8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): February 15, 2006

Commission file number 001-12215

Quest Diagnostics Incorporated

1290 Wall Street West

Lyndhurst, NJ 07071

(201) 393-5000

Delaware

(State of Incorporation)

16-1387862

(I.R.S. Employer Identification Number)

Item 1.01 Entry into a Material Definitive Agreement

          On February 15, 2006, the Compensation Committee of the Board of Directors (the “Compensation Committee”) of Quest Diagnostics Incorporated (the “Company”) approved the annual base salaries for the chief executive officer and other executive officers of the Company for fiscal year 2006. In addition, the Compensation Committee established the financial and strategic criteria and targets used in establishing bonus and award grants for fiscal year 2006 under the Company’s Senior Management Incentive Plan (“SMIP”) and Amended and Restated Employee Long-Term Incentive Plan (“ELTIP”).

          Base Salary

           On February 15, 2006, the Compensation Committee approved the following annual base salaries for fiscal year 2006 for the Company’s chief executive officer and other executive officers (effective January 1, 2006):

Name and Position	Base Salary for 2006
Surya N. Mohapatra Chairman, President and Chief Executive Officer	$	1,023,000
Robert A. Hagemann Senior Vice President and Chief Financial Officer		463,008
David M. Zewe Senior Vice President, Diagnostic Testing Operations		481,416
Michael E. Prevoznik Senior Vice President and General Counsel		401,205
Robert E. Peters Vice President, Sales and Marketing		355,425
W. Thomas Grant, II Senior Vice President, Insurance and Employer Services		365,000

          Cash Bonus Awards

          Annual cash bonus incentives are paid to the chief executive officer and other executive officers in accordance with the SMIP. Consistent with past practice, on February 15, 2006, the Compensation Committee established additional target percentages in respect of each executive officer’s base salary to be used in determining the bonus awards for fiscal year 2006. Whether or not an executive officer receives his target percentage bonus will be based on three factors: first, financial performance, which is to be measured against objectives established for earnings per share and revenue growth; second, the Company’s performance against other specific targets, such as patient satisfaction, six sigma quality, customer retention and employee satisfaction; and third, individual performance measures for each executive officer. These criteria are applicable to all participants under the SMIP, including the Company’s chief executive officer and its other executive officers.

          The additional targets established by the Compensation Committee for bonus awards for the chief executive officer and other executive officers for fiscal year 2006 are as follows:

Name and Position	Target Bonus (as a % of Base Salary) that May be Granted Pursuant to 2006 Awards
Surya N. Mohapatra Chairman, President and Chief Executive Officer	130	%
Robert A. Hagemann Senior Vice President and Chief Financial Officer	90	%
David M. Zewe Senior Vice President, Diagnostic Testing Operations	70	%
Michael E. Prevoznik Senior Vice President and General Counsel	65	%
Robert E. Peters Vice President, Sales and Marketing	65	%
W. Thomas Grant, II* Senior Vice President, Insurance and Employer Services	100	%

* Under Mr. Grant’s employment agreement, dated August 8, 2005, the maximum annual bonus opportunity is 100% of Base Salary (as defined). Under Mr. Grant’s employment agreement, he is also eligible for a Special Annual Performance Bonus (as defined) for fiscal years 2006, 2007 and 2008. The Special Annual Performance Bonus opportunity for target level performance is $38,000, based on the achievement of performance metrics related to the effective integration and growth of the business for which Mr. Grant is responsible.

          Under the SMIP, the maximum bonus that can be paid to a participant is 1% of the Company’s Earnings (as defined in the SMIP) in the relevant fiscal year.

          Long-Term Incentives

          The chief executive officer and each other executive officer of the Company are eligible to receive annual long-term incentive awards in the form of stock options and performance shares under the ELTIP. On February 15, 2006, the Compensation Committee granted the stock options for fiscal year 2006 and the target performance shares for the fiscal year 2006 to 2008 performance period that are set out in the table below:

Name and Position	2006 Stock Option Grants	2006 Target Performance Shares
Surya N. Mohapatra Chairman, President and Chief Executive Officer	275,000	55,000
Robert A. Hagemann Senior Vice President and Chief Financial Officer	113,334	22,667
David M. Zewe Senior Vice President, Diagnostic Testing Operations	63,334	12,667
Michael E. Prevoznik Senior Vice President and General Counsel	54,667	10,934
Robert E. Peters Vice President, Sales and Marketing	50,000	10,000
W. Thomas Grant, II Senior Vice President, Insurance and Employer Services	46,667	9,334

          Each stock option award is subject to the terms and conditions of a Non-Qualified Stock Option Agreement entered into with the participant, the form of which is filed as Exhibit 10.1 to this report and is incorporated herein by this reference. The Non-Qualified Stock Option Agreements executed by the chief executive officer and each other executive officer of the Company with respect to the stock option grants in respect of 2006 also are filed as Exhibit 10.2 though Exhibit 10.7 to this report and are incorporated herein by this reference. The stock options granted in respect of 2006 will vest over a three-year period and have a seven-year term. All stock options are granted with an exercise price that is not less than the fair market value of Company’s common stock on the date of grant and option re-pricing is prohibited by the terms of the ELTIP, except if the Compensation Committee determines that one or more specified corporate transactions has affected the price per share such that an adjustment of outstanding awards is required to preserve (or prevent an enlargement of) the benefit or potential benefit intended at the time of the grant.

          Each performance share award is subject to the terms and conditions of a Performance Share Award Agreement entered into with the participant, the form of which is filed as Exhibit 10.8 to this report and is incorporated herein by this reference. The Performance Share Award Agreements executed by the chief executive officer and each other executive officer of the Company with respect to the performance shares awards in respect of 2006 also are filed as Exhibit 10.9 though Exhibit 10.14 to this report and are incorporated herein by this reference.

          The performance shares subject to the 2006 award will be earned based on the earnings per share performance of the Company over a multi-year period, and will be paid out in shares of common stock of the Company at the end of the term. The target performance shares issued in respect of 2006 provide for the issuance of stock based on the Company’s earnings per share growth as compared to our peers in the compensation peer group. Depending upon the achieved “relative” earnings per share growth, 0% to 200% of the target number of shares may be awarded. Threshold awards equal to 0% of target will be earned when the Company’s earnings per share ranks at the 25th percentile or below of the peer group. Target awards are earned for ranking at the 55th percentile of the peer group. Maximum awards equal to 200% of target will be earned when the Company’s earnings per share growth ranks at the 85th percentile or above of the peer group. Awards for performance between these percentiles will be interpolated on a straight-line basis.

Item 9.01 Financial Statements and Exhibits

(d)	Exhibits
10.1	Form of Non-Qualified Stock Option Agreement
10.2	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and Surya N. Mohapatra
10.3	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and Robert A. Hagemann
10.4	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and David M. Zewe
10.5	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and Michael E. Prevoznik

10.6	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and Robert E. Peters
10.7	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and W. Thomas Grant, II
10.8	Form of Performance Share Award Agreement (2006 – 2008 Performance Period)
10.9	Performance Share Award Agreement, dated February 15, 2006, between the Company and Surya N. Mohapatra
10.10	Performance Share Award Agreement, dated February 15, 2006, between the Company and Robert A. Hagemann
10.11	Performance Share Award Agreement, dated February 15, 2006, between the Company and David M. Zewe
10.12	Performance Share Award Agreement, dated February 15, 2006, between the Company and Michael E. Prevoznik
10.13	Performance Share Award Agreement, dated February 15, 2006, between the Company and Robert E. Peters
10.14	Performance Share Award Agreement, dated February 15, 2006, between the Company and W. Thomas Grant, II

Signature

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

March 17, 2006
QUEST DIAGNOSTICS INCORPORATED
By:	/s/  Leo C. Farrenkopf, Jr.
	Leo C. Farrenkopf, Jr.
	Vice President, Assistant General Counsel and
	Assistant Corporate Secretary

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
10.1	Form of Non-Qualified Stock Option Agreement
10.2	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and Surya N. Mohapatra
10.3	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and Robert A. Hagemann
10.4	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and David M. Zewe
10.5	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and Michael E. Prevoznik
10.6	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and Robert E. Peters
10.7	Non-Qualified Stock Option Agreement, dated February 15, 2006, between the Company and W. Thomas Grant, II
10.8	Form of Performance Share Award Agreement (2006 – 2008 Performance Period)
10.9	Performance Share Award Agreement, dated February 15, 2006, between the Company and Surya N. Mohapatra
10.10	Performance Share Award Agreement, dated February 15, 2006, between the Company and Robert A. Hagemann
10.11	Performance Share Award Agreement, dated February 15, 2006, between the Company and David M. Zewe
10.12	Performance Share Award Agreement, dated February 15, 2006, between the Company and Michael E. Prevoznik
10.13	Performance Share Award Agreement, dated February 15, 2006, between the Company and Robert E. Peters
10.14	Performance Share Award Agreement, dated February 15, 2006, between the Company and W. Thomas Grant, II

EX-10

Exhibit 10.1

QUEST DIAGNOSTICS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT

This Non-Qualified Stock Option Agreement (the “Option Agreement”), dated as of Grant Date (the “Grant Date”), is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, New Jersey 07071 (the “Corporation”) and Optionee (the “Optionee”) Optionee Home Address.

1.	Conditions. This Option Agreement is subject in all respects to the Corporation’s Amended and Restated Long-Term Employee Incentive Plan, which is incorporated herein by reference. The Optionee acknowledges that he/she has read the terms of the Amended and Restated Long-Term Employee Incentive Plan and that those terms shall govern in the event of any conflict between them and those of this Option Agreement.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that all options granted to the Optionee by the Corporation prior to the date hereof (the “Prior Options”) shall be subject to forfeiture pursuant to paragraph 4(b)(ii) of this Option Agreement (for false attestation under the Executive Share Ownership Guidelines of the Corporation (the “ Minimum Share Ownership Policy”)), the Shares obtained on exercise of such Prior Options after the date hereof shall be subject to the Minimum Share Ownership Policy pursuant to paragraph 5(b) of this Option Agreement and the terms of paragraphs 4(b)(ii) and 5(b) hereof are made a part of the terms of each of the Prior Options.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that this Option shall be subject to forfeiture pursuant to paragraph 4(b)(iii) of this Agreement.
	This Option Agreement shall become effective only after the Optionee has executed and returned to the Executive Compensation Department (to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) a signed copy of this Option Agreement and shall be revoked if not executed and returned to Lisa Zajac within thirty (30) days of receipt by the Optionee..
2.	Award of Option. The Corporation hereby awards to the Optionee an option (the “Option”) to purchase from the Corporation such number of shares of the Corporation’s common stock (the “Shares”) at the exercise price set forth in this Option Agreement (the “Exercise Price”) below. This option shall vest equally over a three-year period. If the foregoing results in a fractional number of Shares subject to the Option vesting on any vesting date, the number of Shares subject to the Option vesting on the first and second vesting dates shall be rounded down to the previous whole number of Shares and the Shares subject to the Option vesting on the third vesting date shall be rounded up to the next whole number of Shares, as shall be necessary in order to result in a vesting of 100% of the Shares subject to the Option. The Compensation Committee of the Corporation may, in its sole discretion, convert this Option at any time to a stock settled stock appreciation grant.

Number of Shares Subject to Option: XXXX

Exercise Price per Share: $XXXX

Expiration Date: XXXXX XX, XXXX

Vesting Schedule:
		Number of Shares Subject to Option
Vesting Dates	% of Grant	Incremental	Cumulative
XXXXX	33.33%	XXXX	XXXX
XXXXX	33.33%	XXXX	XXXX
XXXXX	33.34%	XXXX	XXXX

This option shall expire, and no shares may be purchased pursuant to this Option, after the expiration date set forth above (the “Expiration Date”).

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EOAgmt

Non-Qualified Stock Option Agreement
XXXXXX, XX, XXXX
Page 2.

3.	Not An Incentive Stock Option. This Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and this Agreement shall be construed and interpreted in accordance with such intention.
4.	Vesting. Except as otherwise provided below, the Option shall vest and become exercisable as to the percentage of Shares subject to the Option on the vesting dates [set forth above][set forth on the “Summary Grant” page at the Smith Barney website] (the “Vesting Dates”).
	(a)	Termination. Unless the Optionee’s employment is terminated for one of the reasons set forth in Section 4(b) through (i), at the Optionee’s termination of employment prior to the third anniversary of the date of this Agreement, the Optionee will vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
		Notwithstanding anything to the contrary contained herein, if the Optionee is on a leave of absence approved by the Corporation for medical, personal, educational and/or other permissible purposes pursuant to policies of the Corporation as in effect on the date hereof, for a consecutive twelve-month period, such Optionee will be deemed terminated for purposes of this Agreement on the twelve month anniversary of the commencement of such leave of absence and this Option shall cease to vest at the end of such twelve-month period and the Optionee will forfeit any unvested portion of the Option.
	(b)	Cause, Dereliction of Duties or Harmful Acts; Breach of Share Ownership Guidelines; Loss of Equity Award Eligibility Status. (i) If the Optionee shall cause the Corporation to suffer financial harm or damage to its reputation (either before or after termination of employment) through (x) dishonesty, (y) violation of law in the course of the Optionee’s employment or violation of the Corporation’s Corporate Compliance Manual and compliance bulletins or other written policies, or (z) material deviation from the duties owed the Corporation by the Optionee, this Option, whether or not vested, shall expire and be cancelled to the extent it has not been exercised and be of no further force or effect.
		(ii) If the Optionee is subject to the Minimum Share Ownership Policy, any false attestation made under the Minimum Share Ownership Policy may result in the immediate cancellation of this Option and all Prior Options (to the extent not exercised), whether or not vested.
		(iii) If the Optionee’s employment status in the Corporation is changed such that the Optionee will no longer be eligible to receive options pursuant to the Equity Award Eligibility Policy of the Corporation as in effect on the date hereof and attached as Annex A to this Agreement and such changed status continues for a consecutive 90 day period, this Option shall cease to vest at the end of such 90-day period (and the Optionee will then vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the end of such 90-day period by (ii) 36), and the Optionee will immediately forfeit any unvested portion of the Option.
	(c)	Death. If the Optionee shall die while employed, this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s death.
	(d)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s termination of employment.
	(e)	Change of Control. This Option shall vest as to all shares immediately on the effective date of a change of control, provided the Optionee was actively employed by the Corporation on such date. For purposes of this Agreement the term “change of control” shall mean and shall be deemed to occur if and when:
		(i)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 40% of more of the combined voting power of the Corporation’s then outstanding securities; or

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Non-Qualified Stock Option Agreement
XXXXXX, XX, XXXX
Page 3.

		(ii)	The individuals who, as of the Grant Date, constituted the Corporation’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Corporation, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
		(iii)	Shareholders of the Corporation approve an agreement, providing for (a) a transaction in which the Corporation will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Corporation’s assets, or (c) a plan of partial or complete liquidation of the Corporation.
	(f)	Involuntary Termination with Severance. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under one of the Corporation’s Severance Plans, the Optionee will immediately vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(g)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then the Optionee will immediately vest in a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(h)	Transfers. If the Optionee shall be transferred from the Corporation to a subsidiary company (being a 50% owned entity within the meaning of Section 425(f) of the Code), or joint venture or similar entity existing as of the date of this Agreement in which the Corporation has at least a 33.33% interest (“joint venture”) or vice versa or from one subsidiary company (or joint venture) to another, the Optionee’s employment shall not be deemed to have terminated. If, while the Optionee is employed by such a subsidiary company or joint venture, such subsidiary company or joint venture shall cease to be a subsidiary company or joint venture as described above and the Optionee is not thereupon transferred to and employed by the Corporation or another subsidiary company or joint venture as described above, then the Optionee’s employment will be treated as a termination due to a divestiture under clause (g) above as of the date that the Optionee’s employer ceases to be such a subsidiary company or joint venture of the Corporation.
	(i)	Retirement. If the Optionee’s employment shall terminate with the consent of the Corporation on or after the Optionee’s attaining age 60, this Option shall vest and be exercisable as to all Shares subject to this Option on the effective termination date of the Optionee’s employment.
5.	Non-Transferability.
	a)	The rights under this Option Agreement shall not be transferable other than by will or the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee except to the extent of a disability (as defined in Section 22(e)(3) of the Code), in which case the Option may be exercised by the Optionee’s legal representative.
	b)	If the Optionee is subject to the Minimum Share Ownership Policy, the Optionee agrees that any shares issued hereunder or pursuant to any Prior Option shall be subject to the restrictions set forth in the Minimum Share Ownership Policy. If the Optionee is not in compliance with the Minimum Share Ownership Policy, the Corporation may terminate the employment of such Optionee and/or the Option shall immediately terminate and cease to be exercisable. The Optionee hereby acknowledges and agrees that the investment risk associated with the retention of any Shares, whether pursuant to the Minimum Share Ownership Policy or otherwise, is the sole responsibility of the Optionee and Optionee hereby holds the Corporation harmless against any claim of loss related to the retention of the Shares.
6.	Exercise. The purchase price of Shares purchased hereunder shall be paid in full with, or in a combination of, (a) cash or (b) shares of the Corporation’s Common Stock that have been owned by the Optionee, and have been fully vested and freely transferable by the Optionee, for at least six months preceding the date of exercise of the Option, duly endorsed or accompanied by stock powers executed in blank. However, the Corporation in its discretion may permit the Optionee (if the

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Non-Qualified Stock Option Agreement
XXXXXX, XX, XXXX
Page 4.

	Optionee owns shares that have been owned by the Optionee, and have been fully vested and fully transferable by the Optionee, for at least six months preceding the date of exercise) to “attest” to his ownership of the number of shares required to pay all or part of the purchase price (and not require delivery of the shares), in which case the Corporation will deliver to the Optionee the number of shares to which the Optionee is entitled, net of the “attested” shares. If payment is made in whole or in part with shares of the Corporation’s Common Stock, the value of such Common Stock shall be the mean between its high and low prices on the day of purchase as reported by The New York Times following the close of business on the date of exercise. No “reload” or other option will be granted by reason of any such exercise. The Optionee agrees that, notwithstanding the terms of any pre-existing agreement between the Corporation and the Optionee, any shares of the Corporation’s Common Stock surrendered (or “attested” to) for payment of the exercise price of any options previously granted by the Corporation to the Optionee (whether granted under the terms of the Amended and Restated Employee Long-Term Incentive Plan or any predecessor program) shall be valued in the manner provided in the preceding sentence except to the extent otherwise expressly provided by the terms of the program document.
7.	Exercise After Termination of Employment, Death or Disability. The provisions covering the exercise of this Option following termination of employment are as follows:
	(a)	Termination in General. If the Optionee shall terminate his employment for any reason other than those described in Section 7(b) through (f), all of the vested percentage of the Option may be exercised for ninety (90) days following such termination (but not beyond the Expiration Date) and the Option shall thereafter expire and cease to be exercisable;
	(b)	Death. If the Optionee shall die while employed, the Option may be exercised through the Expiration Date in respect of all of the Shares subject to the Option. If the Optionee shall die after termination of employment but while the Option is still exercisable, it shall remain exercisable to the same extent through the first anniversary of the date of death but not beyond the Expiration Date;
	(c)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), the Option shall remain exercisable through the Expiration Date;
	(d)	Involuntary Termination with Severance. If the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under the Corporation’s Severance Plans, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(f)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(e)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(g)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(f)	Retirement. If the Optionee’s employment shall terminate as a result of Retirement as defined in Section 4(i) of this Option, all of the Option may be exercised as to all of the Shares subject to the Option through the Expiration Date.
	In no event may any portion of the Option be exercised after the Expiration Date.
8.	Consideration. In consideration for the Option granted by this Option Agreement, the Optionee hereby agrees to be bound by the Nondisclosure and Nonsolicitation provisions set forth in Sections 9 and 10 of this Option Agreement and the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation. For purposes of Sections 9 and 10, the term “Company” shall mean the Corporation, its affiliates, divisions and subsidiaries, or any other entity in which the Corporation, directly or indirectly, controls or has an ownership or equity interest equal to or greater than 25.0% of the combined voting power of the entity’s then outstanding securities, and their respective successors and assigns.
9.	Nondisclosure of Confidential Information.
	(a)	For purposes of this Option Agreement, the term “Confidential Information” shall mean all ideas, inventions, data, databases, know-how, processes, methods, practices, specifications, raw materials and preparations, compositions, designs, devices, fabrication techniques, technical plans, algorithms, computer programs, protocols, client information, medical records, documentation, customer names and lists, supplier names and lists, price lists, supplier names and lists, apparatus, business plans, marketing plans, financial information, chemical and biological reagents, business methods and systems, literary and graphical and audiovisual works and sound recordings, mask works,

