretations of applicable law, rules or regulations. The determination of the Board on all matters relating to the Plan and any amounts payable thereunder shall be final, binding and conclusive on all parties; provided, however, that following a Change in Control, notwithstanding anything in this Plan to the contrary, any court, tribunal or arbitration panel that adjudicates any dispute, controversy or claim arising between a Participant and the Company, or any of their delegates or successors, in respect of a Participant’s Qualifying Termination, will apply a de novo standard of review to any determinations made by such person and such de novo standard shall apply notwithstanding the grant of full discretion hereunder to any such person or characterization of any such decision by such person as final, binding or conclusive on any party.

                    19. Claims and Appeals. Participants may submit claims for benefits by giving notice to the Company pursuant to Section 12 of this Plan. If a Participant believes that he or she has not received coverage or benefits to which he or she is entitled under the Plan, the Participant may notify the Board in writing of a claim for coverage or benefits. If the claim for coverage or benefits is denied in whole or in part, the Board shall notify the applicant in writing of such denial within thirty (30) days (which may be extended to sixty (60) days under special circumstances), with such notice setting forth: (i) the specific reasons for the denial; (ii) the Plan provisions upon which the denial is based; (iii) any additional material or information necessary for the applicant to perfect his or her claim; and (iv) the procedures for requesting a review of the denial. Upon a denial of a claim by the Board, the Participant may: (i) request a review of the denial by the Board or, where review authority has been so delegated, by such other person or entity as may be designated by the Board for this purpose; (ii) review any Policy documents relevant to his or her claim; and (iii) submit issues and comments to the Board

-15-

or its delegate that are relevant to the review. Any request for review must be made in writing and received by the Board or its delegate within sixty (60) days of the date the applicant received notice of the initial denial, unless special circumstances require an extension of time for processing. The Board or its delegate will make a written ruling on the applicant’s request for review setting forth the reasons for the decision and the Plan provisions upon which the denial, if appropriate, is based. This written ruling shall be made within thirty (30) days of the date the Board or its delegate receives the applicant’s request for review unless special circumstances require an extension of time for processing, in which case a decision will be rendered as soon as possible, but not later than sixty (60) days after receipt of the request for review. All extensions of time permitted by this Section 16 will be permitted at the sole discretion of the Board or its delegate. If the Board does not provide the Participant with written notice of the denial of his or her appeal, the Participant’s claim shall be deemed denied.

                    20. Type of Policy. This Plan is intended to be, and shall be interpreted as an unfunded employee welfare plan under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and Section 2520.104-24 of the Department of Labor Regulations, maintained primarily for the purpose of providing employee welfare benefits, to the extent that it provides welfare benefits, and under Sections 201, 301 and 401 of ERISA, as a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation, to the extent that it provides such compensation, in each case for a select group of management or highly compensated employees.

                    21. No Duplication of Benefits. Except as otherwise expressly provided pursuant to this Plan, this Plan shall be construed and administered in a manner which avoids duplication of compensation and benefits which may be provided under any other plan, program, policy, or other arrangement. In the event a Participant is covered by any other plan, program, policy, individually negotiated agreement or other arrangement, in effect as of his or her Date of Termination, that may duplicate the payments provided in Sections 4 or 5, as applicable, the Company is specifically empowered to reduce or eliminate the duplicative benefits provided for under the Plan. In taking such action, the Company will be guided by the principles that (1) such a Participant will otherwise be treated, for the purpose of the Sections specified above, no more or no less favorably than are other Participants who are not covered by such other plan, program, policy, individually negotiated agreement or other arrangement and (2) the provisions of such other plan, program, policy, individually negotiated agreement or other arrangement (including, but not limited to, a special individual pension, a special deferral account and/or a special equity based grant) which are not duplicative of the payments provided in Sections 4 or 5, as applicable, will not be considered in determining elimination and/or reductions in Plan benefits.

-16-

                    22. Nonassignability. Benefits under the Plan may not be assigned by the Participant. The terms and conditions of the Plan shall be binding on the successors and assigns of the Company.

                    23. Effective Date. The Plan shall be effective as of May 3, 2006.

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Schedule A

Robert A. Hagemann	Senior Vice President and Chief Financial Officer
Joan E. Miller, Ph.D.	Senior Vice President for Pathology and Hospital Services
Michael E. Prevoznik	Senior Vice President and General Counsel
Wayne R. Simmons	Vice President, Operations

Schedule B

None

Appendix A
Additional Reimbursement Payments by the Company –
Schedule A Participants ONLY

                    (a) Anything in this Plan to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of the Participant (whether pursuant to the terms of this Plan or otherwise, but determined without regard to any additional payments required under this Appendix A) (the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by the Participant with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Participant an additional payment (a “Reimbursement Payment”) in an amount such that after payment by the Participant of all taxes (including any Excise Tax) imposed upon the Reimbursement Payment, the Participant retains an amount of the Reimbursement Payment equal to the Excise Tax imposed upon the Payments. For purposes of determining the amount of the Reimbursement Payment, the Participant shall be deemed to (i) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Reimbursement Payment is to be made and (ii) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Reimbursement Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

                    Notwithstanding the foregoing provisions of this Appendix A, if it shall be determined that the Participant is entitled to a Reimbursement Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is no more than 5% of the portion of the Payments that would be treated as “parachute payments” under Section 280G of the Code, then the cash payments payable to the Participant under this Plan shall be reduced (but not below zero) to the maximum amount that could be paid to the Participant without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Reimbursement Payment shall be made to the Participant. The reduction of the cash payments payable hereunder, if applicable, shall be made by reducing the cash payments in the order in which they are written under Section 4 or 5, as applicable. For purposes of reducing the Payments to the Safe Harbor Cap, only the cash payments payable under this Plan (and no other Payments) shall be reduced. If the reduction of the cash payments payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no cash payments payable under this Plan shall be reduced pursuant to this provision.

                    (b) Subject to the provisions of Paragraph (a), all determinations required to be made under this Appendix A, including whether and when a

App. A-1

Reimbursement Payment is required, the amount of such Reimbursement Payment, the amount of any Option Redetermination (as defined below), the reduction of the Payments to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by a public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Participant within fifteen (15) business days of the receipt of notice from the Company or the Participant that there has been a Payment, or such earlier time as is requested by the Company (collectively, the “Determination”). For the avoidance of doubt, the Accounting Firm may use the Option Redetermination amount in determining the reduction of the Payments to the Safe Harbor Cap. Notwithstanding the foregoing, in the event (i) the Board shall determine prior to the Change in Control that the Accounting Firm is precluded from performing such services under applicable auditor independence rules or (ii) the Audit Committee of the Board determines that it does not want the Accounting Firm to perform such services because of auditor independence concerns or (iii) the Accounting Firm is serving as accountant or auditor for the person(s) effecting the Change in Control, the Board shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company, and the Company shall enter into any agreement reasonably requested by the Accounting Firm in connection with the performance of the services hereunder. The Reimbursement Payment under this Appendix A with respect to any Payments shall be made no later than thirty (30) days following such Payment. If the Accounting Firm determines that no Excise Tax is payable by a Participant, it shall furnish the Participant with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on the Participant’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish the Participant with a written opinion to such effect. The Determination by the Accounting Firm shall be binding upon the Company and the Participant.