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Non-Qualified Stock Option Agreement
XXXXXX, XX, XXXX
Page 5.

	computer programs, and the like, and potential trade names, trademarks, and logos, in whatever form or medium and which have commercial value, and whether or not designated or marked “Confidential” or the like, which the Optionee learns, acquires, conceives, creates, develops, or improves while employed by the Company and which (1) relate to the past, current, or prospective business of the Company or its subsidiaries and (a) which have not previously been publicly disclosed without restrictions on use by the Company, or (b) which Optionee knows or has good reason to know are not generally publicly known; or (2) are received by the Company from a third party under an obligation of confidentiality to the third party.
(b)	The Optionee recognizes and acknowledges that during his or her employment with the Company, the Optionee may be given access to or develop Confidential Information. The Optionee shall not use or disclose (directly or indirectly) any Confidential Information (whether or not developed by the Optionee) at any time or in any manner, except as authorized and required in the course of employment with the Company. The Optionee shall not disclose to the Company or use on behalf of the Company any Confidential Information obtained from any former employer or any other third party. All documents and things embodying Confidential Information, whether prepared by the Optionee or otherwise coming into the Optionee’s possession, are the exclusive property of the Company, and must not be removed from any of its premises except as required in the course of employment with the Company. All such documents and things shall be promptly returned by the Optionee to the Company upon the request of the Company and on any termination of employment with the Company. The Optionee will not remove any Confidential Information such as documents or things or retain them in whole or part in any manner. The Optionee shall ensure that any export of Confidential Information undertaken by the Optionee or with his/her knowledge or approval shall be in compliance with all applicable laws.
(c)	The Optionee shall promptly disclose to the Company all Confidential Information which the Optionee creates, conceives, develops, or improves (either alone or with others) referred to below as a “Creation” while in the employment of the Company, if the Creation either: (1) relates to any actual or demonstrably contemplated business, or research or development project, of the Company or its subsidiaries, or to any reasonable extension or variation thereof; or (2) results from any work performed by the Optionee for the Company; or (3) was created utilizing any of the Company’s equipment, supplies, facilities, time, or Confidential Information. The Optionee shall keep complete, accurate, and authentic records on all Creations in the manner and form requested by the Company. The Optionee shall promptly disclose to the Company, in confidence, all patent, copyright, and trademark applications filed by the Optionee within one (1) year after termination of employment with the Company and which relate to any field in which the Optionee worked at the Company. The Optionee agrees that any such application for a patent, copyright registration, trademark registration, mask work registration, or similar right filed within one (1) year after termination of employment with the Company shall be presumed to relate to a Creation of the Optionee created during employment at the Company, unless the Optionee can prove otherwise.
(d)	The Optionee hereby assigns to the Company all of the Optionee’s rights in all of the above-described Creations. All such Creations that are subject to copyright or mask work protection are explicitly considered by the Optionee and the Company to be works made for hire to the extent permitted by law. To the extent that any such Creations are subject to copyright protection and are not works made for hire, any and all of the Optionee’s copyright and mask work interest therein are hereby assigned by the Optionee to the Company, and are the exclusive property of the Company.
(e)	The Optionee agrees to assist the Company in obtaining and/or maintaining patents, copyrights, trademarks, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company, if and to the extent that the Company, in its sole discretion, requests such assistance, the Optionee shall sign all documents and do all other things deemed necessary by the Company, at the Company’s expense, to obtain and/or maintain such rights, to provide confirmatory evidence of the Optionee’s assignment of such Creations to the Company, to defend them from invalidation, and to protect them against infringement by other parties. The obligations of this paragraph are continuing and survive the termination of the Optionee’s employment with the Company. The Optionee irrevocably appoints the Chief Executive Officer of the Company (with powers of delegation) to act as the Optionee’s agent and attorney-in-fact to perform all acts as the Optionee’s agent and to file, prosecute, and maintain applications and registrations for patents, trademarks, copyrights, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company under this Option Agreement, such appointment being effective both during the Optionee’s employment by Company, and thereafter if the Optionee (1) refuses to perform those acts, or (2) is unavailable, within the meaning of any applicable laws. The Optionee acknowledges that the grant of the foregoing power of attorney is coupled with an interest, is irrevocable, and shall survive his/her death or disability.

Page 5 of 9

Non-Qualified Stock Option Agreement
XXXXXX, XX, XXXX
Page 6.

10.	Nonsolicitation
	(a)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee will not directly or indirectly solicit the Business of any customer of the Company of whom the Optionee acquired knowledge and/or had direct or indirect contact during the one (1) year period prior to the termination of the Optionee’s employment relationship with the Company for any purpose other than to obtain, maintain and/or service the customer’s Business for the Company.
	(b)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee agrees not to, directly or indirectly, recruit or solicit any employees of the Company to work for the Optionee or any other person or entity.
	(c)	As used in this Option Agreement, the following terms shall have these respective definitions:
		(i)	“Current Business” shall mean and include: providing clinical testing information services for the diagnosis, monitoring, and treatment of disease; providing clinical laboratory management services; providing medical informatics services (i.e., the statistical analysis of medical information) and consulting services based on such analysis; providing data analysis, medical information services, and database management services for the health care industry; providing clinical testing information services in support of clinical trials, and clinical testing products for use in clinical trials; providing services of storage, retrieval, and communication of medical information via interactive computer networks; providing to managed care organizations, hospitals, employers, and other institutional healthcare providers access to a network of clinical diagnostic laboratories providing services of processing requests for diagnostic tests, performing tests, reporting test results, and paying claims to network laboratories; providing quality and utilization management; providing consolidated chronological reports in graphical and/or numerical form, representing the results of clinical diagnostic tests performed on individual patients and groups of patients over monitored periods of time, together with analysis of the results; and manufacturing and selling clinical diagnostic assay kits, apparatus, and reagents.
		(ii)	“Business” shall include the Current Business and any other product or service which the Company provided during the one (1) year period prior to the Optionee’s termination of employment and during the one (1) year period following the Optionee’s termination of employment, but the restriction on products and services introduced after the Optionee’s termination of employment shall exclude products and services that were not planned, discussed, or contemplated prior to the Optionee’s termination of employment.
		(iii)	“Indirectly Solicit” shall include, but is not be limited to, providing the Company’s Confidential Information to another individual, or entity, allowing the use of the Optionee’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.

11.

Damages and Injunctive Relief. The Optionee understands that if the terms of Section 9 and/or 10 of this Option Agreement are violated, the Corporation would be seriously and irreparably damaged, and agrees that the Corporation will be entitled to seek appropriate remedies for those damages, including, without limitation, injunctive relief to enforce any provision of this Agreement and all reasonable attorney’s fees incurred by the Corporation to enforce the terms of these Sections.

12.

Forfeiture.The Optionee will immediately forfeit any unexercised portion of the Option for any violations of (i) the terms of Sections 9 and/or 10 of this Agreement and/or (ii) the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation, in addition to any equitable and legal rights the Corporation has or may have. The Optionee understands that the forfeiture of any unexercised portion of the Option is only one element of the damages potentially sustained by the Corporation for a violation of Sections 9 and/or 10 of this Agreement or the non-compete obligation described above, and such forfeiture shall not constitute a release of any claim that the Company may have for damages, past, present, or future.

Page 6 of 9

Non-Qualified Stock Option Agreement
XXXXXX, XX, XXXX
Page 7.

13.	(a) Consent Requirement. If the Corporation shall at any time determine that any consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of this Option, the issuance or purchase of Shares or other rights hereunder, or the taking of any other action hereunder (a “Plan Action”), then no such Plan Action shall be taken, in whole or in part, unless and until such consent shall have been effected or obtained to the full satisfaction of the Corporation.
	(b) Definition of Consent. The term “consent” as used herein with respect to any action referred to in Section 13(a) means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the Optionee with respect to the disposition of Shares, or with respect to any other matter, which the Corporation shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies, and (iv) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Corporation. Nothing herein shall require the Corporation to list, register or qualify the Shares of its common stock on any securities exchange.
14.	Invalidity and Enforcement. If any provision of this Agreement is deemed invalid or unenforceable, either in whole or in part, this Option Agreement will be deemed amended to delete or to modify, as set forth in this Section, the offending provision or provisions and to alter the bounds of this Agreement in order to render it valid and enforceable. The Corporation and the Optionee specifically request that any court having jurisdiction over any dispute relating to this Option Agreement modify, if possible, any offending provision so that such provision will be enforceable to the maximum extent permitted by State law.
15.	Employee at Will. The Optionee understands that his/her employment with the Corporation is at will and that it can be terminated at any time by the Optionee and/or the Corporation.
16.	Enforcement by Successors and Assigns. The Corporation and any of its successors or assignees may enforce the Corporation’s rights under this Option Agreement.
17.	Entire Agreement. The Agreement supersedes any prior agreement or understandings between the Optionee and the Company with respect to nonsolicitation, nonuse, and non-disclosure and constitutes the entire agreement between the Corporation and the Optionee. No modification of this Option Agreement will have any force or effect unless such modification is in writing, signed by the Chief Executive Officer of the Corporation and the Optionee, and expressly indicates an intent to modify this Option Agreement.
18.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Agreement shall be finally determined by the Corporation’s Compensation Committee in its absolute discretion.
19.	Notice of Exercise. The Optionee may exercise the Option, in accordance with the procedures specified by the Corporation from time to time.
20.	Rights Prior to Exercise. The Optionee shall not have any rights as a stockholder with respect to any Shares subject to this Option prior to the date on which he/she is recorded as the holder of such Shares on the records of the Corporation.
21.	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 this Option.
22.	Governing Law. This Option Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.
23.	Acknowledgements. By execution of this Non-Qualified Stock Option Grant Agreement, the Optionee agrees that he/she has received and reviewed a copy of: (a) the Prospectus (link to Prospectus: http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_option/stock_option.htm) relating to the Corporation’s Employee Equity Participation Program and; (b) the Quest Diagnostics Incorporated 2005 Annual Report (link to 2005 Annual Report: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700 to Shareholders and Form 10-K); (c) the Corporation’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Optionee further agrees to fully comply with the terms of the Policy;

Page 7 of 9

Non-Qualified Stock Option Agreement
XXXXXX, XX, XXXX
Page 8.

(d)	the Corporation’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and
(e)	the Corporation’s Equity Award Eligibility Policy attached hereto as Annex A.

OPTIONEE:

By:

Page 8 of 9

Non-Qualified Stock Option Agreement
XXXXXX, XX, XXXX
Page 9.

Annex A
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility
•	Unreduced Work Schedule
•	One of the following salary grades:
	•	Corporate VP or Higher
	•	Salary Grade 53 or Higher
	•	Research & Development - Grade RD6 or Higher
	•	Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company’s Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

Page 9 of 9

EX-10

Exhibit 10.2

QUEST DIAGNOSTICS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT (CEO)

This Non-Qualified Stock Option Agreement (the “Option Agreement”), dated as of February 15, 2006 (the “Grant Date”), is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, New Jersey 07071 (the “Corporation”) and Mohapatra, Surya N. (the “Optionee”) [address].

1.	Conditions. This Option Agreement is subject in all respects to the Corporation’s Amended and Restated Long-Term Employee Incentive Plan, which is incorporated herein by reference. The Optionee acknowledges that he/she has read the terms of the Amended and Restated Long-Term Employee Incentive Plan and that those terms shall govern in the event of any conflict between them and those of this Option Agreement. Subject to the foregoing, the terms of the Employment Agreement dated as of November 9, 2003 between the Corporation and the Optionee (the "Employment Agreement") shall govern in the event of any conflict between them and the terms of this Option Agreement. Capitalized terms not defined herein have the meaning set forth in the Employment Agreement.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that all options granted to the Optionee by the Corporation prior to the date hereof (the “Prior Options”) shall be subject to forfeiture pursuant to paragraph 4(h) of this Option Agreement (for false attestation under the Executive Share Ownership Guidelines of the Corporation (the “ Minimum Share Ownership Policy”)), the Shares obtained on exercise of such Prior Options after the date hereof shall be subject to the Minimum Share Ownership Policy pursuant to paragraph 5(b) of this Option Agreement and the terms of paragraphs 4(h) and 5(b) hereof are made a part of the terms of each of the Prior Options.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that this Option shall be subject to forfeiture pursuant to paragraph 4(h) of this Agreement.
	This Option Agreement shall become effective only after the Optionee has executed and returned to the Executive Compensation Department (to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) a signed copy of this Option Agreement and shall be revoked if not executed and returned to Lisa Zajac within thirty (30) days of receipt by the Optionee..
2.	Award of Option. The Corporation hereby awards to the Optionee an option (the “Option”) to purchase from the Corporation such number of shares of the Corporation’s common stock (the “Shares”) at the exercise price set forth in this Option Agreement (the “Exercise Price”) below. This option shall vest equally over a three-year period. If the foregoing results in a fractional number of Shares subject to the Option vesting on any vesting date, the number of Shares subject to the Option vesting on the first and second vesting dates shall be rounded down to the previous whole number of Shares and the Shares subject to the Option vesting on the third vesting date shall be rounded up to the next whole number of Shares, as shall be necessary in order to result in a vesting of 100% of the Shares subject to the Option. The Compensation Committee of the Corporation may, in its sole discretion, convert this Option at any time to a stock settled stock appreciation grant.

Number of Shares Subject to Option: 275,000

Exercise Price per Share: $52.235                   

Expiration Date: February 15, 2013                

Vesting Schedule:

		Number of Shares Subject to Option
Vesting Dates	% of Grant	Incremental	Cumulative
February 15, 2007	33.33%	91,666	91,666
February 15, 2008	33.33%	91,667	183,333
February 15, 2009	33.34%	91,667	275,000

This option shall expire, and no shares may be purchased pursuant to this Option, after the expiration date set forth above (the “Expiration Date”).

Page 1 of 6
EOAgmt

Non-Qualified Stock Option Agreement
February 15, 2006
Page 2.

3.	Not An Incentive Stock Option. This Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and this Agreement shall be construed and interpreted in accordance with such intention.
4.	Vesting. Except as otherwise provided below, the Option shall vest and become exercisable as to the percentage of Shares subject to the Option on the vesting dates set forth above (the “Vesting Dates”).
	(a)	Involuntary Termination or Voluntary Termination for Good Reason. If the Optionee’s employment is terminated by the Company (other than as contemplated by clauses (b), (d) (e) or (f)), or the Optionee terminates his employment for Good Reason prior to the third anniversary of the date of this Agreement, the portion of the Option scheduled to vest within the 24 month period following termination will vest on the appropriate date(s) as if the Optionee remained an employee. All other unvested options shall be cancelled on the Optionee’s date of termination; provided, however, that if the Optionee’s termination of employment occurs within 90 days prior to a Change in Control, then the portion of the Option scheduled to vest within the 36 month period following termination will vest on the appropriate date(s) as if the Optionee remained an employee
	(b)	Termination for Cause. If the Optionee’s employment is terminated for Cause, this Option shall terminate and be of no further force or effect.
	(c)	Non-Renewal of Employment Agreement. If the Optionee’s employment is terminated as a result of the non-renewal of the Employment Agreement, the portion of the Option scheduled to vest within the 18 -month period following termination will vest on the appropriate date(s) as if the Optionee remained an employee. All other unvested options shall be cancelled on the Optionee’s date of termination.
	(d)	Other Voluntary Termination. -- If the Optionee terminates his employment other than for Good Reason or Disability or following non-renewal of the Employment Agreement, the Optionee will vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i)_the number of whole months from the most recent anniversary of the grant date (February 15) to the termination date of the Optionee's employment by (ii) 36, and all unvested options will be cancelled on the effective termination date of the Optionee’s employment.
	(e)	Death. If the Optionee shall die while employed, this Option shall vest on the date of the Optionee’s death.
	(f)	Disability. If the Optionee’s employment shall terminate as a result of Disability, this Option shall vest on the date of the Optionee’s termination of employment.
	(g)	Change in Control. All options will vest immediately on a Change in Control.
	(h)	Breach of Share Ownership Guidelines. Any false attestation made under the Minimum Share Ownership Policy may result in the immediate cancellation of this Option and all Prior Options (to the extent not exercised), whether or not vested.
5.	Non-Transferability.
	(a)	The rights under this Option Agreement shall not be transferable other than by will or the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee except to the extent of a disability (as defined in Section 22(e)(3) of the Code), in which case the Option may be exercised by the Optionee’s legal representative.
	(b)	If the Optionee is subject to the Minimum Share Ownership Policy, the Optionee agrees that any shares issued hereunder or pursuant to any Prior Option shall be subject to the restrictions set forth in the Minimum Share Ownership Policy. If the Optionee is not in compliance with the Minimum Share Ownership Policy, the Corporation may terminate the employment of such Optionee and/or the Option shall immediately terminate and cease to be exercisable. The Optionee hereby acknowledges and agrees that the investment risk associated with the retention of any Shares, whether pursuant to the Minimum Share Ownership Policy or otherwise, is the sole responsibility of the Optionee and Optionee hereby holds the Corporation harmless against any claim of loss related to the retention of the Shares.
6.	Exercise. The purchase price of Shares purchased hereunder shall be paid in full with, or in a combination of,
	(a)	cash or
	(b)	shares of the Corporation’s Common Stock that have been owned by the Optionee, and have been fully vested and freely transferable by the Optionee, for at least six months preceding the date of exercise of the Option, duly endorsed or accompanied by stock powers executed in blank. However, the Corporation in its discretion may permit the Optionee (if the Optionee owns shares that have been owned by the Optionee, and have been fully vested and fully

Page 2 of 6

Non-Qualified Stock Option Agreement
February 15, 2006
Page 3.

		transferable by the Optionee, for at least six months preceding the date of exercise) to “attest” to his ownership of the number of shares required to pay all or part of the purchase price (and not require delivery of the shares), in which case the Corporation will deliver to the Optionee the number of shares to which the Optionee is entitled, net of the “attested” shares. If payment is made in whole or in part with shares of the Corporation’s Common Stock, the value of such Common Stock shall be the mean between its high and low prices on the day of purchase as reported by The New York Times following the close of business on the date of exercise. No “reload” or other option will be granted by reason of any such exercise. The Optionee agrees that, notwithstanding the terms of any pre-existing agreement between the Corporation and the Optionee, any shares of the Corporation’s Common Stock surrendered (or “attested” to) for payment of the exercise price of any options previously granted by the Corporation to the Optionee (whether granted under the terms of the Amended and Restated Employee Long-Term Incentive Plan or any predecessor program) shall be valued in the manner provided in the preceding sentence except to the extent otherwise expressly provided by the terms of the program document.
7.	Exercise After Termination of Employment, Death or Disability. The provisions covering the exercise of this Option following termination of employment are as follows:
	(a)	Termination as a result of death or Disability —If the Optionee’s employment is terminated by reason of death or Disability, all vested options may be exercised through the Expiration Date but only from the earlier of (i) one year after the option is vested or (ii) one year after the date of termination.
	(b)	Termination after a Change in Control. If the Optionee’s employment is terminated for any reason other than for Cause (whether voluntary or involuntary) after a Change in Control, all vested Options may be exercised through the Expiration Date but only from the earlier of (i) one year after the option is vested or (ii) one year after the date of termination.
	(c)	Termination by the Optionee for Good Reason . If the Optionee terminates his employment for Good Reason, all vested options may be exercised through the Expiration Date but only from the earlier of (i) one year after the option is vested or (ii) one year after the date of termination.
	(d)	Non-Renewal of Employment Agreement. If the Optionee’s employment is terminated as a result of the non-renewal of the Employment Agreement, all vested options may be exercised through the Expiration Date but only from the earlier of (i) one year after the option is vested or (ii) one year after the date of termination.
	(e)	Other Termination by the Optionee. If the Optionee terminates his employment other than as contemplated by clauses (a), (b), (c) or (d), all vested options may be exercised through the Expiration Date but only from the earlier of (i) one year after the option is exercised or (ii) one year after the date of termination.
	(f)	Termination for Other Reasons -- If the Optionee’s employment is terminated by the Corporation for any reason other than as contemplated by clauses (a), (b) or (d) or as contemplated by Section 4(b), all vested options may be exercised through the Expiration Date but only from the earlier of (i) one year after the option is vested or (ii) one year after the date of termination.
	In no event may any portion of the Option be exercised after the Expiration Date.
8.	Consideration. In consideration for the Option granted by this Option Agreement, the Optionee hereby agrees to be bound by the Nondisclosure provisions set forth in Section 9 of this Option Agreement For purposes of Section 9, the term “Company” shall mean the Corporation, its affiliates, divisions and subsidiaries, or any other entity in which the Corporation, directly or indirectly, controls or has an ownership or equity interest equal to or greater than 25.0% of the combined voting power of the entity’s then outstanding securities, and their respective successors and assigns.
9.	Nondisclosure of Confidential Information.
	(a)	For purposes of this Option Agreement, the term “Confidential Information” shall mean all ideas, inventions, data, databases, know-how, processes, methods, practices, specifications, raw materials and preparations, compositions, designs, devices, fabrication techniques, technical plans, algorithms, computer programs, protocols, client information, medical records, documentation, customer names and lists, supplier names and lists, price lists, supplier names and lists, apparatus, business plans, marketing plans, financial information, chemical and biological reagents, business methods and systems, literary and graphical and audiovisual works and sound recordings, mask works, computer programs, and the like, and potential trade names, trademarks, and logos, in whatever form or medium and which have commercial value, and whether or not designated or marked “Confidential” or the like, which the Optionee learns, acquires, conceives, creates, develops, or improves while employed by the Company and which (1) relate to the past, current, or prospective business of the Company or its subsidiaries and (a) which have not previously been publicly

Page 3 of 6

Non-Qualified Stock Option Agreement
February 15, 2006
Page 4.

		disclosed without restrictions on use by the Company, or (b) which Optionee knows or has good reason to know are not generally publicly known; or (2) are received by the Company from a third party under an obligation of confidentiality to the third party.
	(b)	The Optionee recognizes and acknowledges that during his or her employment with the Company, the Optionee may be given access to or develop Confidential Information. The Optionee shall not use or disclose (directly or indirectly) any Confidential Information (whether or not developed by the Optionee) at any time or in any manner, except as authorized and required in the course of employment with the Company. The Optionee shall not disclose to the Company or use on behalf of the Company any Confidential Information obtained from any former employer or any other third party. All documents and things embodying Confidential Information, whether prepared by the Optionee or otherwise coming into the Optionee’s possession, are the exclusive property of the Company, and must not be removed from any of its premises except as required in the course of employment with the Company. All such documents and things shall be promptly returned by the Optionee to the Company upon the request of the Company and on any termination of employment with the Company. The Optionee will not remove any Confidential Information such as documents or things or retain them in whole or part in any manner. The Optionee shall ensure that any export of Confidential Information undertaken by the Optionee or with his/her knowledge or approval shall be in compliance with all applicable laws.
	(c)	The Optionee shall promptly disclose to the Company all Confidential Information which the Optionee creates, conceives, develops, or improves (either alone or with others) referred to below as a “Creation” while in the employment of the Company, if the Creation either: (1) relates to any actual or demonstrably contemplated business, or research or development project, of the Company or its subsidiaries, or to any reasonable extension or variation thereof; or (2) results from any work performed by the Optionee for the Company; or (3) was created utilizing any of the Company’s equipment, supplies, facilities, time, or Confidential Information. The Optionee shall keep complete, accurate, and authentic records on all Creations in the manner and form requested by the Company. The Optionee shall promptly disclose to the Company, in confidence, all patent, copyright, and trademark applications filed by the Optionee within one (1) year after termination of employment with the Company and which relate to any field in which the Optionee worked at the Company. The Optionee agrees that any such application for a patent, copyright registration, trademark registration, mask work registration, or similar right filed within one (1) year after termination of employment with the Company shall be presumed to relate to a Creation of the Optionee created during employment at the Company, unless the Optionee can prove otherwise.
	(d)	The Optionee hereby assigns to the Company all of the Optionee’s rights in all of the above-described Creations. All such Creations that are subject to copyright or mask work protection are explicitly considered by the Optionee and the Company to be works made for hire to the extent permitted by law. To the extent that any such Creations are subject to copyright protection and are not works made for hire, any and all of the Optionee’s copyright and mask work interest therein are hereby assigned by the Optionee to the Company, and are the exclusive property of the Company.
	(e)	The Optionee agrees to assist the Company in obtaining and/or maintaining patents, copyrights, trademarks, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company, if and to the extent that the Company, in its sole discretion, requests such assistance, the Optionee shall sign all documents and do all other things deemed necessary by the Company, at the Company’s expense, to obtain and/or maintain such rights, to provide confirmatory evidence of the Optionee’s assignment of such Creations to the Company, to defend them from invalidation, and to protect them against infringement by other parties. The obligations of this paragraph are continuing and survive the termination of the Optionee’s employment with the Company. The Optionee irrevocably appoints the Chief Executive Officer of the Company (with powers of delegation) to act as the Optionee’s agent and attorney-in-fact to perform all acts as the Optionee’s agent and to file, prosecute, and maintain applications and registrations for patents, trademarks, copyrights, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company under this Option Agreement, such appointment being effective both during the Optionee’s employment by Company, and thereafter if the Optionee (1) refuses to perform those acts, or (2) is unavailable, within the meaning of any applicable laws. The Optionee acknowledges that the grant of the foregoing power of attorney is coupled with an interest, is irrevocable, and shall survive his/her death or disability.
10.	Damages and Injunctive Relief. The Optionee understands that if the terms of Section 9 of this Option Agreement are violated, the Corporation would be seriously and irreparably damaged, and agrees that the Corporation will be entitled to seek appropriate remedies for those damages, including, without limitation, injunctive relief to enforce any provision of this Agreement and all reasonable attorney’s fees incurred by the Corporation to enforce the terms of Section 9.

Page 4 of 6

Non-Qualified Stock Option Agreement
February 15, 2006
Page 5.

11.	Forfeiture. The Optionee will immediately forfeit any unexercised portion of the Option for any violations of (i) the terms of Section 9 of this Agreement and/or (ii) the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation, in addition to any equitable and legal rights the Corporation has or may have. The Optionee understands that the forfeiture of any unexercised portion of the Option is only one element of the damages potentially sustained by the Corporation for a violation of Section 9 of this Agreement or the non-compete obligation described above, and such forfeiture shall not constitute a release of any claim that the Company may have for damages, past, present, or future.
12.	Consent Requirement.
	(a)	If the Corporation shall at any time determine that any consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of this Option, the issuance or purchase of Shares or other rights hereunder, or the taking of any other action hereunder (a “Plan Action”), then no such Plan Action shall be taken, in whole or in part, unless and until such consent shall have been effected or obtained to the full satisfaction of the Corporation.
	(b)	The term “consent” as used herein with respect to any action referred to in Section 12(a) means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the Optionee with respect to the disposition of Shares, or with respect to any other matter, which the Corporation shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies, and (iv) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Corporation. Nothing herein shall require the Corporation to list, register or qualify the Shares of its common stock on any securities exchange.
13.	Invalidity and Enforcement. If any provision of this Agreement is deemed invalid or unenforceable, either in whole or in part, this Option Agreement will be deemed amended to delete or to modify, as set forth in this Section, the offending provision or provisions and to alter the bounds of this Agreement in order to render it valid and enforceable. The Corporation and the Optionee specifically request that any court having jurisdiction over any dispute relating to this Option Agreement modify, if possible, any offending provision so that such provision will be enforceable to the maximum extent permitted by State law.
14.	Employee at Will. The Optionee understands that his/her employment with the Corporation is at will and that it can be terminated at any time by the Optionee and/or the Corporation, subject to Optionee’s rights under the Employment Agreement.
15.	Enforcement by Successors and Assigns. The Corporation and any of its successors or assignees may enforce the Corporation’s rights under this Option Agreement.
16.	Entire Agreement. The Agreement supersedes any prior agreement or understandings between the Optionee and the Company with respect to nonuse and non-disclosure and constitutes the entire agreement between the Corporation and the Optionee. No modification of this Option Agreement will have any force or effect unless such modification is in writing, signed by the Chief Executive Officer of the Corporation and the Optionee, and expressly indicates an intent to modify this Option Agreement.
17.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Agreement shall be finally determined by the Corporation’s Compensation Committee in its absolute discretion.
18.	Notice of Exercise. The Optionee may exercise the Option, in accordance with the procedures specified by the Corporation from time to time.
19.	Rights Prior to Exercise. The Optionee shall not have any rights as a stockholder with respect to any Shares subject to this Option prior to the date on which he/she is recorded as the holder of such Shares on the records of the Corporation.
20.	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 this Option.

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 6.

21.	Governing Law. This Option Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.
22.	Acknowledgements. By execution of this Non-Qualified Stock Option Grant Agreement, the Optionee agrees that he/she has received and reviewed a copy of:
	(a) the Prospectus (link to Prospectus: http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_option/stock_option.htm) relating to the Corporation’s Employee Equity Participation Program and;
	(b) the Quest Diagnostics Incorporated 2005 Annual Report (link to 2005 Annual Report: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700 to Shareholders and Form 10-K);
	(c) the Corporation’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Optionee further agrees to fully comply with the terms of the Policy; and the Corporation’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm);

OPTIONEE:

By:
	Mohapatra, Surya N.

Page 6 of 6

EX-10

Exhibit 10.3

QUEST DIAGNOSTICS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT

This Non-Qualified Stock Option Agreement (the “Option Agreement”), dated as of February 15, 2006 (the “Grant Date”), is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, New Jersey 07071 (the “Corporation”) and Hagemann, Robert (the “Optionee”) [address].

1.	Conditions. This Option Agreement is subject in all respects to the Corporation’s Amended and Restated Long-Term Employee Incentive Plan, which is incorporated herein by reference. The Optionee acknowledges that he/she has read the terms of the Amended and Restated Long-Term Employee Incentive Plan and that those terms shall govern in the event of any conflict between them and those of this Option Agreement.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that all options granted to the Optionee by the Corporation prior to the date hereof (the “Prior Options”) shall be subject to forfeiture pursuant to paragraph 4(b)(ii) of this Option Agreement (for false attestation under the Executive Share Ownership Guidelines of the Corporation (the “ Minimum Share Ownership Policy”)), the Shares obtained on exercise of such Prior Options after the date hereof shall be subject to the Minimum Share Ownership Policy pursuant to paragraph 5(b) of this Option Agreement and the terms of paragraphs 4(b)(ii) and 5(b) hereof are made a part of the terms of each of the Prior Options.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that this Option shall be subject to forfeiture pursuant to paragraph 4(b)(iii) of this Agreement.
	This Option Agreement shall become effective only after the Optionee has executed and returned to the Executive Compensation Department (to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) a signed copy of this Option Agreement and shall be revoked if not executed and returned to Lisa Zajac within thirty (30) days of receipt by the Optionee..
2.	Award of Option. The Corporation hereby awards to the Optionee an option (the “Option”) to purchase from the Corporation such number of shares of the Corporation’s common stock (the “Shares”) at the exercise price set forth in this Option Agreement (the “Exercise Price”) below. This option shall vest equally over a three-year period. If the foregoing results in a fractional number of Shares subject to the Option vesting on any vesting date, the number of Shares subject to the Option vesting on the first and second vesting dates shall be rounded down to the previous whole number of Shares and the Shares subject to the Option vesting on the third vesting date shall be rounded up to the next whole number of Shares, as shall be necessary in order to result in a vesting of 100% of the Shares subject to the Option.The Compensation Committee of the Corporation may, in its sole discretion, convert this Option at any time to a stock settled stock appreciation grant.

Number of Shares Subject to Option: 113,334

Exercise Price per Share: $52.235

Expiration Date: February 15, 2013

Vesting Schedule:

			Number of Shares Subject to Option
Vesting Dates	% of Grant		Incremental	Cumulative
February 15, 2007	33.33	%	37,778	37,778
February 15, 2008	33.33	%	37,778	75,556
February 15, 2009	33.34	%	37,778	113,334

This option shall expire, and no shares may be purchased pursuant to this Option, after the expiration date set forth above (the “Expiration Date”).

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EOAgmt

Non-Qualified Stock Option Agreement
February 15, 2006
Page 2.

3.	Not An Incentive Stock Option. This Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and this Agreement shall be construed and interpreted in accordance with such intention.
4.	Vesting. Except as otherwise provided below, the Option shall vest and become exercisable as to the percentage of Shares subject to the Option on the vesting dates [set forth above][set forth on the “Summary Grant” page at the Smith Barney website] (the “Vesting Dates”).
	(a)	Termination. Unless the Optionee’s employment is terminated for one of the reasons set forth in Section 4(b) through (i), at the Optionee’s termination of employment prior to the third anniversary of the date of this Agreement, the Optionee will vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
		Notwithstanding anything to the contrary contained herein, if the Optionee is on a leave of absence approved by the Corporation for medical, personal, educational and/or other permissible purposes pursuant to policies of the Corporation as in effect on the date hereof, for a consecutive twelve-month period, such Optionee will be deemed terminated for purposes of this Agreement on the twelve month anniversary of the commencement of such leave of absence and this Option shall cease to vest at the end of such twelve-month period and the Optionee will forfeit any unvested portion of the Option.
	(b)	Cause, Dereliction of Duties or Harmful Acts; Breach of Share Ownership Guidelines; Loss of Equity Award Eligibility Status. (i) If the Optionee shall cause the Corporation to suffer financial harm or damage to its reputation (either before or after termination of employment) through (x) dishonesty, (y) violation of law in the course of the Optionee’s employment or violation of the Corporation’s Corporate Compliance Manual and compliance bulletins or other written policies, or (z) material deviation from the duties owed the Corporation by the Optionee, this Option, whether or not vested, shall expire and be cancelled to the extent it has not been exercised and be of no further force or effect.
		(ii) If the Optionee is subject to the Minimum Share Ownership Policy, any false attestation made under the Minimum Share Ownership Policy may result in the immediate cancellation of this Option and all Prior Options (to the extent not exercised), whether or not vested.
		(iii) If the Optionee’s employment status in the Corporation is changed such that the Optionee will no longer be eligible to receive options pursuant to the Equity Award Eligibility Policy of the Corporation as in effect on the date hereof and attached as Annex A to this Agreement and such changed status continues for a consecutive 90 day period, this Option shall cease to vest at the end of such 90-day period (and the Optionee will then vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the end of such 90-day period by (ii) 36), and the Optionee will immediately forfeit any unvested portion of the Option.
	(c)	Death. If the Optionee shall die while employed, this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s death.
	(d)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s termination of employment.
	(e)	Change of Control. This Option shall vest as to all shares immediately on the effective date of a change of control, provided the Optionee was actively employed by the Corporation on such date. For purposes of this Agreement the term “change of control” shall mean and shall be deemed to occur if and when:
		(i)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 40% of more of the combined voting power of the Corporation’s then outstanding securities; or

Page 2 of 9

Non-Qualified Stock Option Agreement
February 15, 2006
Page 3.

		(ii)	The individuals who, as of the Grant Date, constituted the Corporation’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Corporation, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
		(iii)	Shareholders of the Corporation approve an agreement, providing for (a) a transaction in which the Corporation will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Corporation’s assets, or (c) a plan of partial or complete liquidation of the Corporation.
	(f)	Involuntary Termination with Severance. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under one of the Corporation’s Severance Plans, the Optionee will immediately vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(g)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then the Optionee will immediately vest in a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(h)	Transfers. If the Optionee shall be transferred from the Corporation to a subsidiary company (being a 50% owned entity within the meaning of Section 425(f) of the Code), or joint venture or similar entity existing as of the date of this Agreement in which the Corporation has at least a 33.33% interest (“joint venture”) or vice versa or from one subsidiary company (or joint venture) to another, the Optionee’s employment shall not be deemed to have terminated. If, while the Optionee is employed by such a subsidiary company or joint venture, such subsidiary company or joint venture shall cease to be a subsidiary company or joint venture as described above and the Optionee is not thereupon transferred to and employed by the Corporation or another subsidiary company or joint venture as described above, then the Optionee’s employment will be treated as a termination due to a divestiture under clause (g) above as of the date that the Optionee’s employer ceases to be such a subsidiary company or joint venture of the Corporation.
	(i)	Retirement. If the Optionee’s employment shall terminate with the consent of the Corporation on or after the Optionee’s attaining age 60, this Option shall vest and be exercisable as to all Shares subject to this Option on the effective termination date of the Optionee’s employment.
5.	Non-Transferability.
	a)	The rights under this Option Agreement shall not be transferable other than by will or the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee except to the extent of a disability (as defined in Section 22(e)(3) of the Code), in which case the Option may be exercised by the Optionee’s legal representative.
	b)	If the Optionee is subject to the Minimum Share Ownership Policy, the Optionee agrees that any shares issued hereunder or pursuant to any Prior Option shall be subject to the restrictions set forth in the Minimum Share Ownership Policy. If the Optionee is not in compliance with the Minimum Share Ownership Policy, the Corporation may terminate the employment of such Optionee and/or the Option shall immediately terminate and cease to be exercisable. The Optionee hereby acknowledges and agrees that the investment risk associated with the retention of any Shares, whether pursuant to the Minimum Share Ownership Policy or otherwise, is the sole responsibility of the Optionee and Optionee hereby holds the Corporation harmless against any claim of loss related to the retention of the Shares.
6.	Exercise. The purchase price of Shares purchased hereunder shall be paid in full with, or in a combination of, (a) cash or (b) shares of the Corporation’s Common Stock that have been owned by the Optionee, and have been fully vested and freely transferable by the Optionee, for at least six months preceding the date of exercise of the Option, duly endorsed or accompanied by stock powers executed in blank. However, the Corporation in its discretion may permit the Optionee (if the

Page 3 of 9

Non-Qualified Stock Option Agreement
February 15, 2006
Page 4.

	Optionee owns shares that have been owned by the Optionee, and have been fully vested and fully transferable by the Optionee, for at least six months preceding the date of exercise) to “attest” to his ownership of the number of shares required to pay all or part of the purchase price (and not require delivery of the shares), in which case the Corporation will deliver to the Optionee the number of shares to which the Optionee is entitled, net of the “attested” shares. If payment is made in whole or in part with shares of the Corporation’s Common Stock, the value of such Common Stock shall be the mean between its high and low prices on the day of purchase as reported by The New York Times following the close of business on the date of exercise. No “reload” or other option will be granted by reason of any such exercise. The Optionee agrees that, notwithstanding the terms of any pre-existing agreement between the Corporation and the Optionee, any shares of the Corporation’s Common Stock surrendered (or “attested” to) for payment of the exercise price of any options previously granted by the Corporation to the Optionee (whether granted under the terms of the Amended and Restated Employee Long-Term Incentive Plan or any predecessor program) shall be valued in the manner provided in the preceding sentence except to the extent otherwise expressly provided by the terms of the program document.
7.	Exercise After Termination of Employment, Death or Disability. The provisions covering the exercise of this Option following termination of employment are as follows:
	(a)	Termination in General. If the Optionee shall terminate his employment for any reason other than those described in Section 7(b) through (f), all of the vested percentage of the Option may be exercised for ninety (90) days following such termination (but not beyond the Expiration Date) and the Option shall thereafter expire and cease to be exercisable;
	(b)	Death. If the Optionee shall die while employed, the Option may be exercised through the Expiration Date in respect of all of the Shares subject to the Option. If the Optionee shall die after termination of employment but while the Option is still exercisable, it shall remain exercisable to the same extent through the first anniversary of the date of death but not beyond the Expiration Date;
	(c)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), the Option shall remain exercisable through the Expiration Date;
	(d)	Involuntary Termination with Severance. If the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under the Corporation’s Severance Plans, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(f)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(e)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(g)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(f)	Retirement. If the Optionee’s employment shall terminate as a result of Retirement as defined in Section 4(i) of this Option, all of the Option may be exercised as to all of the Shares subject to the Option through the Expiration Date.
	In no event may any portion of the Option be exercised after the Expiration Date.
8.	Consideration. In consideration for the Option granted by this Option Agreement, the Optionee hereby agrees to be bound by the Nondisclosure and Nonsolicitation provisions set forth in Sections 9 and 10 of this Option Agreement and the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation. For purposes of Sections 9 and 10, the term “Company” shall mean the Corporation, its affiliates, divisions and subsidiaries, or any other entity in which the Corporation, directly or indirectly, controls or has an ownership or equity interest equal to or greater than 25.0% of the combined voting power of the entity’s then outstanding securities, and their respective successors and assigns.
9.	Nondisclosure of Confidential Information.
	(a)	For purposes of this Option Agreement, the term “Confidential Information” shall mean all ideas, inventions, data, databases, know-how, processes, methods, practices, specifications, raw materials and preparations, compositions, designs, devices, fabrication techniques, technical plans, algorithms, computer programs, protocols, client information, medical records, documentation, customer names and lists, supplier names and lists, price lists, supplier names and lists, apparatus, business plans, marketing plans, financial information, chemical and biological reagents, business methods and systems, literary and graphical and audiovisual works and sound recordings, mask works,

Page 4 of 9

Non-Qualified Stock Option Agreement
February 15, 2006
Page 5.