                    As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Reimbursement Payments which will not have been made by the Company should have been made (“Underpayment”) or Reimbursement Payments are made by the Company which should not have been made (“Overpayment”), consistent with the calculations required to be made hereunder. In the event the amount of the Reimbursement Payment is less than the amount necessary to reimburse the Participant for the Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the benefit of the Participant (but in any event no later than by the end of the Participant’s taxable year next following the Participant’s taxable year in which the Underpayment of Excise Tax is remitted). In the event the amount of the

App. A-2

Reimbursement Payment exceeds the amount necessary to reimburse the Participant for the Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by the Participant (to the extent the Participant has received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. The Participant shall cooperate, to the extent his or her expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax. In the event that the Company makes a Reimbursement Payment to the Participant and subsequently the Company determines that the value of any accelerated vesting of stock options held by the Participant shall be redetermined within the context of Treasury Regulation §1.280G -1 Q/A 33 (the “Option Redetermination”), the Participant shall (i) file with the Internal Revenue Service an amended federal income tax return that claims a refund of the overpayment of the Excise Tax attributable to such Option Redetermination and (ii) promptly pay the refunded Excise Tax to the Company; provided that the Company shall pay on a current basis all reasonable professional fees incurred in the preparation of the Participant’s amended federal income tax return. If the Option Redetermination occurs in the same year that the Reimbursement Payment is included in the Participant’s taxable income, then in addition to returning the refund to the Company, the Participant will also promptly return to the Company any tax benefit realized by the return of such refund and the return of the additional tax benefit payment (all determinations pursuant to this sentence shall be made by the Accounting Firm). In the event that the cash payments payable to the Participant under this Plan were reduced pursuant to the second paragraph of Paragraph (a) and subsequently the Participant determines there has been an Option Redetermination that reduces the value of the Payments attributable to such options, the Company shall pay to the Participant (on the first business day of the calendar year following the year the Option Redetermination is made) any cash payments payable under this Plan that were not previously paid solely as a result of the second paragraph of Paragraph (a) up to the Safe Harbor Cap plus interest, from the date the Participant files the amended return as provided above, at the 3 month Treasury Bill rate.

App. A-3

Exhibit A

FORM OF SEPARATION AGREEMENT AND RELEASE
(HEREIN “AGREEMENT”)

                    Quest Diagnostics Incorporated (the “Company”) and _______________ (“Executive”) agree as follows:

                    1. Executive’s employment with the Company will terminate effective [Date].

                    2. Executive agrees to make himself reasonably available to the Company to respond to requests by the Company for information concerning litigation, regulatory inquiry or investigation, involving facts or events relating to the Company that may be within his knowledge. Executive will cooperate fully with the Company in connection with any and all future litigation or regulatory proceedings brought by or against the Company to the extent the Company reasonably deems Executive’s cooperation necessary. Executive will be entitled to reimbursement of reasonable out-of-pocket expenses (not including counsel fees) incurred in connection with fulfilling his obligations under this Section 2.

                    3. In consideration of Executive’s undertakings herein, the Company will pay an amount equal to $____________ in accordance with Section 4 of the Company’s Executive Severance Plan (the “Severance Plan”), less required deductions (including, but not limited to, federal, state and local tax withholdings) as separation/severance pay (the “Severance Payment”). The Severance Payment will be paid in accordance with the Severance Plan. Payment of the Severance Payment is contingent upon the execution of this Agreement by Executive and Executive’s compliance with all terms and conditions of this Agreement and the Severance Plan. Executive agrees that if this Agreement does not become effective, the Company shall not be required to make any further payments to Executive pursuant to this Agreement or the Severance Plan and shall be entitled to recover all payments already made by it (including interest thereon).

                    4. Executive understands and agrees that any amounts that Executive owes the Company, including any salary or other overpayments related to Executive’s employment with the Company, will be offset and deducted from Executive’s final paycheck from the Company. Executive specifically authorizes the Company to offset and deduct any such amounts from his final paycheck. Executive agrees and acknowledges that, to the extent the amount of Executive’s final paycheck is not sufficient to repay the full amount that Executive owes to the Company, if any, the full remaining amount owed to the Company, if any, will be offset and deducted from the amount of the Severance Payment. Executive specifically authorizes the Company to offset and deduct any such amounts from his Severance Payment.

Exh. A-1

                    5. Executive agrees that, after payment of Executive’s final paycheck on [Date] and the Severance Payment, Executive will have received all compensation and benefits that are due and owing to Executive by the Company, including but not limited to salary, vacation pay, bonus, commissions and incentive/override compensation but excluding any benefits or services provided pursuant to Sections 4(e) and 4(f) of the Severance Plan.

                    6. Executive represents that he has returned to the Company all property or information, including, without limitation, all reports, files, memos, plans, lists, or other records (whether electronically stored or not) belonging to the Company or its affiliates, including copies, extracts or other documents derived from such property or information. Executive will immediately forfeit all rights and benefits under this Agreement and the Severance Plan, including, without limitation, the right to receive any Severance Payment if Executive, directly or indirectly, at any time (i) discloses to any third party or entity any trade secrets or other proprietary or confidential information pertaining to the Company or any of its affiliates or uses such secrets or information without the prior written consent of the General Counsel of the Company or (ii) takes any actions or makes or publishes any statements, written or oral, or instigates, assists or participates in the making or publication of any such statements which libel, slander or disparage the Company or any of its past or present directors, officers or employees. Nothing in this Agreement shall prevent or prohibit Executive or the Company from responding to an order, subpoena, other legal process or regulatory inquiry directed to them or from providing information to or making a filing with a governmental or regulatory body. Executive agrees that upon learning of any order, subpoena or other legal process seeking information that would otherwise be prohibited from disclosure under this Agreement, he will promptly notify the Company, in writing, directed to the Company’s General Counsel. In the event disclosure is so required, Executive agrees not to oppose any action by the Company to seek or obtain a protective order or other appropriate remedy.

                    7. Executive agrees that Executive’s Employment and Confidentiality Agreement (the “Employment and Confidentiality Agreement”) shall continue to be in full force and effect, including but not limited to all non-competition and non-solicitation provisions contained therein.

                    8. Executive hereby represents that he has not filed any action, complaint, charge, grievance or arbitration against the Company or any of its affiliates in connection with any matters relating, directly or indirectly, to his employment, and covenants and agrees not to file any such action, complaint or arbitration or commence any other judicial or arbitral proceedings against the Company or any of its affiliates with respect to events occurring prior to the termination of his employment with the Company or any affiliates thereof.