	computer programs, and the like, and potential trade names, trademarks, and logos, in whatever form or medium and which have commercial value, and whether or not designated or marked “Confidential” or the like, which the Optionee learns, acquires, conceives, creates, develops, or improves while employed by the Company and which (1) relate to the past, current, or prospective business of the Company or its subsidiaries and (a) which have not previously been publicly disclosed without restrictions on use by the Company, or (b) which Optionee knows or has good reason to know are not generally publicly known; or (2) are received by the Company from a third party under an obligation of confidentiality to the third party.
(b)	The Optionee recognizes and acknowledges that during his or her employment with the Company, the Optionee may be given access to or develop Confidential Information. The Optionee shall not use or disclose (directly or indirectly) any Confidential Information (whether or not developed by the Optionee) at any time or in any manner, except as authorized and required in the course of employment with the Company. The Optionee shall not disclose to the Company or use on behalf of the Company any Confidential Information obtained from any former employer or any other third party. All documents and things embodying Confidential Information, whether prepared by the Optionee or otherwise coming into the Optionee’s possession, are the exclusive property of the Company, and must not be removed from any of its premises except as required in the course of employment with the Company. All such documents and things shall be promptly returned by the Optionee to the Company upon the request of the Company and on any termination of employment with the Company. The Optionee will not remove any Confidential Information such as documents or things or retain them in whole or part in any manner. The Optionee shall ensure that any export of Confidential Information undertaken by the Optionee or with his/her knowledge or approval shall be in compliance with all applicable laws.
(c)	The Optionee shall promptly disclose to the Company all Confidential Information which the Optionee creates, conceives, develops, or improves (either alone or with others) referred to below as a “Creation” while in the employment of the Company, if the Creation either: (1) relates to any actual or demonstrably contemplated business, or research or development project, of the Company or its subsidiaries, or to any reasonable extension or variation thereof; or (2) results from any work performed by the Optionee for the Company; or (3) was created utilizing any of the Company’s equipment, supplies, facilities, time, or Confidential Information. The Optionee shall keep complete, accurate, and authentic records on all Creations in the manner and form requested by the Company. The Optionee shall promptly disclose to the Company, in confidence, all patent, copyright, and trademark applications filed by the Optionee within one (1) year after termination of employment with the Company and which relate to any field in which the Optionee worked at the Company. The Optionee agrees that any such application for a patent, copyright registration, trademark registration, mask work registration, or similar right filed within one (1) year after termination of employment with the Company shall be presumed to relate to a Creation of the Optionee created during employment at the Company, unless the Optionee can prove otherwise.
(d)	The Optionee hereby assigns to the Company all of the Optionee’s rights in all of the above-described Creations. All such Creations that are subject to copyright or mask work protection are explicitly considered by the Optionee and the Company to be works made for hire to the extent permitted by law. To the extent that any such Creations are subject to copyright protection and are not works made for hire, any and all of the Optionee’s copyright and mask work interest therein are hereby assigned by the Optionee to the Company, and are the exclusive property of the Company.
(e)	The Optionee agrees to assist the Company in obtaining and/or maintaining patents, copyrights, trademarks, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company, if and to the extent that the Company, in its sole discretion, requests such assistance, the Optionee shall sign all documents and do all other things deemed necessary by the Company, at the Company’s expense, to obtain and/or maintain such rights, to provide confirmatory evidence of the Optionee’s assignment of such Creations to the Company, to defend them from invalidation, and to protect them against infringement by other parties. The obligations of this paragraph are continuing and survive the termination of the Optionee’s employment with the Company. The Optionee irrevocably appoints the Chief Executive Officer of the Company (with powers of delegation) to act as the Optionee’s agent and attorney-in-fact to perform all acts as the Optionee’s agent and to file, prosecute, and maintain applications and registrations for patents, trademarks, copyrights, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company under this Option Agreement, such appointment being effective both during the Optionee’s employment by Company, and thereafter if the Optionee (1) refuses to perform those acts, or (2) is unavailable, within the meaning of any applicable laws. The Optionee acknowledges that the grant of the foregoing power of attorney is coupled with an interest, is irrevocable, and shall survive his/her death or disability.

Page 5 of 9

Non-Qualified Stock Option Agreement
February 15, 2006
Page 6.

10.	Nonsolicitation
	(a)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee will not directly or indirectly solicit the Business of any customer of the Company of whom the Optionee acquired knowledge and/or had direct or indirect contact during the one (1) year period prior to the termination of the Optionee’s employment relationship with the Company for any purpose other than to obtain, maintain and/or service the customer’s Business for the Company.
	(b)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee agrees not to, directly or indirectly, recruit or solicit any employees of the Company to work for the Optionee or any other person or entity.
	(c)	As used in this Option Agreement, the following terms shall have these respective definitions:
		(i)	“Current Business” shall mean and include: providing clinical testing information services for the diagnosis, monitoring, and treatment of disease; providing clinical laboratory management services; providing medical informatics services (i.e., the statistical analysis of medical information) and consulting services based on such analysis; providing data analysis, medical information services, and database management services for the health care industry; providing clinical testing information services in support of clinical trials, and clinical testing products for use in clinical trials; providing services of storage, retrieval, and communication of medical information via interactive computer networks; providing to managed care organizations, hospitals, employers, and other institutional healthcare providers access to a network of clinical diagnostic laboratories providing services of processing requests for diagnostic tests, performing tests, reporting test results, and paying claims to network laboratories; providing quality and utilization management; providing consolidated chronological reports in graphical and/or numerical form, representing the results of clinical diagnostic tests performed on individual patients and groups of patients over monitored periods of time, together with analysis of the results; and manufacturing and selling clinical diagnostic assay kits, apparatus, and reagents.
		(ii)	“Business” shall include the Current Business and any other product or service which the Company provided during the one (1) year period prior to the Optionee’s termination of employment and during the one (1) year period following the Optionee’s termination of employment, but the restriction on products and services introduced after the Optionee’s termination of employment shall exclude products and services that were not planned, discussed, or contemplated prior to the Optionee’s termination of employment.
		(iii)	“Indirectly Solicit” shall include, but is not be limited to, providing the Company’s Confidential Information to another individual, or entity, allowing the use of the Optionee’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.
11.	Damages and Injunctive Relief. The Optionee understands that if the terms of Section 9 and/or 10 of this Option Agreement are violated, the Corporation would be seriously and irreparably damaged, and agrees that the Corporation will be entitled to seek appropriate remedies for those damages, including, without limitation, injunctive relief to enforce any provision of this Agreement and all reasonable attorney’s fees incurred by the Corporation to enforce the terms of these Sections.
12.	Forfeiture. The Optionee will immediately forfeit any unexercised portion of the Option for any violations of (i) the terms of Sections 9 and/or 10 of this Agreement and/or (ii) the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation, in addition to any equitable and legal rights the Corporation has or may have. The Optionee understands that the forfeiture of any unexercised portion of the Option is only one element of the damages potentially sustained by the Corporation for a violation of Sections 9 and/or 10 of this Agreement or the non-compete obligation described above, and such forfeiture shall not constitute a release of any claim that the Company may have for damages, past, present, or future.

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 7.

13.	(a) Consent Requirement. If the Corporation shall at any time determine that any consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of this Option, the issuance or purchase of Shares or other rights hereunder, or the taking of any other action hereunder (a “Plan Action”), then no such Plan Action shall be taken, in whole or in part, unless and until such consent shall have been effected or obtained to the full satisfaction of the Corporation.
	(b) Definition of Consent. The term “consent” as used herein with respect to any action referred to in Section 13(a) means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the Optionee with respect to the disposition of Shares, or with respect to any other matter, which the Corporation shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies, and (iv) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Corporation. Nothing herein shall require the Corporation to list, register or qualify the Shares of its common stock on any securities exchange.
14.	Invalidity and Enforcement. If any provision of this Agreement is deemed invalid or unenforceable, either in whole or in part, this Option Agreement will be deemed amended to delete or to modify, as set forth in this Section, the offending provision or provisions and to alter the bounds of this Agreement in order to render it valid and enforceable. The Corporation and the Optionee specifically request that any court having jurisdiction over any dispute relating to this Option Agreement modify, if possible, any offending provision so that such provision will be enforceable to the maximum extent permitted by State law.
15.	Employee at Will. The Optionee understands that his/her employment with the Corporation is at will and that it can be terminated at any time by the Optionee and/or the Corporation.
16.	Enforcement by Successors and Assigns. The Corporation and any of its successors or assignees may enforce the Corporation’s rights under this Option Agreement.
17.	Entire Agreement. The Agreement supersedes any prior agreement or understandings between the Optionee and the Company with respect to nonsolicitation, nonuse, and non-disclosure and constitutes the entire agreement between the Corporation and the Optionee. No modification of this Option Agreement will have any force or effect unless such modification is in writing, signed by the Chief Executive Officer of the Corporation and the Optionee, and expressly indicates an intent to modify this Option Agreement.
18.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Agreement shall be finally determined by the Corporation’s Compensation Committee in its absolute discretion.
19.	Notice of Exercise. The Optionee may exercise the Option, in accordance with the procedures specified by the Corporation from time to time.
20.	Rights Prior to Exercise. The Optionee shall not have any rights as a stockholder with respect to any Shares subject to this Option prior to the date on which he/she is recorded as the holder of such Shares on the records of the Corporation.
21.	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 this Option.
22.	Governing Law. This Option Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.
23.	Acknowledgements. By execution of this Non-Qualified Stock Option Grant Agreement, the Optionee agrees that he/she has received and reviewed a copy of:
	(a) the Prospectus (link to Prospectus:
	http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_option/stock_option.htm)
	relating to the Corporation’s Employee Equity Participation Program and;
	(b) the Quest Diagnostics Incorporated 2005 Annual Report (link to 2005 Annual Report:
	http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700 to Shareholders and Form 10-K);
	(c) the Corporation’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Optionee further agrees to fully comply with the terms of the Policy;

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 8.

(d)	the Corporation’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and
(e)	the Corporation’s Equity Award Eligibility Policy attached hereto as Annex A.

OPTIONEE:

By:
	Hagemann, Robert

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 9.

Annex A
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility
•	Unreduced Work Schedule
•	One of the following salary grades:
	•	Corporate VP or Higher
	•	Salary Grade 53 or Higher
	•	Research & Development - Grade RD6 or Higher
	•	Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company’s Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

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EX-10

Exhibit 10.4

QUEST DIAGNOSTICS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT

This Non-Qualified Stock Option Agreement (the “Option Agreement”), dated as of February 15, 2006 (the “Grant Date”), is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, New Jersey 07071 (the “Corporation”) and Zewe, David M. (the “Optionee”) [address].

1.	Conditions. This Option Agreement is subject in all respects to the Corporation’s Amended and Restated Long-Term Employee Incentive Plan, which is incorporated herein by reference. The Optionee acknowledges that he/she has read the terms of the Amended and Restated Long-Term Employee Incentive Plan and that those terms shall govern in the event of any conflict between them and those of this Option Agreement.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that all options granted to the Optionee by the Corporation prior to the date hereof (the “Prior Options”) shall be subject to forfeiture pursuant to paragraph 4(b)(ii) of this Option Agreement (for false attestation under the Executive Share Ownership Guidelines of the Corporation (the “ Minimum Share Ownership Policy”)), the Shares obtained on exercise of such Prior Options after the date hereof shall be subject to the Minimum Share Ownership Policy pursuant to paragraph 5(b) of this Option Agreement and the terms of paragraphs 4(b)(ii) and 5(b) hereof are made a part of the terms of each of the Prior Options.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that this Option shall be subject to forfeiture pursuant to paragraph 4(b)(iii) of this Agreement.
	This Option Agreement shall become effective only after the Optionee has executed and returned to the Executive Compensation Department (to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) a signed copy of this Option Agreement and shall be revoked if not executed and returned to Lisa Zajac within thirty (30) days of receipt by the Optionee.
2.	Award of Option. The Corporation hereby awards to the Optionee an option (the “Option”) to purchase from the Corporation such number of shares of the Corporation’s common stock (the “Shares”) at the exercise price set forth in this Option Agreement (the “Exercise Price”) below. This option shall vest equally over a three-year period. If the foregoing results in a fractional number of Shares subject to the Option vesting on any vesting date, the number of Shares subject to the Option vesting on the first and second vesting dates shall be rounded down to the previous whole number of Shares and the Shares subject to the Option vesting on the third vesting date shall be rounded up to the next whole number of Shares, as shall be necessary in order to result in a vesting of 100% of the Shares subject to the Option. The Compensation Committee of the Corporation may, in its sole discretion, convert this Option at any time to a stock settled stock appreciation grant.

Number of Shares Subject to Option: 63,334

Exercise Price per Share: $52.235

Expiration Date: February 15, 2013

Vesting Schedule:
		Number of Shares Subject to Option
Vesting Dates	% of Grant	Incremental	Cumulative
February 15, 2007	33.33%	21,111	21,111
February 15, 2008	33.33%	21,111	42,222
February 15, 2009	33.34%	21,112	63,334

This option shall expire, and no shares may be purchased pursuant to this Option, after the expiration date set forth above (the “Expiration Date”).

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EOAgmt

Non-Qualified Stock Option Agreement
February 15, 2006
Page 2.

3.	Not An Incentive Stock Option. This Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and this Agreement shall be construed and interpreted in accordance with such intention.
4.	Vesting. Except as otherwise provided below, the Option shall vest and become exercisable as to the percentage of Shares subject to the Option on the vesting dates [set forth above][set forth on the “Summary Grant” page at the Smith Barney website] (the “Vesting Dates”).
	(a)	Termination. Unless the Optionee’s employment is terminated for one of the reasons set forth in Section 4(b) through (i), at the Optionee’s termination of employment prior to the third anniversary of the date of this Agreement, the Optionee will vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
		Notwithstanding anything to the contrary contained herein, if the Optionee is on a leave of absence approved by the Corporation for medical, personal, educational and/or other permissible purposes pursuant to policies of the Corporation as in effect on the date hereof, for a consecutive twelve-month period, such Optionee will be deemed terminated for purposes of this Agreement on the twelve month anniversary of the commencement of such leave of absence and this Option shall cease to vest at the end of such twelve-month period and the Optionee will forfeit any unvested portion of the Option.
	(b)	Cause, Dereliction of Duties or Harmful Acts; Breach of Share Ownership Guidelines; Loss of Equity Award Eligibility Status. (i) If the Optionee shall cause the Corporation to suffer financial harm or damage to its reputation (either before or after termination of employment) through (x) dishonesty, (y) violation of law in the course of the Optionee’s employment or violation of the Corporation’s Corporate Compliance Manual and compliance bulletins or other written policies, or (z) material deviation from the duties owed the Corporation by the Optionee, this Option, whether or not vested, shall expire and be cancelled to the extent it has not been exercised and be of no further force or effect.
		(ii) If the Optionee is subject to the Minimum Share Ownership Policy, any false attestation made under the Minimum Share Ownership Policy may result in the immediate cancellation of this Option and all Prior Options (to the extent not exercised), whether or not vested.
		(iii) If the Optionee’s employment status in the Corporation is changed such that the Optionee will no longer be eligible to receive options pursuant to the Equity Award Eligibility Policy of the Corporation as in effect on the date hereof and attached as Annex A to this Agreement and such changed status continues for a consecutive 90 day period, this Option shall cease to vest at the end of such 90-day period (and the Optionee will then vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the end of such 90-day period by (ii) 36), and the Optionee will immediately forfeit any unvested portion of the Option.
	(c)	Death. If the Optionee shall die while employed, this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s death.
	(d)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s termination of employment.
	(e)	Change of Control. This Option shall vest as to all shares immediately on the effective date of a change of control, provided the Optionee was actively employed by the Corporation on such date. For purposes of this Agreement the term “change of control” shall mean and shall be deemed to occur if and when:
		(i)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 40% of more of the combined voting power of the Corporation’s then outstanding securities; or

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February 15, 2006
Page 3.

		(ii)	The individuals who, as of the Grant Date, constituted the Corporation’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Corporation, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
		(iii)	Shareholders of the Corporation approve an agreement, providing for (a) a transaction in which the Corporation will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Corporation’s assets, or (c) a plan of partial or complete liquidation of the Corporation.
	(f)	Involuntary Termination with Severance. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under one of the Corporation’s Severance Plans, the Optionee will immediately vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(g)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then the Optionee will immediately vest in a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(h)	Transfers. If the Optionee shall be transferred from the Corporation to a subsidiary company (being a 50% owned entity within the meaning of Section 425(f) of the Code), or joint venture or similar entity existing as of the date of this Agreement in which the Corporation has at least a 33.33% interest (“joint venture”) or vice versa or from one subsidiary company (or joint venture) to another, the Optionee’s employment shall not be deemed to have terminated. If, while the Optionee is employed by such a subsidiary company or joint venture, such subsidiary company or joint venture shall cease to be a subsidiary company or joint venture as described above and the Optionee is not thereupon transferred to and employed by the Corporation or another subsidiary company or joint venture as described above, then the Optionee’s employment will be treated as a termination due to a divestiture under clause (g) above as of the date that the Optionee’s employer ceases to be such a subsidiary company or joint venture of the Corporation.
	(i)	Retirement. If the Optionee’s employment shall terminate with the consent of the Corporation on or after the Optionee’s attaining age 60, this Option shall vest and be exercisable as to all Shares subject to this Option on the effective termination date of the Optionee’s employment.
5.	Non-Transferability.
	a)	The rights under this Option Agreement shall not be transferable other than by will or the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee except to the extent of a disability (as defined in Section 22(e)(3) of the Code), in which case the Option may be exercised by the Optionee’s legal representative.
	b)	If the Optionee is subject to the Minimum Share Ownership Policy, the Optionee agrees that any shares issued hereunder or pursuant to any Prior Option shall be subject to the restrictions set forth in the Minimum Share Ownership Policy. If the Optionee is not in compliance with the Minimum Share Ownership Policy, the Corporation may terminate the employment of such Optionee and/or the Option shall immediately terminate and cease to be exercisable. The Optionee hereby acknowledges and agrees that the investment risk associated with the retention of any Shares, whether pursuant to the Minimum Share Ownership Policy or otherwise, is the sole responsibility of the Optionee and Optionee hereby holds the Corporation harmless against any claim of loss related to the retention of the Shares.
6.	Exercise. The purchase price of Shares purchased hereunder shall be paid in full with, or in a combination of, (a) cash or (b) shares of the Corporation’s Common Stock that have been owned by the Optionee, and have been fully vested and freely transferable by the Optionee, for at least six months preceding the date of exercise of the Option, duly endorsed or accompanied by stock powers executed in blank. However, the Corporation in its discretion may permit the Optionee (if the

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 4.

	Optionee owns shares that have been owned by the Optionee, and have been fully vested and fully transferable by the Optionee, for at least six months preceding the date of exercise) to “attest” to his ownership of the number of shares required to pay all or part of the purchase price (and not require delivery of the shares), in which case the Corporation will deliver to the Optionee the number of shares to which the Optionee is entitled, net of the “attested” shares. If payment is made in whole or in part with shares of the Corporation’s Common Stock, the value of such Common Stock shall be the mean between its high and low prices on the day of purchase as reported by The New York Times following the close of business on the date of exercise. No “reload” or other option will be granted by reason of any such exercise. The Optionee agrees that, notwithstanding the terms of any pre-existing agreement between the Corporation and the Optionee, any shares of the Corporation’s Common Stock surrendered (or “attested” to) for payment of the exercise price of any options previously granted by the Corporation to the Optionee (whether granted under the terms of the Amended and Restated Employee Long-Term Incentive Plan or any predecessor program) shall be valued in the manner provided in the preceding sentence except to the extent otherwise expressly provided by the terms of the program document.
7.	Exercise After Termination of Employment, Death or Disability. The provisions covering the exercise of this Option following termination of employment are as follows:
	(a)	Termination in General. If the Optionee shall terminate his employment for any reason other than those described in Section 7(b) through (f), all of the vested percentage of the Option may be exercised for ninety (90) days following such termination (but not beyond the Expiration Date) and the Option shall thereafter expire and cease to be exercisable;
	(b)	Death. If the Optionee shall die while employed, the Option may be exercised through the Expiration Date in respect of all of the Shares subject to the Option. If the Optionee shall die after termination of employment but while the Option is still exercisable, it shall remain exercisable to the same extent through the first anniversary of the date of death but not beyond the Expiration Date;
	(c)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), the Option shall remain exercisable through the Expiration Date;
	(d)	Involuntary Termination with Severance. If the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under the Corporation’s Severance Plans, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(f)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(e)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(g)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(f)	Retirement. If the Optionee’s employment shall terminate as a result of Retirement as defined in Section 4(i) of this Option, all of the Option may be exercised as to all of the Shares subject to the Option through the Expiration Date.
	In no event may any portion of the Option be exercised after the Expiration Date.
8.	Consideration. In consideration for the Option granted by this Option Agreement, the Optionee hereby agrees to be bound by the Nondisclosure and Nonsolicitation provisions set forth in Sections 9 and 10 of this Option Agreement and the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation. For purposes of Sections 9 and 10, the term “Company” shall mean the Corporation, its affiliates, divisions and subsidiaries, or any other entity in which the Corporation, directly or indirectly, controls or has an ownership or equity interest equal to or greater than 25.0% of the combined voting power of the entity’s then outstanding securities, and their respective successors and assigns.
9.	Nondisclosure of Confidential Information.
	(a)	For purposes of this Option Agreement, the term “Confidential Information” shall mean all ideas, inventions, data, databases, know-how, processes, methods, practices, specifications, raw materials and preparations, compositions, designs, devices, fabrication techniques, technical plans, algorithms, computer programs, protocols, client information, medical records, documentation, customer names and lists, supplier names and lists, price lists, supplier names and lists, apparatus, business plans, marketing plans, financial information, chemical and biological reagents, business methods and systems, literary and graphical and audiovisual works and sound recordings, mask works,

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February 15, 2006
Page 5.

	computer programs, and the like, and potential trade names, trademarks, and logos, in whatever form or medium and which have commercial value, and whether or not designated or marked “Confidential” or the like, which the Optionee learns, acquires, conceives, creates, develops, or improves while employed by the Company and which (1) relate to the past, current, or prospective business of the Company or its subsidiaries and (a) which have not previously been publicly disclosed without restrictions on use by the Company, or (b) which Optionee knows or has good reason to know are not generally publicly known; or (2) are received by the Company from a third party under an obligation of confidentiality to the third party.
(b)	The Optionee recognizes and acknowledges that during his or her employment with the Company, the Optionee may be given access to or develop Confidential Information. The Optionee shall not use or disclose (directly or indirectly) any Confidential Information (whether or not developed by the Optionee) at any time or in any manner, except as authorized and required in the course of employment with the Company. The Optionee shall not disclose to the Company or use on behalf of the Company any Confidential Information obtained from any former employer or any other third party. All documents and things embodying Confidential Information, whether prepared by the Optionee or otherwise coming into the Optionee’s possession, are the exclusive property of the Company, and must not be removed from any of its premises except as required in the course of employment with the Company. All such documents and things shall be promptly returned by the Optionee to the Company upon the request of the Company and on any termination of employment with the Company. The Optionee will not remove any Confidential Information such as documents or things or retain them in whole or part in any manner. The Optionee shall ensure that any export of Confidential Information undertaken by the Optionee or with his/her knowledge or approval shall be in compliance with all applicable laws.
(c)	The Optionee shall promptly disclose to the Company all Confidential Information which the Optionee creates, conceives, develops, or improves (either alone or with others) referred to below as a “Creation” while in the employment of the Company, if the Creation either: (1) relates to any actual or demonstrably contemplated business, or research or development project, of the Company or its subsidiaries, or to any reasonable extension or variation thereof; or (2) results from any work performed by the Optionee for the Company; or (3) was created utilizing any of the Company’s equipment, supplies, facilities, time, or Confidential Information. The Optionee shall keep complete, accurate, and authentic records on all Creations in the manner and form requested by the Company. The Optionee shall promptly disclose to the Company, in confidence, all patent, copyright, and trademark applications filed by the Optionee within one (1) year after termination of employment with the Company and which relate to any field in which the Optionee worked at the Company. The Optionee agrees that any such application for a patent, copyright registration, trademark registration, mask work registration, or similar right filed within one (1) year after termination of employment with the Company shall be presumed to relate to a Creation of the Optionee created during employment at the Company, unless the Optionee can prove otherwise.
(d)	The Optionee hereby assigns to the Company all of the Optionee’s rights in all of the above-described Creations. All such Creations that are subject to copyright or mask work protection are explicitly considered by the Optionee and the Company to be works made for hire to the extent permitted by law. To the extent that any such Creations are subject to copyright protection and are not works made for hire, any and all of the Optionee’s copyright and mask work interest therein are hereby assigned by the Optionee to the Company, and are the exclusive property of the Company.
(e)	The Optionee agrees to assist the Company in obtaining and/or maintaining patents, copyrights, trademarks, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company, if and to the extent that the Company, in its sole discretion, requests such assistance, the Optionee shall sign all documents and do all other things deemed necessary by the Company, at the Company’s expense, to obtain and/or maintain such rights, to provide confirmatory evidence of the Optionee’s assignment of such Creations to the Company, to defend them from invalidation, and to protect them against infringement by other parties. The obligations of this paragraph are continuing and survive the termination of the Optionee’s employment with the Company. The Optionee irrevocably appoints the Chief Executive Officer of the Company (with powers of delegation) to act as the Optionee’s agent and attorney-in-fact to perform all acts as the Optionee’s agent and to file, prosecute, and maintain applications and registrations for patents, trademarks, copyrights, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company under this Option Agreement, such appointment being effective both during the Optionee’s employment by Company, and thereafter if the Optionee (1) refuses to perform those acts, or (2) is unavailable, within the meaning of any applicable laws. The Optionee acknowledges that the grant of the foregoing power of attorney is coupled with an interest, is irrevocable, and shall survive his/her death or disability.

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 6.

10.	Nonsolicitation
	(a)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee will not directly or indirectly solicit the Business of any customer of the Company of whom the Optionee acquired knowledge and/or had direct or indirect contact during the one (1) year period prior to the termination of the Optionee’s employment relationship with the Company for any purpose other than to obtain, maintain and/or service the customer’s Business for the Company.
	(b)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee agrees not to, directly or indirectly, recruit or solicit any employees of the Company to work for the Optionee or any other person or entity.
	(c)	As used in this Option Agreement, the following terms shall have these respective definitions:
		(i)	“Current Business” shall mean and include: providing clinical testing information services for the diagnosis, monitoring, and treatment of disease; providing clinical laboratory management services; providing medical informatics services (i.e., the statistical analysis of medical information) and consulting services based on such analysis; providing data analysis, medical information services, and database management services for the health care industry; providing clinical testing information services in support of clinical trials, and clinical testing products for use in clinical trials; providing services of storage, retrieval, and communication of medical information via interactive computer networks; providing to managed care organizations, hospitals, employers, and other institutional healthcare providers access to a network of clinical diagnostic laboratories providing services of processing requests for diagnostic tests, performing tests, reporting test results, and paying claims to network laboratories; providing quality and utilization management; providing consolidated chronological reports in graphical and/or numerical form, representing the results of clinical diagnostic tests performed on individual patients and groups of patients over monitored periods of time, together with analysis of the results; and manufacturing and selling clinical diagnostic assay kits, apparatus, and reagents.
		(ii)	“Business” shall include the Current Business and any other product or service which the Company provided during the one (1) year period prior to the Optionee’s termination of employment and during the one (1) year period following the Optionee’s termination of employment, but the restriction on products and services introduced after the Optionee’s termination of employment shall exclude products and services that were not planned, discussed, or contemplated prior to the Optionee’s termination of employment.
		(iii)	“Indirectly Solicit” shall include, but is not be limited to, providing the Company’s Confidential Information to another individual, or entity, allowing the use of the Optionee’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.
11.	Damages and Injunctive Relief. The Optionee understands that if the terms of Section 9 and/or 10 of this Option Agreement are violated, the Corporation would be seriously and irreparably damaged, and agrees that the Corporation will be entitled to seek appropriate remedies for those damages, including, without limitation, injunctive relief to enforce any provision of this Agreement and all reasonable attorney’s fees incurred by the Corporation to enforce the terms of these Sections.
12.	Forfeiture. The Optionee will immediately forfeit any unexercised portion of the Option for any violations of (i) the terms of Sections 9 and/or 10 of this Agreement and/or (ii) the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation, in addition to any equitable and legal rights the Corporation has or may have. The Optionee understands that the forfeiture of any unexercised portion of the Option is only one element of the damages potentially sustained by the Corporation for a violation of Sections 9 and/or 10 of this Agreement or the non-compete obligation described above, and such forfeiture shall not constitute a release of any claim that the Company may have for damages, past, present, or future.

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 7.

13.	(a) Consent Requirement. If the Corporation shall at any time determine that any consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of this Option, the issuance or purchase of Shares or other rights hereunder, or the taking of any other action hereunder (a “Plan Action”), then no such Plan Action shall be taken, in whole or in part, unless and until such consent shall have been effected or obtained to the full satisfaction of the Corporation.
	(b) Definition of Consent. The term “consent” as used herein with respect to any action referred to in Section 13(a) means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the Optionee with respect to the disposition of Shares, or with respect to any other matter, which the Corporation shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies, and (iv) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Corporation. Nothing herein shall require the Corporation to list, register or qualify the Shares of its common stock on any securities exchange.
14.	Invalidity and Enforcement. If any provision of this Agreement is deemed invalid or unenforceable, either in whole or in part, this Option Agreement will be deemed amended to delete or to modify, as set forth in this Section, the offending provision or provisions and to alter the bounds of this Agreement in order to render it valid and enforceable. The Corporation and the Optionee specifically request that any court having jurisdiction over any dispute relating to this Option Agreement modify, if possible, any offending provision so that such provision will be enforceable to the maximum extent permitted by State law.
15.	Employee at Will. The Optionee understands that his/her employment with the Corporation is at will and that it can be terminated at any time by the Optionee and/or the Corporation.
16.	Enforcement by Successors and Assigns. The Corporation and any of its successors or assignees may enforce the Corporation’s rights under this Option Agreement.
17.	Entire Agreement. The Agreement supersedes any prior agreement or understandings between the Optionee and the Company with respect to nonsolicitation, nonuse, and non-disclosure and constitutes the entire agreement between the Corporation and the Optionee. No modification of this Option Agreement will have any force or effect unless such modification is in writing, signed by the Chief Executive Officer of the Corporation and the Optionee, and expressly indicates an intent to modify this Option Agreement.
18.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Agreement shall be finally determined by the Corporation’s Compensation Committee in its absolute discretion.
19.	Notice of Exercise. The Optionee may exercise the Option, in accordance with the procedures specified by the Corporation from time to time.
20.	Rights Prior to Exercise. The Optionee shall not have any rights as a stockholder with respect to any Shares subject to this Option prior to the date on which he/she is recorded as the holder of such Shares on the records of the Corporation.
21.	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 this Option.
22.	Governing Law. This Option Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.
23.	Acknowledgements. By execution of this Non-Qualified Stock Option Grant Agreement, the Optionee agrees that he/she has received and reviewed a copy of:
	(a) the Prospectus (link to Prospectus: http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_option/stock_option.htm) relating to the Corporation’s Employee Equity Participation Program and;
	(b) the Quest Diagnostics Incorporated 2005 Annual Report (link to 2005 Annual Report: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700 to Shareholders and Form 10-K);
	(c) the Corporation’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Optionee further agrees to fully comply with the terms of the Policy;

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 8.

(d)     the Corporation’s Executive Share Ownership Guidelines (link to guidelines:
http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and

(e)     the Corporation’s Equity Award Eligibility Policy attached hereto as Annex A.

OPTIONEE:

By:
	Zewe, David M.

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 9.

Annex A
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility

• Unreduced Work Schedule

• One of the following salary grades:

• Corporate VP or Higher

• Salary Grade 53 or Higher

• Research & Development - Grade RD6 or Higher

• Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company’s Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

Page 9 of 9

EX-10

Exhibit 10.5

QUEST DIAGNOSTICS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT

This Non-Qualified Stock Option Agreement (the “Option Agreement”), dated as of February 15, 2006 (the “Grant Date”), is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, New Jersey 07071 (the “Corporation”) and Prevoznik, Michael (the “Optionee”) [address].

1.	Conditions. This Option Agreement is subject in all respects to the Corporation’s Amended and Restated Long-Term Employee Incentive Plan, which is incorporated herein by reference. The Optionee acknowledges that he/she has read the terms of the Amended and Restated Long-Term Employee Incentive Plan and that those terms shall govern in the event of any conflict between them and those of this Option Agreement.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that all options granted to the Optionee by the Corporation prior to the date hereof (the “Prior Options”) shall be subject to forfeiture pursuant to paragraph 4(b)(ii) of this Option Agreement (for false attestation under the Executive Share Ownership Guidelines of the Corporation (the “ Minimum Share Ownership Policy”)), the Shares obtained on exercise of such Prior Options after the date hereof shall be subject to the Minimum Share Ownership Policy pursuant to paragraph 5(b) of this Option Agreement and the terms of paragraphs 4(b)(ii) and 5(b) hereof are made a part of the terms of each of the Prior Options.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that this Option shall be subject to forfeiture pursuant to paragraph 4(b)(iii) of this Agreement.
	This Option Agreement shall become effective only after the Optionee has executed and returned to the Executive Compensation Department (to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) a signed copy of this Option Agreement and shall be revoked if not executed and returned to Lisa Zajac within thirty (30) days of receipt by the Optionee..
2.	Award of Option. The Corporation hereby awards to the Optionee an option (the “Option”) to purchase from the Corporation such number of shares of the Corporation’s common stock (the “Shares”) at the exercise price set forth in this Option Agreement (the “Exercise Price”) below. This option shall vest equally over a three-year period. If the foregoing results in a fractional number of Shares subject to the Option vesting on any vesting date, the number of Shares subject to the Option vesting on the first and second vesting dates shall be rounded down to the previous whole number of Shares and the Shares subject to the Option vesting on the third vesting date shall be rounded up to the next whole number of Shares, as shall be necessary in order to result in a vesting of 100% of the Shares subject to the Option. The Compensation Committee of the Corporation may, in its sole discretion, convert this Option at any time to a stock settled stock appreciation grant.

Number of Shares Subject to Option: 54,667

Exercise Price per Share: $52.235

Expiration Date: February 15, 2013

Vesting Schedule:

		Number of Shares Subject to Option
Vesting Dates	% of Grant	Incremental	Cumulative
February 15, 2007	33.33%	18,222	18,222
February 15, 2008	33.33%	18,222	36,444
February 15, 2009	33.34%	18,223	54,667

This option shall expire, and no shares may be purchased pursuant to this Option, after the expiration date set forth above (the “Expiration Date”).

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EOAgmt

Non-Qualified Stock Option Agreement
February 15, 2006
Page 2.

3.	Not An Incentive Stock Option. This Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and this Agreement shall be construed and interpreted in accordance with such intention.
4.	Vesting. Except as otherwise provided below, the Option shall vest and become exercisable as to the percentage of Shares subject to the Option on the vesting dates [set forth above][set forth on the “Summary Grant” page at the Smith Barney website] (the “Vesting Dates”).
	(a)	Termination. Unless the Optionee’s employment is terminated for one of the reasons set forth in Section 4(b) through (i), at the Optionee’s termination of employment prior to the third anniversary of the date of this Agreement, the Optionee will vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
		Notwithstanding anything to the contrary contained herein, if the Optionee is on a leave of absence approved by the Corporation for medical, personal, educational and/or other permissible purposes pursuant to policies of the Corporation as in effect on the date hereof, for a consecutive twelve-month period, such Optionee will be deemed terminated for purposes of this Agreement on the twelve month anniversary of the commencement of such leave of absence and this Option shall cease to vest at the end of such twelve-month period and the Optionee will forfeit any unvested portion of the Option.
	(b)	Cause, Dereliction of Duties or Harmful Acts; Breach of Share Ownership Guidelines; Loss of Equity Award Eligibility Status. (i) If the Optionee shall cause the Corporation to suffer financial harm or damage to its reputation (either before or after termination of employment) through (x) dishonesty, (y) violation of law in the course of the Optionee’s employment or violation of the Corporation’s Corporate Compliance Manual and compliance bulletins or other written policies, or (z) material deviation from the duties owed the Corporation by the Optionee, this Option, whether or not vested, shall expire and be cancelled to the extent it has not been exercised and be of no further force or effect.
		(ii) If the Optionee is subject to the Minimum Share Ownership Policy, any false attestation made under the Minimum Share Ownership Policy may result in the immediate cancellation of this Option and all Prior Options (to the extent not exercised), whether or not vested.
		(iii) If the Optionee’s employment status in the Corporation is changed such that the Optionee will no longer be eligible to receive options pursuant to the Equity Award Eligibility Policy of the Corporation as in effect on the date hereof and attached as Annex A to this Agreement and such changed status continues for a consecutive 90 day period, this Option shall cease to vest at the end of such 90-day period (and the Optionee will then vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the end of such 90-day period by (ii) 36), and the Optionee will immediately forfeit any unvested portion of the Option.
	(c)	Death. If the Optionee shall die while employed, this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s death.
	(d)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s termination of employment.
	(e)	Change of Control. This Option shall vest as to all shares immediately on the effective date of a change of control, provided the Optionee was actively employed by the Corporation on such date. For purposes of this Agreement the term “change of control” shall mean and shall be deemed to occur if and when:
		(i)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 40% of more of the combined voting power of the Corporation’s then outstanding securities; or

Page 2 of 9

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February 15, 2006
Page 3.

		(ii)	The individuals who, as of the Grant Date, constituted the Corporation’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Corporation, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
		(iii)	Shareholders of the Corporation approve an agreement, providing for (a) a transaction in which the Corporation will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Corporation’s assets, or (c) a plan of partial or complete liquidation of the Corporation.
	(f)	Involuntary Termination with Severance . If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under one of the Corporation’s Severance Plans, the Optionee will immediately vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(g)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then the Optionee will immediately vest in a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(h)	Transfers. If the Optionee shall be transferred from the Corporation to a subsidiary company (being a 50% owned entity within the meaning of Section 425(f) of the Code), or joint venture or similar entity existing as of the date of this Agreement in which the Corporation has at least a 33.33% interest (“joint venture”) or vice versa or from one subsidiary company (or joint venture) to another, the Optionee’s employment shall not be deemed to have terminated. If, while the Optionee is employed by such a subsidiary company or joint venture, such subsidiary company or joint venture shall cease to be a subsidiary company or joint venture as described above and the Optionee is not thereupon transferred to and employed by the Corporation or another subsidiary company or joint venture as described above, then the Optionee’s employment will be treated as a termination due to a divestiture under clause (g) above as of the date that the Optionee’s employer ceases to be such a subsidiary company or joint venture of the Corporation.
	(i)	Retirement. If the Optionee’s employment shall terminate with the consent of the Corporation on or after the Optionee’s attaining age 60, this Option shall vest and be exercisable as to all Shares subject to this Option on the effective termination date of the Optionee’s employment.
5.	Non-Transferability.
	a)	The rights under this Option Agreement shall not be transferable other than by will or the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee except to the extent of a disability (as defined in Section 22(e)(3) of the Code), in which case the Option may be exercised by the Optionee’s legal representative.
	b)	If the Optionee is subject to the Minimum Share Ownership Policy, the Optionee agrees that any shares issued hereunder or pursuant to any Prior Option shall be subject to the restrictions set forth in the Minimum Share Ownership Policy. If the Optionee is not in compliance with the Minimum Share Ownership Policy, the Corporation may terminate the employment of such Optionee and/or the Option shall immediately terminate and cease to be exercisable. The Optionee hereby acknowledges and agrees that the investment risk associated with the retention of any Shares, whether pursuant to the Minimum Share Ownership Policy or otherwise, is the sole responsibility of the Optionee and Optionee hereby holds the Corporation harmless against any claim of loss related to the retention of the Shares.
6.	Exercise. The purchase price of Shares purchased hereunder shall be paid in full with, or in a combination of, (a) cash or (b) shares of the Corporation’s Common Stock that have been owned by the Optionee, and have been fully vested and freely transferable by the Optionee, for at least six months preceding the date of exercise of the Option, duly endorsed or accompanied by stock powers executed in blank. However, the Corporation in its discretion may permit the Optionee (if the

Page 3 of 9

Non-Qualified Stock Option Agreement
February 15, 2006
Page 4.