                    9. Effective on [Date], the Company will cease all health benefit coverage and other benefit coverage for Executive.

Exh. A-2

                    10. GENERAL RELEASE – Effective as of the Effective Date, and in return for the consideration set forth above, Executive agrees not to sue or file any action, claim, or lawsuit against the Company, agrees not to pursue, seek to recover or recover any alleged damages, seek to obtain or obtain any other form of relief or remedy with respect to, and cause the dismissal or withdrawal of, any lawsuit, action, claim, or charge against the Company, and Executive agrees to waive all claims and release and forever discharge the Company, its officers, directors, subsidiaries, affiliates, parents, attorneys, shareholders and employees from any claims, demands, actions, causes of action or liabilities for compensatory damages or any other relief or remedy, and obligations of any kind or nature whatsoever, based on any matter, cause or thing, relating in any way, directly or indirectly, to his employment, from the beginning of time through the Effective Date of this Agreement, whether known or unknown, fixed or contingent, liquidated or unliquidated, and whether arising from tort, statute, or contract, including, but not limited to, any claims arising under or pursuant to the California Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1871, the Civil Rights Act of 1991, the Americans with Disabilities Act, the Rehabilitation Act, the Family and Medical Leave Act of 1993, the Occupational Safety & Health Act, the Employee Retirement Income Security Act of 1974, the Older Workers Benefit Protection Act of 1990, the Worker Adjustment and Retraining Notification Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act of 1967 (“ADEA”), New York State Labor Law, New York State Human Rights Law, New York Human Rights Law, and any other state, federal, city, county or local statute, rule, regulation, ordinance or order, or the national or local law of any foreign country, any claim for future consideration for employment with the Company, any claims for attorneys’ fees and costs and any employment rights or entitlement law, and any claims for wrongful discharge, intentional infliction of emotional distress, defamation, libel or slander, payment of wages, outrageous behavior, breach of contract or any duty allegedly owed to Executive, discrimination based upon race, color, ethnicity, sex, age, national origin, religion, disability, sexual orientation, or another unlawful criterion or circumstance, and any other theory of recovery. It is the intention of the parties to make this release as broad and as general as the law permits.

                    [Executive acknowledges that he is aware of, has read, has had explained to him by his attorneys, understands and expressly waives any and all rights he has or may have under Section 1542 of the California Civil Code, which provides as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him must have materially affected his or her settlement with the debtor.”]¹

¹ Include bracketed language for California employees.

Exh. A-3

                    11. Executive acknowledges that he may later discover facts different from or in addition to those which he knows or believes to be true now, and he agrees that, in such event, this Agreement shall nevertheless remain effective in all respects, notwithstanding such different or additional facts or the discovery of those facts.

                    12. This Agreement may not be introduced in any legal or administrative proceeding, or other similar forum, except one concerning a breach of this Agreement or the Severance Plan.

                    13. Executive acknowledges that Executive has made an independent investigation of the facts, and does not rely on any statement or representation of the Company in entering into this Agreement, other than those set forth herein.

                    14. Executive agrees that, without limiting the Company’s remedies, should he commence, continue, join in, or in any other manner attempt to assert any claim released in connection herewith, or otherwise violate in a material fashion any of the terms of this Agreement, the Company shall not be required to make any further payments to the Executive pursuant to this Agreement or the Severance Plan and shall be entitled to recover all payments already made by it (including interest thereon), in addition to all damages, attorneys’ fees and costs the Company incurs in connection with Executive’s breach of this Agreement. Executive further agrees that the Company shall be entitled to the repayments and recovery of damages described above without waiver of or prejudice to the release granted by him in connection with this Agreement, and that his violation or breach of any provision of this Agreement shall forever release and discharge the Company from the performance of its obligations arising from the Agreement.

                    15. Executive has been advised and acknowledges that he has been given forty-five (45) days to sign this Agreement, he has seven (7) days following his signing of this Agreement to revoke and cancel the terms and conditions contained herein, and the terms and conditions of this Agreement shall not become effective or enforceable until the revocation period has expired (the “Effective Date”).

                    16. Executive acknowledges that Executive has been advised hereby to consult with, and has consulted with, an attorney of his choice prior to signing this Agreement.

                    17. Executive acknowledges that Executive has fully read this Agreement, understands the contents of this Agreement, and agrees to its terms and conditions of his own free will, knowingly and voluntarily, and without any duress or coercion.

                    18. Executive understands that this Agreement includes a final general release, and that Executive can make no further claims against the Company or the persons listed in Section 10 of this Agreement relating in any way, directly or indirectly, to his employment. Executive also understands that this Agreement precludes Executive

Exh. A-4

from recovering any damages or other relief as a result of any lawsuit, grievance, charge or claim brought on Executive’s behalf against the Company or the persons listed in Section 10 of this Agreement.

                    19. Executive acknowledges that Executive is receiving adequate consideration (that is in addition to what Executive is otherwise entitled to) for signing this Agreement.

                    20. This Agreement and the Severance Plan constitute the complete understanding between Executive and the Company regarding the subject matter hereof and thereof. No other promises or agreements regarding the subject matter hereof and thereof will be binding unless signed by Executive and the Company.

                    21. Executive and the Company agree that all notices or other communications required or permitted to be given under the terms of this Agreement shall be given in accordance with Section 9 of the Severance Plan.

                    22. Executive and the Company agree that any disputes relating to any matters covered under the terms of this Agreement shall be resolved in accordance with Section 10 of the Severance Plan.

                    23. By entering into this Agreement, the Company does not admit and specifically denies any liability, wrongdoing or violation of any law, statute, regulation or policy, and it is expressly understood and agreed that this Agreement is being entered into solely for the purpose of amicably resolving all matters of any kind whatsoever between Executive and the Company.

                    24. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

                    25. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.

                    26. Unless expressly specified elsewhere in this Agreement, this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York without reference to the principles of conflict of law.

Exh. A-5

                    27. This Agreement may be executed in one or more counterparts.

Company	Executive
By:	By:
Date:	Date:

Exh. A-6

EX-10.31

Exhibit 10.31

AMENDMENT TO
THE PROFIT SHARING PLAN OF
QUEST DIAGNOSTICS INCORPORATED

          The Profit Sharing Plan of Quest Diagnostics Incorporated, whose predecessor was originally effective October 1, 1973, as presently maintained under an amendment and restatement made effective as of January 1, 2007, is hereby further amended, generally effective as of January 1, 2008 and effective as of January 1, 2009 as specifically stated herein, in the following respects:

1. A new paragraph is added at the end of the “Introduction” to provide as follows:
	“Effective January 1, 2008, Focus Diagnostics, Inc. became an Employer in the Plan, and the Plan is hereby again amended and restated to reflect the merger, effective March 13, 2008, of the Focus Diagnostics, Inc. 401(k) and Profit Sharing Plan into the Plan.”
2. Clause (2) of the second paragraph of the definition of “Deferral Compensation” is amended to provide as follows:
	“(2) except as specifically provided in (1) above, Deferral Compensation shall not include severance pay or other form of post-termination compensation;”
3. The definition of “Employer” is amended by changing the date from January 1, 2007 to January 1, 2008 and adding Focus Diagnostics, Inc. to the list of Employers, and is further amended by changing the date from January 1, 2008 to January 1, 2009 and adding Specialty Laboratories, Inc. and HemoCue, Inc. to the list of Employers.
4. The definition of “Fiduciary” is amended in its entirety to provide as follows:
	“Fiduciary – The Trustee, the Committee and any individual, corporation, firm or other entity which has, in accordance with ERISA, fiduciary responsibilities respecting management of the Plan or the disposition of its assets.”
5. The definition of “Investment Option” is amended in its entirety to provide as follows:
	“Investment Option — The investment vehicle elected by the Participant in accordance with Section 2.4 for investment of his Individual Account. The Employer Stock Fund at all times may be an available Investment Option under this Plan.”
6. The definition of “Merged Plan” is amended in its entirety, effective January 1, 2008 to provide as follows:
	“Merged Plan — The Advance Medical Plan, the AML-East Plan, the AML-West Plan, the CBCLS Plan, the CDS Plan, the CPF Pension Plan, the CPF Savings Plan, the Damon Plan, the DeYor Plan, the LabPortal Plan, the Maryland Medical Laboratory Plan, the MedPlus Plan, the MetWest Plan, the Nichols Institute Plan, the Podiatric Pathology Laboratories Plan, the Statlab Plan, the Unilab Plan, the LabOne (k) Plan, the LabOne Pension Plan and the Focus Diagnostics, Inc. Profit Sharing and 401(k) Plan, either individually or collectively as the case may be.”