	Optionee owns shares that have been owned by the Optionee, and have been fully vested and fully transferable by the Optionee, for at least six months preceding the date of exercise) to “attest” to his ownership of the number of shares required to pay all or part of the purchase price (and not require delivery of the shares), in which case the Corporation will deliver to the Optionee the number of shares to which the Optionee is entitled, net of the “attested” shares. If payment is made in whole or in part with shares of the Corporation’s Common Stock, the value of such Common Stock shall be the mean between its high and low prices on the day of purchase as reported by The New York Times following the close of business on the date of exercise. No “reload” or other option will be granted by reason of any such exercise. The Optionee agrees that, notwithstanding the terms of any pre-existing agreement between the Corporation and the Optionee, any shares of the Corporation’s Common Stock surrendered (or “attested” to) for payment of the exercise price of any options previously granted by the Corporation to the Optionee (whether granted under the terms of the Amended and Restated Employee Long-Term Incentive Plan or any predecessor program) shall be valued in the manner provided in the preceding sentence except to the extent otherwise expressly provided by the terms of the program document.
7.	Exercise After Termination of Employment, Death or Disability. The provisions covering the exercise of this Option following termination of employment are as follows:
	(a)	Termination in General. If the Optionee shall terminate his employment for any reason other than those described in Section 7(b) through (f), all of the vested percentage of the Option may be exercised for ninety (90) days following such termination (but not beyond the Expiration Date) and the Option shall thereafter expire and cease to be exercisable;
	(b)	Death. If the Optionee shall die while employed, the Option may be exercised through the Expiration Date in respect of all of the Shares subject to the Option. If the Optionee shall die after termination of employment but while the Option is still exercisable, it shall remain exercisable to the same extent through the first anniversary of the date of death but not beyond the Expiration Date;
	(c)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), the Option shall remain exercisable through the Expiration Date;
	(d)	Involuntary Termination with Severance. If the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under the Corporation’s Severance Plans, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(f)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(e)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(g)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(f)	Retirement. If the Optionee’s employment shall terminate as a result of Retirement as defined in Section 4(i) of this Option, all of the Option may be exercised as to all of the Shares subject to the Option through the Expiration Date.
	In no event may any portion of the Option be exercised after the Expiration Date.
8.	Consideration. In consideration for the Option granted by this Option Agreement, the Optionee hereby agrees to be bound by the Nondisclosure and Nonsolicitation provisions set forth in Sections 9 and 10 of this Option Agreement and the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation. For purposes of Sections 9 and 10, the term “Company” shall mean the Corporation, its affiliates, divisions and subsidiaries, or any other entity in which the Corporation, directly or indirectly, controls or has an ownership or equity interest equal to or greater than 25.0% of the combined voting power of the entity's then outstanding securities, and their respective successors and assigns.
9.	Nondisclosure of Confidential Information.
	(a)	For purposes of this Option Agreement, the term “Confidential Information” shall mean all ideas, inventions, data, databases, know-how, processes, methods, practices, specifications, raw materials and preparations, compositions, designs, devices, fabrication techniques, technical plans, algorithms, computer programs, protocols, client information, medical records, documentation, customer names and lists, supplier names and lists, price lists, supplier names and lists, apparatus, business plans, marketing plans, financial information, chemical and biological reagents, business methods and systems, literary and graphical and audiovisual works and sound recordings, mask works,

Pgae 4 of 9

Non-Qualified Stock Option Agreement
February 15, 2006
Page 5.

	computer programs, and the like, and potential trade names, trademarks, and logos, in whatever form or medium and which have commercial value, and whether or not designated or marked “Confidential” or the like, which the Optionee learns, acquires, conceives, creates, develops, or improves while employed by the Company and which (1) relate to the past, current, or prospective business of the Company or its subsidiaries and (a) which have not previously been publicly disclosed without restrictions on use by the Company, or (b) which Optionee knows or has good reason to know are not generally publicly known; or (2) are received by the Company from a third party under an obligation of confidentiality to the third party.
(b)	The Optionee recognizes and acknowledges that during his or her employment with the Company, the Optionee may be given access to or develop Confidential Information. The Optionee shall not use or disclose (directly or indirectly) any Confidential Information (whether or not developed by the Optionee) at any time or in any manner, except as authorized and required in the course of employment with the Company. The Optionee shall not disclose to the Company or use on behalf of the Company any Confidential Information obtained from any former employer or any other third party. All documents and things embodying Confidential Information, whether prepared by the Optionee or otherwise coming into the Optionee’s possession, are the exclusive property of the Company, and must not be removed from any of its premises except as required in the course of employment with the Company. All such documents and things shall be promptly returned by the Optionee to the Company upon the request of the Company and on any termination of employment with the Company. The Optionee will not remove any Confidential Information such as documents or things or retain them in whole or part in any manner. The Optionee shall ensure that any export of Confidential Information undertaken by the Optionee or with his/her knowledge or approval shall be in compliance with all applicable laws.
(c)	The Optionee shall promptly disclose to the Company all Confidential Information which the Optionee creates, conceives, develops, or improves (either alone or with others) referred to below as a “Creation” while in the employment of the Company, if the Creation either: (1) relates to any actual or demonstrably contemplated business, or research or development project, of the Company or its subsidiaries, or to any reasonable extension or variation thereof; or (2) results from any work performed by the Optionee for the Company; or (3) was created utilizing any of the Company’s equipment, supplies, facilities, time, or Confidential Information. The Optionee shall keep complete, accurate, and authentic records on all Creations in the manner and form requested by the Company. The Optionee shall promptly disclose to the Company, in confidence, all patent, copyright, and trademark applications filed by the Optionee within one (1) year after termination of employment with the Company and which relate to any field in which the Optionee worked at the Company. The Optionee agrees that any such application for a patent, copyright registration, trademark registration, mask work registration, or similar right filed within one (1) year after termination of employment with the Company shall be presumed to relate to a Creation of the Optionee created during employment at the Company, unless the Optionee can prove otherwise.
(d)	The Optionee hereby assigns to the Company all of the Optionee’s rights in all of the above-described Creations. All such Creations that are subject to copyright or mask work protection are explicitly considered by the Optionee and the Company to be works made for hire to the extent permitted by law. To the extent that any such Creations are subject to copyright protection and are not works made for hire, any and all of the Optionee’s copyright and mask work interest therein are hereby assigned by the Optionee to the Company, and are the exclusive property of the Company.
(e)	The Optionee agrees to assist the Company in obtaining and/or maintaining patents, copyrights, trademarks, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company, if and to the extent that the Company, in its sole discretion, requests such assistance, the Optionee shall sign all documents and do all other things deemed necessary by the Company, at the Company’s expense, to obtain and/or maintain such rights, to provide confirmatory evidence of the Optionee’s assignment of such Creations to the Company, to defend them from invalidation, and to protect them against infringement by other parties. The obligations of this paragraph are continuing and survive the termination of the Optionee’s employment with the Company. The Optionee irrevocably appoints the Chief Executive Officer of the Company (with powers of delegation) to act as the Optionee’s agent and attorney-in-fact to perform all acts as the Optionee’s agent and to file, prosecute, and maintain applications and registrations for patents, trademarks, copyrights, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company under this Option Agreement, such appointment being effective both during the Optionee’s employment by Company, and thereafter if the Optionee (1) refuses to perform those acts, or (2) is unavailable, within the meaning of any applicable laws. The Optionee acknowledges that the grant of the foregoing power of attorney is coupled with an interest, is irrevocable, and shall survive his/her death or disability.

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 6.

10.	Nonsolicitation
	(a)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee will not directly or indirectly solicit the Business of any customer of the Company of whom the Optionee acquired knowledge and/or had direct or indirect contact during the one (1) year period prior to the termination of the Optionee’s employment relationship with the Company for any purpose other than to obtain, maintain and/or service the customer’s Business for the Company.
	(b)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee agrees not to, directly or indirectly, recruit or solicit any employees of the Company to work for the Optionee or any other person or entity.
	(c)	As used in this Option Agreement, the following terms shall have these respective definitions:
		(i)	“Current Business” shall mean and include: providing clinical testing information services for the diagnosis, monitoring, and treatment of disease; providing clinical laboratory management services; providing medical informatics services (i.e., the statistical analysis of medical information) and consulting services based on such analysis; providing data analysis, medical information services, and database management services for the health care industry; providing clinical testing information services in support of clinical trials, and clinical testing products for use in clinical trials; providing services of storage, retrieval, and communication of medical information via interactive computer networks; providing to managed care organizations, hospitals, employers, and other institutional healthcare providers access to a network of clinical diagnostic laboratories providing services of processing requests for diagnostic tests, performing tests, reporting test results, and paying claims to network laboratories; providing quality and utilization management; providing consolidated chronological reports in graphical and/or numerical form, representing the results of clinical diagnostic tests performed on individual patients and groups of patients over monitored periods of time, together with analysis of the results; and manufacturing and selling clinical diagnostic assay kits, apparatus, and reagents.
		(ii)	“Business” shall include the Current Business and any other product or service which the Company provided during the one (1) year period prior to the Optionee’s termination of employment and during the one (1) year period following the Optionee’s termination of employment, but the restriction on products and services introduced after the Optionee’s termination of employment shall exclude products and services that were not planned, discussed, or contemplated prior to the Optionee’s termination of employment.
		(iii)	“Indirectly Solicit” shall include, but is not be limited to, providing the Company’s Confidential Information to another individual, or entity, allowing the use of the Optionee’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.
11.	Damages and Injunctive Relief. The Optionee understands that if the terms of Section 9 and/or 10 of this Option Agreement are violated, the Corporation would be seriously and irreparably damaged, and agrees that the Corporation will be entitled to seek appropriate remedies for those damages, including, without limitation, injunctive relief to enforce any provision of this Agreement and all reasonable attorney’s fees incurred by the Corporation to enforce the terms of these Sections.
12.	Forfeiture. The Optionee will immediately forfeit any unexercised portion of the Option for any violations of (i) the terms of Sections 9 and/or 10 of this Agreement and/or (ii) the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation, in addition to any equitable and legal rights the Corporation has or may have. The Optionee understands that the forfeiture of any unexercised portion of the Option is only one element of the damages potentially sustained by the Corporation for a violation of Sections 9 and/or 10 of this Agreement or the non-compete obligation described above, and such forfeiture shall not constitute a release of any claim that the Company may have for damages, past, present, or future.

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 7.

13.	(a) Consent Requirement. If the Corporation shall at any time determine that any consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of this Option, the issuance or purchase of Shares or other rights hereunder, or the taking of any other action hereunder (a “Plan Action”), then no such Plan Action shall be taken, in whole or in part, unless and until such consent shall have been effected or obtained to the full satisfaction of the Corporation.
	(b) Definition of Consent. The term “consent” as used herein with respect to any action referred to in Section 13(a) means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the Optionee with respect to the disposition of Shares, or with respect to any other matter, which the Corporation shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies, and (iv) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Corporation. Nothing herein shall require the Corporation to list, register or qualify the Shares of its common stock on any securities exchange.
14.	Invalidity and Enforcement. If any provision of this Agreement is deemed invalid or unenforceable, either in whole or in part, this Option Agreement will be deemed amended to delete or to modify, as set forth in this Section, the offending provision or provisions and to alter the bounds of this Agreement in order to render it valid and enforceable. The Corporation and the Optionee specifically request that any court having jurisdiction over any dispute relating to this Option Agreement modify, if possible, any offending provision so that such provision will be enforceable to the maximum extent permitted by State law.
15.	Employee at Will. The Optionee understands that his/her employment with the Corporation is at will and that it can be terminated at any time by the Optionee and/or the Corporation.
16.	Enforcement by Successors and Assigns. The Corporation and any of its successors or assignees may enforce the Corporation’s rights under this Option Agreement.
17.	Entire Agreement. The Agreement supersedes any prior agreement or understandings between the Optionee and the Company with respect to nonsolicitation, nonuse, and non-disclosure and constitutes the entire agreement between the Corporation and the Optionee. No modification of this Option Agreement will have any force or effect unless such modification is in writing, signed by the Chief Executive Officer of the Corporation and the Optionee, and expressly indicates an intent to modify this Option Agreement.
18.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Agreement shall be finally determined by the Corporation’s Compensation Committee in its absolute discretion.
19.	Notice of Exercise. The Optionee may exercise the Option, in accordance with the procedures specified by the Corporation from time to time.
20.	Rights Prior to Exercise. The Optionee shall not have any rights as a stockholder with respect to any Shares subject to this Option prior to the date on which he/she is recorded as the holder of such Shares on the records of the Corporation.
21.	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 this Option.
22.	Governing Law. This Option Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.
23.	Acknowledgements. By execution of this Non-Qualified Stock Option Grant Agreement, the Optionee agrees that he/she has received and reviewed a copy of:
	(a) the Prospectus (link to Prospectus: http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_option/stock_option.htm) relating to the Corporation’s Employee Equity Participation Program and;
	(b) the Quest Diagnostics Incorporated 2005 Annual Report (link to 2005 Annual Report: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700 to Shareholders and Form 10-K);
	(c) the Corporation’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Optionee further agrees to fully comply with the terms of the Policy;

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 8.

(d) the Corporation’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and

(e) the Corporation’s Equity Award Eligibility Policy attached hereto as Annex A.

OPTIONEE:

By:
	Prevoznik, Michael

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Non-Qualified Stock Option Agreement
February 15, 2006
Page 9.

Annex A
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility

• Unreduced Work Schedule

• One of the following salary grades:

• Corporate VP or Higher

• Salary Grade 53 or Higher

• Research & Development - Grade RD6 or Higher

• Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company's Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

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EX-10

Exhibit 10.6

QUEST DIAGNOSTICS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT

This Non-Qualified Stock Option Agreement (the “Option Agreement”), dated as of February 15, 2006 (the “Grant Date”), is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, New Jersey 07071 (the “Corporation”) and Peters, Robert E. (the “Optionee”) [address].

1.	Conditions. This Option Agreement is subject in all respects to the Corporation’s Amended and Restated Long-Term Employee Incentive Plan, which is incorporated herein by reference. The Optionee acknowledges that he/she has read the terms of the Amended and Restated Long-Term Employee Incentive Plan and that those terms shall govern in the event of any conflict between them and those of this Option Agreement.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that all options granted to the Optionee by the Corporation prior to the date hereof (the “Prior Options”) shall be subject to forfeiture pursuant to paragraph 4(b)(ii) of this Option Agreement (for false attestation under the Executive Share Ownership Guidelines of the Corporation (the “ Minimum Share Ownership Policy”)), the Shares obtained on exercise of such Prior Options after the date hereof shall be subject to the Minimum Share Ownership Policy pursuant to paragraph 5(b) of this Option Agreement and the terms of paragraphs 4(b)(ii) and 5(b) hereof are made a part of the terms of each of the Prior Options.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that this Option shall be subject to forfeiture pursuant to paragraph 4(b)(iii) of this Agreement.
	This Option Agreement shall become effective only after the Optionee has executed and returned to the Executive Compensation Department (to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) a signed copy of this Option Agreement and shall be revoked if not executed and returned to Lisa Zajac within thirty (30) days of receipt by the Optionee.
2.	[Award of Option. The Corporation hereby awards to the Optionee an option (the “Option”) to purchase from the Corporation such number of shares of the Corporation’s common stock (the “Shares”) at the exercise price set forth in this Option Agreement (the “Exercise Price”) below. This option shall vest equally over a three-year period. If the foregoing results in a fractional number of Shares subject to the Option vesting on any vesting date, the number of Shares subject to the Option vesting on the first and second vesting dates shall be rounded down to the previous whole number of Shares and the Shares subject to the Option vesting on the third vesting date shall be rounded up to the next whole number of Shares, as shall be necessary in order to result in a vesting of 100% of the Shares subject to the Option. The Compensation Committee of the Corporation may, in its sole discretion, convert this Option at any time to a stock settled stock appreciation grant.

Number of Shares Subject to Option: 50,000

Exercise Price per Share: $52.235

Expiration Date: February 15, 2013

Vesting Schedule:

			Number of Shares Subject to Option
Vesting Dates	% of Grant		Incremental	Cumulative
February 15, 2007	33.33	%	16,666	16,666
February 15, 2008	33.33	%	16,667	33,333
February 15, 2009	33.34	%	16,667	50,000

This option shall expire, and no shares may be purchased pursuant to this Option, after the expiration date set forth above (the “Expiration Date”).

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EOAgmt

Non-Qualified Stock Option Agreement
February 15, 2006
page 2.

3.	Not An Incentive Stock Option. This Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and this Agreement shall be construed and interpreted in accordance with such intention.
4.	Vesting. Except as otherwise provided below, the Option shall vest and become exercisable as to the percentage of Shares subject to the Option on the vesting dates [set forth above][set forth on the “Summary Grant” page at the Smith Barney website] (the “Vesting Dates”).
	(a)	Termination. Unless the Optionee’s employment is terminated for one of the reasons set forth in Section 4(b) through (i), at the Optionee’s termination of employment prior to the third anniversary of the date of this Agreement, the Optionee will vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
		Notwithstanding anything to the contrary contained herein, if the Optionee is on a leave of absence approved by the Corporation for medical, personal, educational and/or other permissible purposes pursuant to policies of the Corporation as in effect on the date hereof, for a consecutive twelve-month period, such Optionee will be deemed terminated for purposes of this Agreement on the twelve month anniversary of the commencement of such leave of absence and this Option shall cease to vest at the end of such twelve-month period and the Optionee will forfeit any unvested portion of the Option.
	(b)	Cause, Dereliction of Duties or Harmful Acts; Breach of Share Ownership Guidelines; Loss of Equity Award Eligibility Status. (i) If the Optionee shall cause the Corporation to suffer financial harm or damage to its reputation (either before or after termination of employment) through (x) dishonesty, (y) violation of law in the course of the Optionee’s employment or violation of the Corporation’s Corporate Compliance Manual and compliance bulletins or other written policies, or (z) material deviation from the duties owed the Corporation by the Optionee, this Option, whether or not vested, shall expire and be cancelled to the extent it has not been exercised and be of no further force or effect.
		(ii) If the Optionee is subject to the Minimum Share Ownership Policy, any false attestation made under the Minimum Share Ownership Policy may result in the immediate cancellation of this Option and all Prior Options (to the extent not exercised), whether or not vested.
		(iii) If the Optionee’s employment status in the Corporation is changed such that the Optionee will no longer be eligible to receive options pursuant to the Equity Award Eligibility Policy of the Corporation as in effect on the date hereof and attached as Annex A to this Agreement and such changed status continues for a consecutive 90 day period, this Option shall cease to vest at the end of such 90-day period (and the Optionee will then vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the end of such 90-day period by (ii) 36), and the Optionee will immediately forfeit any unvested portion of the Option.
	(c)	Death. If the Optionee shall die while employed, this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s death.
	(d)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s termination of employment.
	(e)	Change of Control. This Option shall vest as to all shares immediately on the effective date of a change of control, provided the Optionee was actively employed by the Corporation on such date. For purposes of this Agreement the term “change of control” shall mean and shall be deemed to occur if and when:
		(i)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 40% of more of the combined voting power of the Corporation’s then outstanding securities; or

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February 15, 2006
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		(ii)	The individuals who, as of the Grant Date, constituted the Corporation’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Corporation, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
		(iii)	Shareholders of the Corporation approve an agreement, providing for (a) a transaction in which the Corporation will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Corporation’s assets, or (c) a plan of partial or complete liquidation of the Corporation.
	(f)	Involuntary Termination with Severance. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under one of the Corporation’s Severance Plans, the Optionee will immediately vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(g)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then the Optionee will immediately vest in a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(h)	Transfers. If the Optionee shall be transferred from the Corporation to a subsidiary company (being a 50% owned entity within the meaning of Section 425(f) of the Code), or joint venture or similar entity existing as of the date of this Agreement in which the Corporation has at least a 33.33% interest (“joint venture”) or vice versa or from one subsidiary company (or joint venture) to another, the Optionee’s employment shall not be deemed to have terminated. If, while the Optionee is employed by such a subsidiary company or joint venture, such subsidiary company or joint venture shall cease to be a subsidiary company or joint venture as described above and the Optionee is not thereupon transferred to and employed by the Corporation or another subsidiary company or joint venture as described above, then the Optionee’s employment will be treated as a termination due to a divestiture under clause (g) above as of the date that the Optionee’s employer ceases to be such a subsidiary company or joint venture of the Corporation.
	(i)	Retirement. If the Optionee’s employment shall terminate with the consent of the Corporation on or after the Optionee’s attaining age 60, this Option shall vest and be exercisable as to all Shares subject to this Option on the effective termination date of the Optionee’s employment.
5.	Non-Transferability.
	a)	The rights under this Option Agreement shall not be transferable other than by will or the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee except to the extent of a disability (as defined in Section 22(e)(3) of the Code), in which case the Option may be exercised by the Optionee’s legal representative.
	b)	If the Optionee is subject to the Minimum Share Ownership Policy, the Optionee agrees that any shares issued hereunder or pursuant to any Prior Option shall be subject to the restrictions set forth in the Minimum Share Ownership Policy. If the Optionee is not in compliance with the Minimum Share Ownership Policy, the Corporation may terminate the employment of such Optionee and/or the Option shall immediately terminate and cease to be exercisable. The Optionee hereby acknowledges and agrees that the investment risk associated with the retention of any Shares, whether pursuant to the Minimum Share Ownership Policy or otherwise, is the sole responsibility of the Optionee and Optionee hereby holds the Corporation harmless against any claim of loss related to the retention of the Shares.
6.	Exercise. The purchase price of Shares purchased hereunder shall be paid in full with, or in a combination of, (a) cash or (b) shares of the Corporation’s Common Stock that have been owned by the Optionee, and have been fully vested and freely transferable by the Optionee, for at least six months preceding the date of exercise of the Option, duly endorsed or accompanied by stock powers executed in blank. However, the Corporation in its discretion may permit the Optionee (if the

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Non-Qualified Stock Option Agreement
February 15, 2006
page 4.

Optionee owns shares that have been owned by the Optionee, and have been fully vested and fully transferable by the Optionee, for at least six months preceding the date of exercise) to “attest” to his ownership of the number of shares required to pay all or part of the purchase price (and not require delivery of the shares), in which case the Corporation will deliver to the Optionee the number of shares to which the Optionee is entitled, net of the “attested” shares. If payment is made in whole or in part with shares of the Corporation’s Common Stock, the value of such Common Stock shall be the mean between its high and low prices on the day of purchase as reported by The New York Times following the close of business on the date of exercise. No “reload” or other option will be granted by reason of any such exercise. The Optionee agrees that, notwithstanding the terms of any pre-existing agreement between the Corporation and the Optionee, any shares of the Corporation’s Common Stock surrendered (or “attested” to) for payment of the exercise price of any options previously granted by the Corporation to the Optionee (whether granted under the terms of the Amended and Restated Employee Long-Term Incentive Plan or any predecessor program) shall be valued in the manner provided in the preceding sentence except to the extent otherwise expressly provided by the terms of the program document.

7.	Exercise After Termination of Employment, Death or Disability. The provisions covering the exercise of this Option following termination of employment are as follows:
	(a)	Termination in General. If the Optionee shall terminate his employment for any reason other than those described in Section 7(b) through (f), all of the vested percentage of the Option may be exercised for ninety (90) days following such termination (but not beyond the Expiration Date) and the Option shall thereafter expire and cease to be exercisable;
	(b)	Death. If the Optionee shall die while employed, the Option may be exercised through the Expiration Date in respect of all of the Shares subject to the Option. If the Optionee shall die after termination of employment but while the Option is still exercisable, it shall remain exercisable to the same extent through the first anniversary of the date of death but not beyond the Expiration Date;
	(c)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), the Option shall remain exercisable through the Expiration Date;
	(d)	Involuntary Termination with Severance. If the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under the Corporation’s Severance Plans, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(f)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(e)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(g)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(f)	Retirement. If the Optionee’s employment shall terminate as a result of Retirement as defined in Section 4(i) of this Option, all of the Option may be exercised as to all of the Shares subject to the Option through the Expiration Date.
	In no event may any portion of the Option be exercised after the Expiration Date.
8.	Consideration. In consideration for the Option granted by this Option Agreement, the Optionee hereby agrees to be bound by the Nondisclosure and Nonsolicitation provisions set forth in Sections 9 and 10 of this Option Agreement and the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation. For purposes of Sections 9 and 10, the term “Company” shall mean the Corporation, its affiliates, divisions and subsidiaries, or any other entity in which the Corporation, directly or indirectly, controls or has an ownership or equity interest equal to or greater than 25.0% of the combined voting power of the entity’s then outstanding securities, and their respective successors and assigns.
9.	Nondisclosure of Confidential Information.
	(a)	For purposes of this Option Agreement, the term “Confidential Information” shall mean all ideas, inventions, data, databases, know-how, processes, methods, practices, specifications, raw materials and preparations, compositions, designs, devices, fabrication techniques, technical plans, algorithms, computer programs, protocols, client information, medical records, documentation, customer names and lists, supplier names and lists, price lists, supplier names and lists, apparatus, business plans, marketing plans, financial information, chemical and biological reagents, business methods and systems, literary and graphical and audiovisual works and sound recordings, mask works,

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February 15, 2006
page 5.

computer programs, and the like, and potential trade names, trademarks, and logos, in whatever form or medium and which have commercial value, and whether or not designated or marked “Confidential” or the like, which the Optionee learns, acquires, conceives, creates, develops, or improves while employed by the Company and which (1) relate to the past, current, or prospective business of the Company or its subsidiaries and (a) which have not previously been publicly disclosed without restrictions on use by the Company, or (b) which Optionee knows or has good reason to know are not generally publicly known; or (2) are received by the Company from a third party under an obligation of confidentiality to the third party

(b)	The Optionee recognizes and acknowledges that during his or her employment with the Company, the Optionee may be given access to or develop Confidential Information. The Optionee shall not use or disclose (directly or indirectly) any Confidential Information (whether or not developed by the Optionee) at any time or in any manner, except as authorized and required in the course of employment with the Company. The Optionee shall not disclose to the Company or use on behalf of the Company any Confidential Information obtained from any former employer or any other third party. All documents and things embodying Confidential Information, whether prepared by the Optionee or otherwise coming into the Optionee’s possession, are the exclusive property of the Company, and must not be removed from any of its premises except as required in the course of employment with the Company. All such documents and things shall be promptly returned by the Optionee to the Company upon the request of the Company and on any termination of employment with the Company. The Optionee will not remove any Confidential Information such as documents or things or retain them in whole or part in any manner. The Optionee shall ensure that any export of Confidential Information undertaken by the Optionee or with his/her knowledge or approval shall be in compliance with all applicable laws.
(c)	The Optionee shall promptly disclose to the Company all Confidential Information which the Optionee creates, conceives, develops, or improves (either alone or with others) referred to below as a “Creation” while in the employment of the Company, if the Creation either: (1) relates to any actual or demonstrably contemplated business, or research or development project, of the Company or its subsidiaries, or to any reasonable extension or variation thereof; or (2) results from any work performed by the Optionee for the Company; or (3) was created utilizing any of the Company’s equipment, supplies, facilities, time, or Confidential Information. The Optionee shall keep complete, accurate, and authentic records on all Creations in the manner and form requested by the Company. The Optionee shall promptly disclose to the Company, in confidence, all patent, copyright, and trademark applications filed by the Optionee within one (1) year after termination of employment with the Company and which relate to any field in which the Optionee worked at the Company. The Optionee agrees that any such application for a patent, copyright registration, trademark registration, mask work registration, or similar right filed within one (1) year after termination of employment with the Company shall be presumed to relate to a Creation of the Optionee created during employment at the Company, unless the Optionee can prove otherwise.
(d)	The Optionee hereby assigns to the Company all of the Optionee’s rights in all of the above-described Creations. All such Creations that are subject to copyright or mask work protection are explicitly considered by the Optionee and the Company to be works made for hire to the extent permitted by law. To the extent that any such Creations are subject to copyright protection and are not works made for hire, any and all of the Optionee’s copyright and mask work interest therein are hereby assigned by the Optionee to the Company, and are the exclusive property of the Company.
(e)	The Optionee agrees to assist the Company in obtaining and/or maintaining patents, copyrights, trademarks, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company, if and to the extent that the Company, in its sole discretion, requests such assistance, the Optionee shall sign all documents and do all other things deemed necessary by the Company, at the Company’s expense, to obtain and/or maintain such rights, to provide confirmatory evidence of the Optionee’s assignment of such Creations to the Company, to defend them from invalidation, and to protect them against infringement by other parties. The obligations of this paragraph are continuing and survive the termination of the Optionee’s employment with the Company. The Optionee irrevocably appoints the Chief Executive Officer of the Company (with powers of delegation) to act as the Optionee’s agent and attorney-in-fact to perform all acts as the Optionee’s agent and to file, prosecute, and maintain applications and registrations for patents, trademarks, copyrights, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company under this Option Agreement, such appointment being effective both during the Optionee’s employment by Company, and thereafter if the Optionee (1) refuses to perform those acts, or (2) is unavailable, within the meaning of any applicable laws. The Optionee acknowledges that the grant of the foregoing power of attorney is coupled with an interest, is irrevocable, and shall survive his/her death or disability.

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February 15, 2006
page 6.

10.	Nonsolicitation
	(a)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee will not directly or indirectly solicit the Business of any customer of the Company of whom the Optionee acquired knowledge and/or had direct or indirect contact during the one (1) year period prior to the termination of the Optionee’s employment relationship with the Company for any purpose other than to obtain, maintain and/or service the customer’s Business for the Company.
	(b)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee agrees not to, directly or indirectly, recruit or solicit any employees of the Company to work for the Optionee or any other person or entity.
	(c)	As used in this Option Agreement, the following terms shall have these respective definitions:
		(i)	“Current Business” shall mean and include: providing clinical testing information services for the diagnosis, monitoring, and treatment of disease; providing clinical laboratory management services; providing medical informatics services (i.e., the statistical analysis of medical information) and consulting services based on such analysis; providing data analysis, medical information services, and database management services for the health care industry; providing clinical testing information services in support of clinical trials, and clinical testing products for use in clinical trials; providing services of storage, retrieval, and communication of medical information via interactive computer networks; providing to managed care organizations, hospitals, employers, and other institutional healthcare providers access to a network of clinical diagnostic laboratories providing services of processing requests for diagnostic tests, performing tests, reporting test results, and paying claims to network laboratories; providing quality and utilization management; providing consolidated chronological reports in graphical and/or numerical form, representing the results of clinical diagnostic tests performed on individual patients and groups of patients over monitored periods of time, together with analysis of the results; and manufacturing and selling clinical diagnostic assay kits, apparatus, and reagents.
		(ii)	“Business” shall include the Current Business and any other product or service which the Company provided during the one (1) year period prior to the Optionee’s termination of employment and during the one (1) year period following the Optionee’s termination of employment, but the restriction on products and services introduced after the Optionee’s termination of employment shall exclude products and services that were not planned, discussed, or contemplated prior to the Optionee’s termination of employment.
		(iii)	“Indirectly Solicit” shall include, but is not be limited to, providing the Company’s Confidential Information to another individual, or entity, allowing the use of the Optionee’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.
11.	Damages and Injunctive Relief. The Optionee understands that if the terms of Section 9 and/or 10 of this Option Agreement are violated, the Corporation would be seriously and irreparably damaged, and agrees that the Corporation will be entitled to seek appropriate remedies for those damages, including, without limitation, injunctive relief to enforce any provision of this Agreement and all reasonable attorney’s fees incurred by the Corporation to enforce the terms of these Sections.
12.	Forfeiture. The Optionee will immediately forfeit any unexercised portion of the Option for any violations of (i) the terms of Sections 9 and/or 10 of this Agreement and/or (ii) the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation, in addition to any equitable and legal rights the Corporation has or may have. The Optionee understands that the forfeiture of any unexercised portion of the Option is only one element of the damages potentially sustained by the Corporation for a violation of Sections 9 and/or 10 of this Agreement or the non-compete obligation described above, and such forfeiture shall not constitute a release of any claim that the Company may have for damages, past, present, or future.

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February 15, 2006
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13.	(a) Consent Requirement. If the Corporation shall at any time determine that any consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of this Option, the issuance or purchase of Shares or other rights hereunder, or the taking of any other action hereunder (a “Plan Action”), then no such Plan Action shall be taken, in whole or in part, unless and until such consent shall have been effected or obtained to the full satisfaction of the Corporation.
	(b) Definition of Consent. The term “consent” as used herein with respect to any action referred to in Section 13(a) means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the Optionee with respect to the disposition of Shares, or with respect to any other matter, which the Corporation shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies, and (iv) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Corporation. Nothing herein shall require the Corporation to list, register or qualify the Shares of its common stock on any securities exchange.
14.	Invalidity and Enforcement. If any provision of this Agreement is deemed invalid or unenforceable, either in whole or in part, this Option Agreement will be deemed amended to delete or to modify, as set forth in this Section, the offending provision or provisions and to alter the bounds of this Agreement in order to render it valid and enforceable. The Corporation and the Optionee specifically request that any court having jurisdiction over any dispute relating to this Option Agreement modify, if possible, any offending provision so that such provision will be enforceable to the maximum extent permitted by State law.
15.	Employee at Will. The Optionee understands that his/her employment with the Corporation is at will and that it can be terminated at any time by the Optionee and/or the Corporation.
16.	Enforcement by Successors and Assigns. The Corporation and any of its successors or assignees may enforce the Corporation’s rights under this Option Agreement.
17.	Entire Agreement. The Agreement supersedes any prior agreement or understandings between the Optionee and the Company with respect to nonsolicitation, nonuse, and non-disclosure and constitutes the entire agreement between the Corporation and the Optionee. No modification of this Option Agreement will have any force or effect unless such modification is in writing, signed by the Chief Executive Officer of the Corporation and the Optionee, and expressly indicates an intent to modify this Option Agreement.
18.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Agreement shall be finally determined by the Corporation’s Compensation Committee in its absolute discretion.
19.	Notice of Exercise. The Optionee may exercise the Option, in accordance with the procedures specified by the Corporation from time to time.
20.	Rights Prior to Exercise. The Optionee shall not have any rights as a stockholder with respect to any Shares subject to this Option prior to the date on which he/she is recorded as the holder of such Shares on the records of the Corporation.
21.	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 this Option.
22.	Governing Law. This Option Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.
23.	Acknowledgements. By execution of this Non-Qualified Stock Option Grant Agreement, the Optionee agrees that he/she has received and reviewed a copy of:
	(a) the Prospectus (link to Prospectus:
	http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_option/stock_option.htm)
	relating to the Corporation’s Employee Equity Participation Program and;
	(b) the Quest Diagnostics Incorporated 2005 Annual Report (link to 2005 Annual Report:
	http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700 to Shareholders and Form 10-K);
	(c) the Corporation’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Optionee further agrees to fully comply with the terms of the Policy;

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February 15, 2006
page 8.

(d) the Corporation’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and

(e) the Corporation’s Equity Award Eligibility Policy attached hereto as Annex A.

OPTIONEE:
By:
	Peters, Robert E.

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Non-Qualified Stock Option Agreement
February 15, 2006
page 9.

Annex A
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility

• Unreduced Work Schedule

• One of the following salary grades:

• Corporate VP or Higher

• Salary Grade 53 or Higher

• Research & Development - Grade RD6 or Higher

• Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company’s Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

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EX-10

Exhibit 10.7

QUEST DIAGNOSTICS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT

This Non-Qualified Stock Option Agreement (the “Option Agreement”), dated as of February 15, 2006 (the “Grant Date”), is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, New Jersey 07071 (the “Corporation”) and W. Thomas Grant, II (the “Optionee”) [address].

1.	Conditions. This Option Agreement is subject in all respects to the Corporation’s Amended and Restated Long-Term Employee Incentive Plan, which is incorporated herein by reference. The Optionee acknowledges that he/she has read the terms of the Amended and Restated Long-Term Employee Incentive Plan and that those terms shall govern in the event of any conflict between them and those of this Option Agreement.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that all options granted to the Optionee by the Corporation prior to the date hereof (the “Prior Options”) shall be subject to forfeiture pursuant to paragraph 4(b)(ii) of this Option Agreement (for false attestation under the Executive Share Ownership Guidelines of the Corporation (the “ Minimum Share Ownership Policy”)), the Shares obtained on exercise of such Prior Options after the date hereof shall be subject to the Minimum Share Ownership Policy pursuant to paragraph 5(b) of this Option Agreement and the terms of paragraphs 4(b)(ii) and 5(b) hereof are made a part of the terms of each of the Prior Options.
	In consideration of the grant of the option provided pursuant to this Option Agreement and by accepting the terms of this Agreement, the Optionee agrees that this Option shall be subject to forfeiture pursuant to paragraph 4(b)(iii) of this Agreement.
	This Option Agreement shall become effective only after the Optionee has executed and returned to the Executive Compensation Department (to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) a signed copy of this Option Agreement and shall be revoked if not executed and returned to Lisa Zajac within thirty (30) days of receipt by the Optionee..
2.	Award of Option. The Corporation hereby awards to the Optionee an option (the “Option”) to purchase from the Corporation such number of shares of the Corporation’s common stock (the “Shares”) at the exercise price set forth in this Option Agreement (the “Exercise Price”) below. This option shall vest equally over a three-year period. If the foregoing results in a fractional number of Shares subject to the Option vesting on any vesting date, the number of Shares subject to the Option vesting on the first and second vesting dates shall be rounded down to the previous whole number of Shares and the Shares subject to the Option vesting on the third vesting date shall be rounded up to the next whole number of Shares, as shall be necessary in order to result in a vesting of 100% of the Shares subject to the Option. The Compensation Committee of the Corporation may, in its sole discretion, convert this Option at any time to a stock settled stock appreciation grant.]

Number of Shares Subject to Option:   46,667

Exercise Price per Share:   $52.235

Expiration Date:   February 15, 2013

Vesting Schedule:

			Number of Shares Subject to Option
Vesting Dates	% of Grant		Incremental	Cumulative
February 15, 2007	33.33	%	15,555	15,555
February 15, 2008	33.33	%	15,556	31,111
February 15, 2009	33.34	%	15,556	46,667

This option shall expire, and no shares may be purchased pursuant to this Option, after the expiration date set forth above (the “Expiration Date”).

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EOAgmt

Non-Qualified Stock Option Agreement
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3.	Not An Incentive Stock Option. This Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and this Agreement shall be construed and interpreted in accordance with such intention.
4.	Vesting. Except as otherwise provided below, the Option shall vest and become exercisable as to the percentage of Shares subject to the Option on the vesting dates set forth above (the “Vesting Dates”).
	(a)	Termination. Unless the Optionee’s employment is terminated for one of the reasons set forth in Section 4(b) through (i), at the Optionee’s termination of employment prior to the third anniversary of the date of this Agreement, the Optionee will vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
		Notwithstanding anything to the contrary contained herein, if the Optionee is on a leave of absence approved by the Corporation for medical, personal, educational and/or other permissible purposes pursuant to policies of the Corporation as in effect on the date hereof, for a consecutive twelve-month period, such Optionee will be deemed terminated for purposes of this Agreement on the twelve month anniversary of the commencement of such leave of absence and this Option shall cease to vest at the end of such twelve-month period and the Optionee will forfeit any unvested portion of the Option.
	(b)	Cause, Dereliction of Duties or Harmful Acts; Breach of Share Ownership Guidelines; Loss of Equity Award Eligibility Status. (i) If the Optionee shall cause the Corporation to suffer financial harm or damage to its reputation (either before or after termination of employment) through (x) dishonesty, (y) violation of law in the course of the Optionee’s employment or violation of the Corporation’s Corporate Compliance Manual and compliance bulletins or other written policies, or (z) material deviation from the duties owed the Corporation by the Optionee, this Option, whether or not vested, shall expire and be cancelled to the extent it has not been exercised and be of no further force or effect.
		(ii) If the Optionee is subject to the Minimum Share Ownership Policy, any false attestation made under the Minimum Share Ownership Policy may result in the immediate cancellation of this Option and all Prior Options (to the extent not exercised), whether or not vested.
		(iii) If the Optionee’s employment status in the Corporation is changed such that the Optionee will no longer be eligible to receive options pursuant to the Equity Award Eligibility Policy of the Corporation as in effect on the date hereof and attached as Annex A to this Agreement and such changed status continues for a consecutive 90 day period, this Option shall cease to vest at the end of such 90-day period (and the Optionee will then vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the end of such 90-day period by (ii) 36), and the Optionee will immediately forfeit any unvested portion of the Option.
	(c)	Death. If the Optionee shall die while employed, this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s death.
	(d)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), this Option shall vest as to all Shares subject to the Option on the date of the Optionee’s termination of employment.
	(e)	Change of Control. This Option shall vest as to all shares immediately on the effective date of a change of control, provided the Optionee was actively employed by the Corporation on such date. For purposes of this Agreement the term “change of control” shall mean and shall be deemed to occur if and when:
		(i)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 40% of more of the combined voting power of the Corporation’s then outstanding securities; or