7. A new definition, “Prior Focus Plan Match Sub-Account” is added, effective January 1, 2008 to provide as follows:
	“Prior Focus Plan Match Sub-Account — That portion of the Individual Account of a Participant attributable to employer matching contributions made to the Focus Diagnostics, Inc. Profit Sharing and 401(k) Plan and earnings or losses thereon.”
8. The definition of “Individual Account,” the definition of “Vested Employer Stock Dividend Sub-Account” and Sections 4.1(a), 4.5, 5.5(b)(2)(A), 6.1(g), 6.2(a), 6.3(b) and 6.5(a) are amended by following each phrase or clause where the term “Prior Employer Match Sub-Account” appears with a corresponding phrase or clause using the term “Prior Focus Plan Match Sub-Account,” and renumbering subsequent phrases or clauses as may be necessary.
9. The definition of “Section 415 Compensation” is amended in its entirety to provide as follows:
	“Section 415 Compensation — Compensation within the meaning of Section 415(c)(3) of the Code, which shall include “post-severance compensation.” “Post-severance compensation” means, for any Limitation Year beginning on or after July 1, 2007, the following amount(s) that would have been included in the definition of Section 415 Compensation if the amounts were paid prior to the Employee’s Severance from Service (as defined in regulations under Code Section 1.415(a)-1(f)(5)) with the Employer, and that are paid to the Employee by the later of 2½ months after the Employee’s Severance from Service with the Employer or the end of the Limitation Year that includes the Employee’s date of Severance from Service with the Employer if the payment is:
	(a)	regular compensation for services during the Employee’s regular working hours, or compensation for services outside the Employee’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments and the payment would have been paid to the Employee prior to a Severance from Service if the Employee had continued in employment with the Employer;
	(b)	for unused accrued bona fide sick, vacation or other leave, but only if the Employee would have been able to use the leave if employment had continued;
	(c)	received by the Employee pursuant to a nonqualified unfunded deferred compensation plan, but only if the payment would have been paid to the Employee at the same time if the Employee had continued in employment with the Employer and only to the extent that the payment is includible in the Employee’s gross income; or
	(d)	made by the Employer to an individual who does not currently perform services for the Employer by reason of Qualified Military Service to the extent those

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		payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the Employer rather than entering Qualified Military Service.”
10. Section 2.4(a) is amended in its entirety to provide as follows:
	“In the absence of any valid Investment Option specification to the contrary, a Participant’s Individual Account automatically shall be invested in the applicable qualified default investment alternative (as defined under ERISA) specified by the Committee. Commencing on the date that is 30 days after the Employee’s date of hire with an Employer (or such other date as the Committee shall designate), the Employee may change his Investment Option specification in accordance with subsection (b).”
11. Section 3.1(c)(2)(A) is amended in its entirety to provide as follows:
	“If in any calendar year the aggregate of a Participant’s Regular Pre-Tax Contributions made on his behalf under this Plan, plus his other elective deferrals under any other qualified cash or deferred arrangement (as defined in Code Section 401(k)) maintained by any sponsor, under any simplified employee pension (as defined in Code Section 408(k)), or used to have an annuity contract purchased on his behalf under Code Section 403(b), exceed the limitation of paragraph (1), then no later than the March 15 following such calendar year the Participant may notify the Committee (i) that he has exceeded the limitation and (ii) of the amount of his Regular Pre-Tax Contributions under this Plan which he wants distributed to him (as adjusted for Allocable Income/Loss), notwithstanding his salary reduction agreement, so that he will not exceed the limitation. The Committee may require the Participant to provide reasonable proof that he has exceeded the limitation of paragraph (1).”
12. A new Section 3.1(c)(2)(C) is added to provide as follows:
	“(C) “Allocable Income/Loss” means, with respect to any contributions which must be returned to the Participant or forfeited under any of the limitations of Article III, the income or loss allocable to such contributions for the Plan Year. Income or loss may be determined by any reasonable method for computing the income or loss, provided that such method is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is the same method used by the Plan for allocating income or loss to Participants’ Individual Accounts. ”
13. The third sentence of Section 3.4(d) is amended to provide as follows:
	“The rollover contribution of an Employee who has not satisfied the initial eligibility requirements of Section 2.1 shall be invested in the applicable qualified default investment alternative specified by the Committee, unless and until he makes a different Investment Option specification pursuant to Section 2.4.”

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14. A new second paragraph is added at the end of Section 3.6 to provide as follows:
	“Notwithstanding that the Plan is intended to be operated as a “safe harbor” 401(k) plan with respect to Employee Pre-Tax Contributions, the provisions of the remainder of this Section 3.6 shall be applicable to Participants during such period as they are able to make Employee Pre-Tax Contributions but are not eligible to receive Employer Matching Contributions. The Plan shall satisfy the ADP test of Code Section 401(k)(3) and Treasury Regulations §§1.401(k)-2(a) and (b). For this purpose, the Plan shall use the current year testing method. ”
15. Section 4.6 is amended in its entirety to provide as follows:
	“4.6	Maximum Additions
	(a)	For the purpose of this Section 4.6, the following terms shall have the following meanings:
		(1)	“Annual Additions” means for any Limitation Year:
			(i)	The sum of the following amounts credited to a Participant’s account in all qualified defined contribution plans (which includes an annuity contract described in Code Section 403(b)) maintained by the Employer or an Affiliate (or a predecessor employer as defined in Regulation §1.415(f)-1(c)):
				(A)	Employer contributions, even if such Employer contributions are excess contributions (as described in Code Section 401(k)(8)(B)) or excess aggregate contributions (as described in Code Section 401(m)(6)(B)), or such excess contributions or excess aggregate contributions are corrected through distribution;
				(B)	Employee contributions, which include mandatory employee contributions (as defined in Code Section 411(c)(2)(C) and Regulations thereunder) and voluntary employee contributions;
				(C)	Forfeitures;
				(D)	Contributions allocated to any individual medical account, as defined in Code Section 415(1)(2), which is part of a pension or annuity plan established pursuant to Code Section 401(h) and maintained by the Employer or an Affiliate;
				(E)	Amounts attributable to post-retirement medical benefits allocated to a separate account for a key employee (any Employee who, at any time during the Plan Year or any

- 4 -

		preceding Plan Year, is or was a key employee pursuant to Code Section 419A(d)), maintained by the Employer or an Affiliate; and
	(F)	Effective as of the first day of the first Limitation Year beginning on or after July 1, 2007, the difference between the value of any assets transferred to the Plan and the consideration, where an Employee or the Employer transfers assets to the Plan in exchange for consideration that is less than the fair market value of the assets transferred to the Plan.
(ii)	Notwithstanding the foregoing, a Participant’s Annual Additions do not include the following:
	(A)	The restoration of an Employee’s accrued benefit by the Employer in accordance with Code Section 411(a)(3)(D) or Code Section 411(a)(7)(C) or resulting from the repayment of cashouts (as described in Code Section 415(k)(3)) under a governmental plan (as defined in Code Section 414(d)) for the Limitation Year in which the restoration occurs, regardless of whether the Plan restricts the timing of repayments to the maximum extent allowed by Code Section 411(a);
	(B)	Catch-Up Pre-Tax Contributions made in accordance with Code Section 414(v) and Regulation §1.414(v)-1;
	(C)	Effective as of the first day of the first Limitation Year beginning on or after July 1, 2007, a payment made to restore some or all of the Plan’s losses resulting from an action (or a failure to act) by a fiduciary for which there is reasonable risk of liability for breach of a fiduciary duty (other than a breach of fiduciary duty arising from failure to remit contributions to the Plan) under ERISA or under other applicable federal or state law, where Participants who are similarly situated are treated similarly with respect to the payments. This includes payments to the Plan made pursuant to a Department of Labor order, the Department of Labor’s Voluntary Fiduciary Correction Program, or a court-approved settlement, to restore losses to a qualified defined contribution plan;
	(D)	Excess elective deferrals that are distributed in accordance with Regulation §1.402(g)-1(e)(2) or (3);

- 5 -

			(E)	Rollover Contributions (as described in Code Sections 401(a)(31), 402(c)(1), 403(a)(4), 403(b)(8), 408(d)(3), and 457(e)(16));
			(F)	Repayments of loans made to a Participant from the Plan;
			(G)	Repayments of prior Plan distributions described in Code Section 411(a)(7)(B) (in accordance with Code Section 411(a)(7)(C)) and Code Section 411(a)(3)(D) or repayment of contributions to a governmental plan (as defined in Code Section 414(d)) as described in Code Section 415(k)(3);
			(H)	The direct transfer of a benefit or employee contributions from a qualified plan to a defined contribution plan;
			(I)	The reinvestment of dividends on employer securities under an employee stock ownership plan pursuant to Code Section 404(k)(2)(A)(iii)(II); and
			(J)	Employee contributions to a qualified cost of living arrangement within the meaning of Code Section 415(k)(2)(B).
	(2)	“Limitation Year” means the calendar year unless changed by a Plan amendment. Notwithstanding the preceding, if the Plan is terminated effective as of a date other than the last day of the Limitation Year, the Plan shall be treated as if it had been amended to change its Limitation Year.
(b)	Code Section 415 Limit
	(1)	Notwithstanding anything contained herein to the contrary, in no event may the Annual Additions (except for Catch-Up Pre-Tax Contributions) made with respect to a Participant for a Limitation Year under the Plan and any other defined contribution plan, within the meaning of Code Section 415(c), maintained by an Employer or an Affiliate exceed the lesser of $40,000 (as adjusted pursuant to Code Section 415(d) for Plan Years beginning after 2002) or, 100% of his or her annual 415 Compensation from the Employer or an Affiliate for the Limitation Year. The compensation limitation referred to in the preceding sentence shall not apply to any contribution for medical benefits (within the meaning of Code Sections 401(h) or 419A(f)(2)) which is otherwise treated as an Annual Addition under Code Sections 415(a)(2) or 415(l)(1). In the event a short Limitation Year is created because of an amendment changing the Limitation Year to a different 12-consecutive month period, the maximum amount indicated above shall be reduced pro rata in accordance with the number of months in the short Limitation Year.

- 6 -

	(2)	If due to a reasonable error in calculating a Participant’s Section 415 Compensation for a Plan Year, due to the allocation of forfeitures, or due to such other facts and circumstances as may justify the availability of this special rule, as determined by the Internal Revenue Service (“IRS”), the Annual Additions to the Participant’s Account under this Plan and any other defined contribution plan of the Employer exceeds the limitations of paragraph (a) for a Limitation Year, then the excess amounts may be corrected only in accordance with the IRS Employee Plans Compliance Resolution System as set forth in Revenue Ruling 2008-50 or any superseding guidance including, but not limited to, the preamble to the final Code Section 415 regulations as published in the Federal Register on April 5, 2007.
	(3)	The provisions of Code Section 415 are hereby incorporated by reference to the extent not provided above.”
16. Section 5.5(b)(2)(H) is renumbered as Section 5.5(b)(2)(I) and a new Section 5.5(b)(2)(H) is added to provide as follows:
	“(I) A Participant shall have a vested interest in the following percentage of his Prior Focus Plan Match Sub-Account (if any):

Years of Vesting Service	Vested Interest
0	0%
1	20%
2	40%
3	60%
4	80%
5 or more	100%

17. A new Section 5.5(b)(3)(D) is added to provide as follows:
	“(D) If the employment of a Participant terminates for any reason other than retirement under Section 5.1, disability under Section 5.2, death under Section 5.3 or reduction-in-force under Section 5.5(a) at a time when he is not fully vested in his Prior Focus Plan Match Sub-Account (if any), then the Committee shall follow the procedure set forth in clause (i) or that set forth in clause (ii) below, as appropriate:
	(i) If the Participant had no vested interest in his Prior Focus Plan Match Sub-Account at the time of his termination of employment, the Committee nonetheless shall treat the Participant as if he had received a distribution on the date his employment terminated and shall forfeit the Participant’s entire Prior Focus Plan Match Sub-Account as soon as administratively feasible after the date his employment terminated. If such a Participant returns as an Employee prior to incurring a five-year Period of Severance, his Prior Focus Plan Match Sub-Account, determined as of the date of

- 7 -

		his deemed distribution, shall be fully restored to him as soon as administratively feasible after his reemployment.
		If the Participant is partially vested in his Prior Focus Plan Match Sub-Account at the time of his termination of employment and if he receives a distribution of his vested interest before he incurs a five-year Period of Severance, the remaining portion of his Prior Focus Plan Match Sub-Account shall be forfeited as soon as administratively feasible after the date of distribution. If such a Participant returns as an Employee prior to incurring a five-year Period of Severance and if he repays the full amount of the distribution paid to him by reason of his termination of employment no later than the fifth anniversary of the date of his reemployment, then his Prior Focus Plan Match Sub-Account, determined as of the date of the distribution of his vested interest, shall be fully restored to him as soon as administratively feasible after such repayment is made.
		A Participant’s Prior Focus Plan Match Sub-Account shall be restored first out of Forfeitures for such Plan Year and, if such Forfeitures are insufficient to restore such Prior Focus Plan Match Sub-Account, the Employer shall make a special contribution to the extent necessary so that the Participant’s Prior Focus Plan Match Sub-Account is fully restored.
		(ii) If the Participant is partially vested in his Prior Focus Plan Match Sub-Account at the time of his termination of employment and if he does not receive a distribution of such vested interest before he incurs a five-year Period of Severance, the remaining portion of his Prior Focus Plan Match Sub-Account shall be forfeited as soon as administratively feasible after such five-year Period of Severance has been incurred.
18. Section 5.10 is amended in its entirety to provide as follows:
	“A Participant’s Individual Account (or applicable sub-account thereof) shall be valued at fair market value as of the last day of the Plan Year (the “Valuation Date”). At the discretion of the Committee, its delegate or a Trustee (whichever applies), some or all of the assets of the Trust may be valued more frequently. These dates also shall be Valuation Dates. As of each such Valuation Date, the earnings and losses of the Trust Fund shall be allocated to each Participant’s Individual Account (or applicable sub-account thereof) pursuant to a consistent non-discriminatory method selected by the Committee.”
19. Section 5.11 is amended in its entirety to provide as follows:
	“5.11	Direct Rollovers
	(a)	Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee’s election under this Section, a distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible

- 8 -

	rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.
(b)	(1)	An “eligible rollover distribution” is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; any hardship distribution; the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities) unless such portion is transferred to an individual retirement account or annuity described in Code Sections 408(a) or (b), or to a qualified plan described in Code Section 401(a) or to an annuity contract described in Code Section 403(b) which in each case agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible; and any distribution that is reasonably expected to total less than $200 during a year.
	(2)	An “eligible retirement plan” is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), a Roth IRA described in Code Section 408A (if the direct rollover meets the requirements of Code Sections 402(c), 403(b)(8) or 457(c)(16), as applicable), an annuity plan described in Code Section 403(a), a qualified plan described in Code Section 401(a), an annuity contract described in Code Section 403(b) or an eligible plan under Code Section 457(b) maintained by a state, political subdivision of a state, or any agency or instrumentality of a state and which agrees to separately account for amounts transferred into such plan from this Plan. An “eligible retirement plan” for a distributee who is a designated beneficiary (as defined by Section 401(a)(9)(E) of the Code) of the Participant and who is not the surviving spouse of the Participant is an individual retirement account described in Code Section 408(a) or an individual retirement annuity described in Code Section 408(b) that will be treated as an inherited IRA pursuant to Code Section 402(c)(11).
	(3)	A “distributee” includes an employee or former employee. In addition, the employee’s or former employee’s surviving spouse and the employee’s or former employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are distributees with regard to the interest of the spouse or former spouse. A distributee also shall include an individual

- 9 -

			who is a designated beneficiary (as defined by Section 401(a)(9)(E) of the Code) of the Participant and who is not the surviving spouse of the Participant.
		(4)	A “direct rollover” is a payment by the Plan to the eligible retirement plan specified by the distributee.”
20. A new Section 5.14 is added to provide as follows:
	“5.14	Voluntary Direct Transfers
		A Participant whose employment status has changed so that he no longer is eligible for active participation in the Plan and who is not expected to regain such eligibility in the foreseeable future, may request a distribution from his Individual Account prior to his Severance from Service Date. Such Individual Account may be distributed only through transfer to another cash or deferred arrangement under Code Section 401(k) maintained by the Employer or an Affiliate under which the Participant currently is, or soon will be, eligible to participate. The provisions of Code Section 411(a)(10) shall apply to the vesting schedule of such transferee plan as if an amendment to the vesting schedule of this Plan. Payments made pursuant to this Section shall operate as a complete discharge of the Trustee, the Committee and the Trust Fund.”
21. Section 7.3 is amended in its entirety to provide as follows:
		“One of the Investment Options may be the Employer Stock Fund, which will be invested in the common stock of the Employer, provided such stock qualifies as qualifying employer securities within the meaning of ERISA Section 407(d)(5). The portion of the Plan comprised of the Employer Stock Fund shall be an employee stock ownership plan under Code Section 4975(e)(7) which shall include the share distribution requirements of Code Section 409(h) and the participant pass-through voting rights required under Code Section 409(e). The level of Plan assets invested in such fund shall be determined by Participants’ Investment Option specifications and, subject to any restrictions that may be imposed under Section 2.4, may consist of up to 100% of all Plan assets.’
22. Clause (3) of the third paragraph of Section 8.1 is amended to provide as follows::
		“(3) delegation by the Committee to another committee of its responsibility to add, change or delete Investment Options in accordance with Section 8.5.”
23. The sixth paragraph of Section 8.5 is amended in its entirety to provide as follows:
		“The Committee (or its delegate pursuant to Section 8.1) may add, change or delete the available Investment Options at any time.

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24. A new first sentence is added to Section 8.6 to provide as follows:
	“All claims for benefits under the Plan shall be submitted to the Committee or its delegate, including a committee designated by the Committee to review appeals from initial claim denials, which shall have the responsibility for determining the eligibility of any Participant or Beneficiary for benefits.”
25. All subsequent appearances in Section 8.6 of the phrase “the Committee” are changed to “the Committee or its delegate.”
26. A new fifth paragraph is added to Section 8.6 to provide as follows:
	“In the context of a claim involving a disability determination, the initial claim determination shall be made within 45 days, and the maximum extension of time available to the decisionmaker is 30 days. Further, the information included in any denial also shall include identification of any medical or vocational experts whose advice was obtained in connection with a claim determination, whether or not their judgment was relied upon in making the determination.”
27. All appearances in Section 8.7 of the phrase “the Committee” are changed to “the Committee or its delegate.”
28. The first two paragraphs of Section 8.7 are amended in their entirety to provide as follows:
	“In the event a claim for benefits is denied, the claimant or his duly authorized representative, at the claimant’s sole expense, may appeal the denial by filing a written request for review with the Committee or its delegate within 60 days (45 days in the context of a claim involving a disability determination) of the receipt of written notice of denial or 60 days (45 days in the context of a claim involving a disability determination) from the date such claim is deemed to be denied. In pursuing such appeal, the claimant or his duly authorized representative may review pertinent Plan documents, and may submit issues and comments in writing.
	The decision on review shall be made by the Committee or its delegate within 60 days (45 days in the context of a claim involving a disability determination) of receipt of the request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of a request for review. If such an extension of time is required, written notice of the extension shall be furnished to the claimant before the end of the original 60-day (or 45-day) period, and such extension notice shall indicate the special circumstance requiring an extension of the time and the date by which the Committee or its delegate expects to render a decision.”
29. Appendix A is amended in its entirety to provide as follows in the attached Appendix A.

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30. The first table in Appendix B is amended in its entirety to provide as follows in the attached first table in Appendix B.

31. In all other respects, the Plan shall remain unchanged by this Amendment.

          As evidence of its adoption of this Amendment, Quest Diagnostics Incorporated has caused this instrument to be signed by its authorized officer this 23rd day of December, 2008, generally effective as of January 1, 2008 and effective as of January 1, 2009 as specifically stated herein.

QUEST DIAGNOSTICS INCORPORATED
	/s/ David W. Norgard
By:	David W. Norgard
Title:	Vice President, Human Resources

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Appendix A

          The Effective Date for each Employer is set forth below:

Employer	Effective Date
Quest Diagnostics Incorporated (DE)	October 1, 1973
Quest Diagnostics Incorporated (MI)	May 1, 1990
Quest Diagnostics LLC (CT)	January 1, 1994
Quest Diagnostics of Pennsylvania Inc. (DE)	July 1, 1993
MetWest Inc. dba Quest Diagnostics	April 1, 1994
Quest Diagnostics LLC (MA)	March 1, 1995
Quest Diagnostics Incorporated (MD)	January 1, 1995
Nichols Institute Diagnostics (CA)	January 1, 1995
Quest Diagnostics Incorporated (CA)	January 1, 1995
Quest Diagnostics LLC (IL)	January 1, 1999
Quest Diagnostics Clinical Laboratories, Inc. (DE) (f/k/a SmithKline Beecham Clinical Laboratories, Inc.)	August 16, 1999
MedPlus, Inc.	January 1, 2002
Quest Diagnostics Venture LLC (PA)	November 15, 1997
Diagnostic Laboratory of Oklahoma	January 13, 2001
Quest Diagnostics Nichols Institute Inc.	January 1, 2003
Quest Diagnostics Incorporated (NV)	January 1, 2003
Associated Pathologists, Chartered	January 1, 2003
Associated Diagnostic Pathologists, Inc.	January 1, 2007
LabOne, Inc.	January 1, 2007
Focus Diagnostics, Inc.	January 1, 2008
Specialty Laboratories, Inc.	January 1, 2009
HemoCue, Inc.	January 1, 2009

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Appendix B

          The Merger Date for each Merged Plan is set forth below:

Name	Merger Date
Advance Medical & Research Center, Inc. Retirement Plan	May 1, 1990
Continental Bio Clinical Laboratory Service, Inc. Profit Sharing and Retirement Savings Plan	January 1, 1992
Statlab, Inc. Retirement Plan	March 1, 1993
CPF/MetPath Savings and Retirement Plan	July 1, 1993
Clinical Pathology Facility, Inc. Pension Plan	July 1, 1993
DeYor Laboratories 401(k) Profit Sharing Plan and Trust	January 1, 1994
The Profit Sharing Plan and Trust Agreement for Employees of MetWest Inc.	April 1, 1994
Maryland Medical Laboratory, Inc. 401(k) Profit Sharing Plan and Trust	January 1, 1995
Nichols Institute 401(k) Plan	January 1, 1995
Podiatric Pathology Laboratories, Inc. Profit Sharing Plan	January 1, 1995
MedPlus, Inc. 401(k) Plan	January 2, 2002
LabPortal, Inc. 401(k) Plan	July 1, 2002
AML-East 401(k) Plan	January 3, 2003
APL Healthcare Group Inc. Profit Sharing and 401(k) Plan	January 3, 2003
Clinical Diagnostics Services 401(k) Plan	June 2, 2003
Unilab 401(k) Plan	January 2, 2004
LabOne, Inc. Profit Sharing 401(k) Plan	March 1, 2007
LabOne, Inc. Money Purchase Pension Plan	March 1, 2007
Focus Diagnostics, Inc. Profit Sharing and 401(k) Plan	March 13, 2008

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EX-21.1

Exhibit 21.1
As of December 31, 2008

Quest Diagnostics Incorporated (DE)
(Incorporated on December 12, 1990 in Delaware; FEIN No. 16-1387862)

Subsidiaries, Joint Ventures and Affiliates

100%	Quest Diagnostics Holdings Incorporated (f/k/a SBCL, Inc.) (DE)
	100%	Quest Diagnostics Clinical Laboratories, Inc. (f/k/a SmithKline Beecham Clinical
		Laboratories, Inc.) (DE)
		(33-l/3%)		Compunet Clinical Laboratories (OH)
		(44%)		Mid America Clinical Laboratories (IN)
		(51%)		Diagnostic Laboratory of Oklahoma LLC (OK)
100%	Quest Diagnostics Incorporated (MD)
	100%	Diagnostic Reference Services Inc. (MD)
		100%	Pathology Building Partnership (MD) (gen. ptnrshp.)
100%	Quest Diagnostics Incorporated (MI)
100%	Quest Diagnostics Investments Incorporated (DE)
	100%	Quest Diagnostics Finance Incorporated (DE)
100%	Quest Diagnostics LLC (IL)
100%	Quest Diagnostics LLC (MA)
100%	Quest Diagnostics LLC (CT)
100%	Quest Diagnostics Nichols Institute (f/k/a Quest Diagnostics Incorporated) (CA)
100%	Quest Diagnostics of Pennsylvania Inc. (DE)
	51%	Quest Diagnostics Venture LLC (PA)
	53.5%	Associated Clinical Laboratories (PA) (gen. ptnrshp.)
		100% North Coast General Services, Inc. (PA)
100%	Quest Diagnostics of Puerto Rico, Inc. (PR)
100%	Quest Diagnostics Receivables Inc. (DE)
100%	Quest Diagnostics Ventures LLC (DE)
100%	American Medical Laboratories, Incorporated (DE)
	100%	Quest Diagnostics Nichols Institute, Inc. (f/k/a Medical Laboratories Corporation) (VA)
	100%	Quest Diagnostics Incorporated (NV)
		100%	APL Properties Limited Liability Company (NV)
100%	DPD Holdings, Inc. (DE)
	100%	MetWest Inc. (DE)
		100%	Diagnostic Path Lab, Inc. (TX)
		100%	Quest Diagnostics Provider Network, LLC (CO)
		49%	Sonora Quest Laboratories LLC (AZ)
100%	Enterix Inc. (DE)
	100%	Enterix (Australia) Pty Limited (Australia)
		100%	Enterix Pty Limited (Australia)
			100%      Enterix UK Limited (UK)

Exhibit 21.1

100%	Focus GmbH (Germany)
100%	Focus Technologies Holding Company (DE)
	100%	Focus Diagnostics, Inc. (DE)
100%	HemoCue, Inc. (CA)
100%	QDI Acquisition AB (Sweden)
	100%	POCT Holding AB (Sweden)
		100%		HemoCue Holding AB (Sweden)
				100%	HemoCue AB (Sweden)
					100%      HemoCue Oy (Finland)
				100%	HemoCue GmbH (Germany)
				99.7%	HemoCue AG (Switzerland) (remaining 0.3% held in trust for HemoCue
					Holding AB)
				100%	Biotest Medizintechnik GmbH (Germany)
				100%	HemoCue Diagnostics B.V. (The Netherlands)
				100%	HC Diagnostics, Limited (UK)
100%	Lab Portal, Inc. (DE)
100%	LabOne, Inc. (MO)
	100%	ExamOne World Wide, Inc. (PA)
		100%	ExamOne World Wide of NJ, Inc. (NJ)
	100%	Systematic Business Services, Inc. (MO)
	100%	LabOne, L.L.C. (KS)
	100%	Central Plains Holdings, Inc. (KS)
	100%	Lab One Canada, Inc. (Ontario)
		100%		ExamOne Canada, Inc. (Ontario)
				100%	Rapid-Med Plus Franchise Corporation (Ontario)
	100%	LabOne of Ohio, Inc. (DE)
	100%	Osborn Group Inc. (DE)
100%	Lifepoint Medical Corporation (DE)
	100%	C&S Clinical Laboratory, Inc. (d/b/a Clinical Diagnostic Services) (NJ)
100%	MedPlus, Inc. (OH)
	100%	Valcor Associates Inc. (PA)
100%	Unilab Corporation (DE)
100%	Nichols Institute Diagnostics (CA)
100%	Nichols Institute Diagnostics Limited (UK)
100%	Nichols Institute Diagnostika GmbH (Germany)
100%	Nichols Institute International Holding B.V. (Netherlands)
	100%	Nichols Institute Diagnostics B.V. (Netherlands)
	100%	Nichols Institute Diagnostics SARL (France)
100%	Nomad Massachusetts, Inc. (MA)
	100%	Quest Diagnostics Mexico, S.A. de C.V. (f/k/a Laboratorios Clinicos de Mexico, S.A. de C.V.) (Mexico)
	100%	Laboratorio de Analisis Biomedicos, S.A. (Mexico)
100%	Quest Diagnostics do Brasil Ltda. (Brazil)
100%	Quest Diagnostics India Private Limited (India)
100%	Quest Diagnostics Limited (UK)
	100%	The Pathology Partnership plc (UK)
19.9%	Clinical Genomics Pty Ltd. (Australia)

100%	AmeriPath Group Holdings, Inc. (DE)
	100%	AmeriPath Holdings, Inc. (DE)
		100%	AmeriPath Intermediate Holdings, Inc. (DE)
			100%	AmeriPath, Inc. (DE)
				100%	AmeriPath 5.01(a) Corporation (TX)
				100%	AmeriPath Cincinnati, Inc. (OH)
				100%	AmeriPath Cleveland, Inc. (OH)
				100%	AmeriPath Consolidated Labs, Inc. (FL)
				100%	AmeriPath Florida, LLC (DE)
				100%	AmeriPath Hospital Services Florida, LLC (DE)
				100%	AmeriPath Indemnity, Ltd. (Cayman Islands)
				100%	AmeriPath Indiana, LLC (IN)
				100%	AmeriPath, LLC (DE)
					100%     AmeriPath Texas, LP
				100%	AmeriPath Kentucky, Inc. (KY)
				100%	AmeriPath Lubbock 5.01(a) Corporation (TX)
				100%	AmeriPath Lubbock Outpatient 5.01(a) Corporation (f/k/a Simpson
					Pathology 5.01(a) Corporation) (TX)
				100%	AmeriPath Marketing USA, Inc (FL)
				100%	AmeriPath Michigan, Inc. (MI)
				100%	AmeriPath Mississippi, Inc. (MS)
				100%	AmeriPath New York, LLC (DE)
				100%	AmeriPath North Carolina, Inc. (NC)
				100%	AmeriPath Ohio, Inc. (DE)
					100%      AmeriPath Youngstown Labs, Inc. (OH)
				100%	AmeriPath PAT 5.01(a) Corporation (TX)
				100%	AmeriPath Pennsylvania, LLC (PA)
				100%	AmeriPath Philadelphia, Inc. (NJ)
				100%	AmeriPath San Antonio 5.01(a) Corporation (TX)
				100%	AmeriPath SC, Inc. (SC)
				100%	AmeriPath Severance 5.01(a) Corporation (TX)
				100%	AmeriPath Texarkana 5.01(a) Corporation (TX)
				100%	AmeriPath Wisconsin, LLC (WI)
				100%	AmeriPath Youngstown, Inc. (OH)
				100%	Anatomic Pathology Services, Inc. (OK)
				100%	API No. 2, LLC (DE)
				100%	Arlington Pathology Association 5.01(a) Corporation (TX)
				100%	Dermatopathology Services, Inc. (AL)
				100%	DFW 5.01(a) Corporation (TX)
				100%	Diagnostic Pathology Management Services, LLC (OK)
				100%	Kailash B. Sharma, M.D., Inc. (GA)
				100%	NAPA 5.01(a) Corporation (TX)
				100%	Nuclear Medicine and Pathology Associates (GA)
				100%	Ocmulgee Medical Pathology Association, Inc. (GA)
				100%	O’Quinn Medical Pathology Association, LLC (GA)

100%	PCA of Denver, Inc. (TN)
100%	PCA of Nashville, Inc. (TN)
100%	Peter G. Klacsmann, M.D., Inc. (GA)
100%	Sharon G. Daspit, M.D., Inc. (GA)
100%	Shoals Pathology Associates, Inc. (AL)
100%	Specialty Laboratories, Inc. (CA)
100%	Strigen, Inc. (UT)
	100%     Arizona Pathology Group, Inc. (AZ)
	100%     Regional Pathology Consultants, LLC (UT)
	100%     Rocky Mountain Pathology, LLC (UT)
100%	TID Acquisition Corp. (DE)
100%	TXAR 5.01(a) Corporation (TX)

Additional Entities Consolidated for Accounting Purposes

A. Bernard Ackerman, M.D. Dermatopathology, PC (NY)

AmeriPath Consulting Pathology Services, P.A. (NC)

AmeriPath Indianapolis, P.C. (IN)

AmeriPath Institute of Urological Pathology, PC (MI)., (f/k/a J.J. Humes M.D. and Assoc.)

AmeriPath Milwaukee, S.C. (WI)

AmeriPath Pittsburgh, P.C. (PA)

Colorado Diagnostic Laboratory, LLC (CO)

Colorado Pathology Consultants, P.C. (CO)

Consulting Pathologists of Pennsylvania, P.C. (PA)

Dermatopathology of Wisconsin, S.C. (WI)

Institute for Dermatopathology, P.C. (PA)

Jill A. Cohen, M.D., Inc. (AZ)

Kilpatrick Pathology, P.A. (NC)

Rose Pathology Associates, P.C. (CO)

Southwest Diagnostic Laboratories, P.C. (CO)

St. Luke’s Pathology Associates, P.A. (KS)

Tulsa Diagnostics, P.C. (OK)

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-143867 and 333-54310) and Form S-8 (Nos. 333-143889, 333-136196, 333-136195, 333-103555, 333-60758, 333-85713, 333-74103, 333-66177, 333-60477, 333-17077, 333-17079 and 333-17083) of Quest Diagnostics Incorporated of our report dated February 17, 2009 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Florham Park, New Jersey
February 17, 2009

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Surya N. Mohapatra, certify that:

1.	I have reviewed this annual report on Form 10-K of Quest Diagnostics Incorporated;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 17, 2009
By	/s/ Surya N. Mohapatra
	Surya N. Mohapatra, Ph.D.
	Chairman of the Board, President and
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert A. Hagemann, certify that:

1.	I have reviewed this annual report on Form 10-K of Quest Diagnostics Incorporated;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 17, 2009
By	/s/ Robert A. Hagemann
	Robert A. Hagemann
	Senior Vice President and
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

          Pursuant to 18 U.S.C. § 1350, the undersigned certifies that, to the best of my knowledge, the Annual Report on Form 10-K for the period ended December 31, 2008 of Quest Diagnostics Incorporated, as being filed with the Securities and Exchange Commission concurrently herewith, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or 78o(d)) and that the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of Quest Diagnostics Incorporated.

Dated: February 17, 2009	/s/ Surya N. Mohapatra
	Surya N. Mohapatra, Ph.D.
	Chairman of the Board, President and
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

          Pursuant to 18 U.S.C. § 1350, the undersigned certifies that, to the best of my knowledge, the Annual Report on Form 10-K for the period ended December 31, 2008 of Quest Diagnostics Incorporated, as being filed with the Securities and Exchange Commission concurrently herewith, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or 78o(d)) and that the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of Quest Diagnostics Incorporated.

Dated: February 17, 2009	/s/ Robert A. Hagemann
	Robert A. Hagemann
	Senior Vice President and
	Chief Financial Officer