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Non-Qualified Stock Option Agreement
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		(ii)	The individuals who, as of the Grant Date, constituted the Corporation’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Corporation, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
		(iii)	Shareholders of the Corporation approve an agreement, providing for (a) a transaction in which the Corporation will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Corporation’s assets, or (c) a plan of partial or complete liquidation of the Corporation.
	(f)	Involuntary Termination with Severance. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under one of the Corporation’s Severance Plans, the Optionee will immediately vest in and have the right to purchase a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(g)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then the Optionee will immediately vest in a percentage of the Shares subject to this Option determined by dividing (i) the number of whole months from the most recent anniversary of the grant date (February 15) to the date that is twelve months after the termination date of the Optionee’s employment by (ii) 36, and the Option will cease to be exercisable and will be cancelled for the balance of the Shares subject to this Option.
	(h)	Transfers. If the Optionee shall be transferred from the Corporation to a subsidiary company (being a 50% owned entity within the meaning of Section 425(f) of the Code), or joint venture or similar entity existing as of the date of this Agreement in which the Corporation has at least a 33.33% interest (“joint venture”) or vice versa or from one subsidiary company (or joint venture) to another, the Optionee’s employment shall not be deemed to have terminated. If, while the Optionee is employed by such a subsidiary company or joint venture, such subsidiary company or joint venture shall cease to be a subsidiary company or joint venture as described above and the Optionee is not thereupon transferred to and employed by the Corporation or another subsidiary company or joint venture as described above, then the Optionee’s employment will be treated as a termination due to a divestiture under clause (g) above as of the date that the Optionee’s employer ceases to be such a subsidiary company or joint venture of the Corporation.
	(i)	Retirement. If the Optionee’s employment shall terminate with the consent of the Corporation on or after the Optionee’s attaining age 60, this Option shall vest and be exercisable as to all Shares subject to this Option on the effective termination date of the Optionee’s employment.
5.	Non-Transferability.
	a)	The rights under this Option Agreement shall not be transferable other than by will or the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee except to the extent of a disability (as defined in Section 22(e)(3) of the Code), in which case the Option may be exercised by the Optionee’s legal representative.
	b)	If the Optionee is subject to the Minimum Share Ownership Policy, the Optionee agrees that any shares issued hereunder or pursuant to any Prior Option shall be subject to the restrictions set forth in the Minimum Share Ownership Policy. If the Optionee is not in compliance with the Minimum Share Ownership Policy, the Corporation may terminate the employment of such Optionee and/or the Option shall immediately terminate and cease to be exercisable. The Optionee hereby acknowledges and agrees that the investment risk associated with the retention of any Shares, whether pursuant to the Minimum Share Ownership Policy or otherwise, is the sole responsibility of the Optionee and Optionee hereby holds the Corporation harmless against any claim of loss related to the retention of the Shares.
6.	Exercise. The purchase price of Shares purchased hereunder shall be paid in full with, or in a combination of, (a) cash or (b) shares of the Corporation’s Common Stock that have been owned by the Optionee, and have been fully vested and freely transferable by the Optionee, for at least six months preceding the date of exercise of the Option, duly endorsed or accompanied by stock powers executed in blank. However, the Corporation in its discretion may permit the Optionee (if the

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Non-Qualified Stock Option Agreement
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	Optionee owns shares that have been owned by the Optionee, and have been fully vested and fully transferable by the Optionee, for at least six months preceding the date of exercise) to “attest” to his ownership of the number of shares required to pay all or part of the purchase price (and not require delivery of the shares), in which case the Corporation will deliver to the Optionee the number of shares to which the Optionee is entitled, net of the “attested” shares. If payment is made in whole or in part with shares of the Corporation’s Common Stock, the value of such Common Stock shall be the mean between its high and low prices on the day of purchase as reported by The New York Times following the close of business on the date of exercise. No “reload” or other option will be granted by reason of any such exercise.
7.	Exercise After Termination of Employment, Death or Disability. The provisions covering the exercise of this Option following termination of employment are as follows:
	(a)	Termination in General. If the Optionee shall terminate his employment for any reason other than those described in Section 7(b) through (f), all of the vested percentage of the Option may be exercised for ninety (90) days following such termination (but not beyond the Expiration Date) and the Option shall thereafter expire and cease to be exercisable;
	(b)	Death. If the Optionee shall die while employed, the Option may be exercised through the Expiration Date in respect of all of the Shares subject to the Option. If the Optionee shall die after termination of employment but while the Option is still exercisable, it shall remain exercisable to the same extent through the first anniversary of the date of death but not beyond the Expiration Date;
	(c)	Disability. If the Optionee’s employment shall terminate as a result of disability (as defined in Section 22(e)(3) of the Code), the Option shall remain exercisable through the Expiration Date;
	(d)	Involuntary Termination with Severance. If the Optionee’s employment is terminated by the Corporation and, as a result, the Optionee becomes eligible for severance benefits under the Corporation’s Severance Plans, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(f)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(e)	Divestiture. If prior to the third anniversary of the date of this Agreement, the Optionee’s employment is terminated by the Corporation due to a divestiture and the Optionee is employed by the purchasing entity, then to the extent this Option is vested and exercisable (and becomes vested and exercisable under Section 4(g)), it may be exercised through the first anniversary of the date of termination (but not beyond the Expiration Date) and shall thereafter expire.
	(f)	Retirement. If the Optionee’s employment shall terminate as a result of Retirement as defined in Section 4(i) of this Option, all of the Option may be exercised as to all of the Shares subject to the Option through the Expiration Date.

          In no event may any portion of the Option be exercised after the Expiration Date.

8.	Consideration. In consideration for the Option granted by this Option Agreement, the Optionee hereby agrees to be bound by the Nondisclosure and Nonsolicitation provisions set forth in Sections 9 and 10 of this Option Agreement and the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation. For purposes of Sections 9 and 10, the term “Company” shall mean the Corporation, its affiliates, divisions and subsidiaries, or any other entity in which the Corporation, directly or indirectly, controls or has an ownership or equity interest equal to or greater than 25.0% of the combined voting power of the entity’s then outstanding securities, and their respective successors and assigns.
9.	Nondisclosure of Confidential Information.
	(a)	For purposes of this Option Agreement, the term “Confidential Information” shall mean all ideas, inventions, data, databases, know-how, processes, methods, practices, specifications, raw materials and preparations, compositions, designs, devices, fabrication techniques, technical plans, algorithms, computer programs, protocols, client information, medical records, documentation, customer names and lists, supplier names and lists, price lists, supplier names and lists, apparatus, business plans, marketing plans, financial information, chemical and biological reagents, business methods and systems, literary and graphical and audiovisual works and sound recordings, mask works, computer programs, and the like, and potential trade names, trademarks, and logos, in whatever form or medium and which have commercial value, and whether or not designated or marked “Confidential” or the like, which the Optionee learns, acquires, conceives, creates, develops, or improves while employed by the Company and which (1) relate to the past, current, or prospective business of the Company or its subsidiaries and (a) which have not previously been publicly disclosed without restrictions on use by the Company, or (b) which Optionee knows or has

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Non-Qualified Stock Option Agreement
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		good reason to know are not generally publicly known; or (2) are received by the Company from a third party under an obligation of confidentiality to the third party.
	(b)	The Optionee recognizes and acknowledges that during his or her employment with the Company, the Optionee may be given access to or develop Confidential Information. The Optionee shall not use or disclose (directly or indirectly) any Confidential Information (whether or not developed by the Optionee) at any time or in any manner, except as authorized and required in the course of employment with the Company. The Optionee shall not disclose to the Company or use on behalf of the Company any Confidential Information obtained from any former employer or any other third party. All documents and things embodying Confidential Information, whether prepared by the Optionee or otherwise coming into the Optionee’s possession, are the exclusive property of the Company, and must not be removed from any of its premises except as required in the course of employment with the Company. All such documents and things shall be promptly returned by the Optionee to the Company upon the request of the Company and on any termination of employment with the Company. The Optionee will not remove any Confidential Information such as documents or things or retain them in whole or part in any manner. The Optionee shall ensure that any export of Confidential Information undertaken by the Optionee or with his/her knowledge or approval shall be in compliance with all applicable laws.
	(c)	The Optionee shall promptly disclose to the Company all Confidential Information which the Optionee creates, conceives, develops, or improves (either alone or with others) referred to below as a “Creation” while in the employment of the Company, if the Creation either: (1) relates to any actual or demonstrably contemplated business, or research or development project, of the Company or its subsidiaries, or to any reasonable extension or variation thereof; or (2) results from any work performed by the Optionee for the Company; or (3) was created utilizing any of the Company’s equipment, supplies, facilities, time, or Confidential Information. The Optionee shall keep complete, accurate, and authentic records on all Creations in the manner and form requested by the Company. The Optionee shall promptly disclose to the Company, in confidence, all patent, copyright, and trademark applications filed by the Optionee within one (1) year after termination of employment with the Company and which relate to any field in which the Optionee worked at the Company. The Optionee agrees that any such application for a patent, copyright registration, trademark registration, mask work registration, or similar right filed within one (1) year after termination of employment with the Company shall be presumed to relate to a Creation of the Optionee created during employment at the Company, unless the Optionee can prove otherwise.
	(d)	The Optionee hereby assigns to the Company all of the Optionee’s rights in all of the above-described Creations. All such Creations that are subject to copyright or mask work protection are explicitly considered by the Optionee and the Company to be works made for hire to the extent permitted by law. To the extent that any such Creations are subject to copyright protection and are not works made for hire, any and all of the Optionee’s copyright and mask work interest therein are hereby assigned by the Optionee to the Company, and are the exclusive property of the Company.
	(e)	The Optionee agrees to assist the Company in obtaining and/or maintaining patents, copyrights, trademarks, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company, if and to the extent that the Company, in its sole discretion, requests such assistance, the Optionee shall sign all documents and do all other things deemed necessary by the Company, at the Company’s expense, to obtain and/or maintain such rights, to provide confirmatory evidence of the Optionee’s assignment of such Creations to the Company, to defend them from invalidation, and to protect them against infringement by other parties. The obligations of this paragraph are continuing and survive the termination of the Optionee’s employment with the Company. The Optionee irrevocably appoints the Chief Executive Officer of the Company (with powers of delegation) to act as the Optionee’s agent and attorney-in-fact to perform all acts as the Optionee’s agent and to file, prosecute, and maintain applications and registrations for patents, trademarks, copyrights, mask work rights, and similar rights to any Creations assigned by the Optionee to the Company under this Option Agreement, such appointment being effective both during the Optionee’s employment by Company, and thereafter if the Optionee (1) refuses to perform those acts, or (2) is unavailable, within the meaning of any applicable laws. The Optionee acknowledges that the grant of the foregoing power of attorney is coupled with an interest, is irrevocable, and shall survive his/her death or disability.
10.	Nonsolicitation
	(a)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee will not directly or indirectly solicit the Business of any customer of the Company of whom the Optionee acquired knowledge and/or had direct or indirect contact during the one (1) year period prior to the termination of the Optionee’s employment relationship with the Company for any purpose other than to obtain, maintain and/or service the customer’s Business for the Company.

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	(b)	For a period of one (1) year following the termination of the Optionee’s employment for any reason, the Optionee agrees not to, directly or indirectly, recruit or solicit any employees of the Company to work for the Optionee or any other person or entity.
	(c)	As used in this Option Agreement, the following terms shall have these respective definitions:
		(i)	“Current Business” shall mean and include: providing clinical testing information services for the diagnosis, monitoring, and treatment of disease; providing clinical laboratory management services; providing medical informatics services (i.e., the statistical analysis of medical information) and consulting services based on such analysis; providing data analysis, medical information services, and database management services for the health care industry; providing clinical testing information services in support of clinical trials, and clinical testing products for use in clinical trials; providing services of storage, retrieval, and communication of medical information via interactive computer networks; providing to managed care organizations, hospitals, employers, and other institutional healthcare providers access to a network of clinical diagnostic laboratories providing services of processing requests for diagnostic tests, performing tests, reporting test results, and paying claims to network laboratories; providing quality and utilization management; providing consolidated chronological reports in graphical and/or numerical form, representing the results of clinical diagnostic tests performed on individual patients and groups of patients over monitored periods of time, together with analysis of the results; and manufacturing and selling clinical diagnostic assay kits, apparatus, and reagents.
		(ii)	“Business” shall include the Current Business and any other product or service which the Company provided during the one (1) year period prior to the Optionee’s termination of employment and during the one (1) year period following the Optionee’s termination of employment, but the restriction on products and services introduced after the Optionee’s termination of employment shall exclude products and services that were not planned, discussed, or contemplated prior to the Optionee’s termination of employment.
		(iii)	“Indirectly Solicit” shall include, but is not be limited to, providing the Company’s Confidential Information to another individual, or entity, allowing the use of the Optionee’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.
11.	Damages and Injunctive Relief. The Optionee understands that if the terms of Section 9 and/or 10 of this Option Agreement are violated, the Corporation would be seriously and irreparably damaged, and agrees that the Corporation will be entitled to seek appropriate remedies for those damages, including, without limitation, injunctive relief to enforce any provision of this Agreement and all reasonable attorney’s fees incurred by the Corporation to enforce the terms of these Sections.
12.	Forfeiture. The Optionee will immediately forfeit any unexercised portion of the Option for any violations of (i) the terms of Sections 9 and/or 10 of this Agreement and/or (ii) the non-compete obligations set forth in the agreement between the Optionee and the Corporation or otherwise pursuant to any written policy of the Corporation, in addition to any equitable and legal rights the Corporation has or may have. The Optionee understands that the forfeiture of any unexercised portion of the Option is only one element of the damages potentially sustained by the Corporation for a violation of Sections 9 and/or 10 of this Agreement or the non-compete obligation described above, and such forfeiture shall not constitute a release of any claim that the Company may have for damages, past, present, or future.
13.	(a) Consent Requirement. If the Corporation shall at any time determine that any consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of this Option, the issuance or purchase of Shares or other rights hereunder, or the taking of any other action hereunder (a “Plan Action”), then no such Plan Action shall be taken, in whole or in part, unless and until such consent shall have been effected or obtained to the full satisfaction of the Corporation.
	(b) Definition of Consent. The term “consent” as used herein with respect to any action referred to in Section 13(a) means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the Optionee with respect to the disposition of Shares, or with respect to any other matter, which the Corporation shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies, and (iv) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Corporation. Nothing herein shall require the Corporation to list, register or qualify the Shares of its common stock on any securities exchange.

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14.	Invalidity and Enforcement. If any provision of this Agreement is deemed invalid or unenforceable, either in whole or in part, this Option Agreement will be deemed amended to delete or to modify, as set forth in this Section, the offending provision or provisions and to alter the bounds of this Agreement in order to render it valid and enforceable. The Corporation and the Optionee specifically request that any court having jurisdiction over any dispute relating to this Option Agreement modify, if possible, any offending provision so that such provision will be enforceable to the maximum extent permitted by State law.
15.	Employee at Will. The Optionee understands that his/her employment with the Corporation is at will and that it can be terminated at any time by the Optionee and/or the Corporation, subject to the rights of Optionee under the Employment Agreement dated as of August 8, 2005 between LabOne, Inc. and Optionee.
16.	Enforcement by Successors and Assigns. The Corporation and any of its successors or assignees may enforce the Corporation’s rights under this Option Agreement.
17.	Entire Agreement. The Agreement supersedes any prior agreement or understandings between the Optionee and the Company with respect to nonsolicitation, nonuse, and non-disclosure and constitutes the entire agreement between the Corporation and the Optionee. No modification of this Option Agreement will have any force or effect unless such modification is in writing, signed by the Chief Executive Officer of the Corporation and the Optionee, and expressly indicates an intent to modify this Option Agreement.
18.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Agreement shall be finally determined by the Corporation’s Compensation Committee in its absolute discretion.
19.	Notice of Exercise. The Optionee may exercise the Option, in accordance with the procedures specified by the Corporation from time to time.
20.	Rights Prior to Exercise. The Optionee shall not have any rights as a stockholder with respect to any Shares subject to this Option prior to the date on which he/she is recorded as the holder of such Shares on the records of the Corporation.
21.	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 this Option.
22.	Governing Law. This Option Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.
23.	Acknowledgements. By execution of this Non-Qualified Stock Option Grant Agreement, the Optionee agrees that he/she has received and reviewed a copy of: (a) the Prospectus (link to Prospectus: http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_option/stock_option.htm) relating to the Corporation’s Employee Equity Participation Program and; (b) the Quest Diagnostics Incorporated 2005 Annual Report (link to 2005 Annual Report: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700 to Shareholders and Form 10-K); (c) the Corporation’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Optionee further agrees to fully comply with the terms of the Policy; (d) the Corporation’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and (e) the Corporation’s Equity Award Eligibility Policy attached hereto as Annex A.

OPTIONEE:
By:
	W. Thomas Grant, II

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Annex A
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility

• Unreduced Work Schedule

• One of the following salary grades:

• Corporate VP or Higher

• Salary Grade 53 or Higher

• Research & Development - Grade RD6 or Higher

• Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company’s Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

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EX-10

Exhibit 10.8

QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
(2006 – 2008 Performance Period)

This Performance Share Award Agreement (the “Share Agreement”) dated as of Grant Date (the “Grant Date”) is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, NJ 07071 (the “Company”) and ________________________ (the “Employee”).

1.	Conditions. This Share Agreement is subject in all respects to the Company’s Amended and Restated Employee Long-Term Incentive Plan (the “Plan”), the applicable terms of which are incorporated herein by reference. Terms not defined in this Share Agreement shall have the meaning ascribed in the Plan. The Employee acknowledges that he/she has read the terms of the Plan. This Share Agreement shall become void and the underlying grant will be revoked unless this document is executed by the Employee and returned by mail to the Executive Compensation Department to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) within thirty (30) days from the date of transmittal to the Employee.
2.	Calculation of Potential Award. The Employee shall be eligible to vest in shares of the Company’s stock as provided in this section (shares that have so vested, “Vested Shares”).
	Employee’s Target Performance Shares: ____________________
	Performance will be measured over the Performance Period using Baseline Year results and Final Year results for the Company as well as for the companies in the Comparator Peer Group (see Appendix A for these defined terms). After the Final Year of the Performance Period, the results of each company in the Comparator Peer Group will be arrayed from highest to lowest. The Company’s results will then be compared to that of the Comparator Peer Group and, based on the Company’s relative position in this array; Vested Shares will be awarded based upon the following formula:

	Performance Relative to Peers *		“Earnings Multiple”* multiplied by Target Performance Shares = Vested Shares
	Greater Than or Equal to 85th%ile		2 x Target Performance Shares = Vested Shares
	Equal to 55th %ile		1 x Target Performance Shares = Vested Shares
	Less Than or Equal to 25th %ile		0 x Target Performance Shares = 0 Shares
		*Intermediate Performance and resulting Earnings Multiple will be interpolated.
	For example, if the Company’s EPS Compound Annual Growth Rate (CAGR) from fiscal year 2005 to fiscal year 2007 is at the 70th %ile relative to the companies in the S&P500 Healthcare Index, an Earnings Multiple of 1.5 will be applied to the Target Performance Shares to calculate the Vested Shares.
3.	Adjustments to Target Performance Shares: The Target Performance Shares will only be adjusted on a pro rata basis in the event either of the following occur:
	(a)	the Employee’s employment with the Company ends prior to the end of the Performance Period, except if for death, disability (as defined in Section 22(e)(3) of the Internal Revenue Code), or retirement (defined as termination after the Employee attains age sixty and with the consent of the Company). In that event, the Target Performance Shares will be pro-rated by dividing the number of full months served by the Employee during the Performance Period by the number of

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		months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Pro Ration Factor and the Earnings Multiple; or
	(b)	the Employee’s employment with the Company ends prior to the end of the Performance Period as a result of a separation which would entitle the Employee to severance benefits under the Company’s Severance Policy or an employment agreement between such Employee and the Company. In that event, the Target Performance Shares will be pro-rated by adding the number of full months served by the Employee during the Performance Period plus twelve (but not to exceed the number of months remaining in the Performance Period) and then dividing that total by the number of months in the Performance Period (“Severance Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Severance Pro Ration Factor and the Earnings Multiple.
	(c)	If prior to the end of the Performance Period, the Employee’s employment status in the Company is changed such that the Employee will no longer be eligible to receive performance shares pursuant to the Equity Award Eligibility Policy of the Company as in effect on the date hereof and attached as Appendix B to this Agreement and such changed status continues for a consecutive 90-day period, then, notwithstanding any other provision in this Agreement to the contrary, the Target Performance Shares will be pro-rated by dividing (x) the number of full months served by the Employee during the Performance Period through such 90th day (not to exceed 36) by (y) the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Pro Ration Factor and the Earnings Multiple. The balance of the Target Performance Shares will be forfeited.
4.	Vesting and Exceptions to Vesting:
	Subject to the exception enumerated at the end of this Section 4, the Employee will vest at the end of the Performance Period. Vested Shares, net of required tax withholding as described in Section 8 below, will be transferred into the Employee’s account at the Company’s dedicated broker by March 15 after the Performance Period ends.
	In the event a Change in Control of the Company occurs prior to the end of the Performance Period (or prior to the determination of the final approved Earnings Multiple), then, upon the consummation of such transaction, a number of Vested Shares will be delivered to the Employee equal to the greater of: (1) the Target Performance Shares (as pro rated, if applicable, pursuant to section 3 above) or (2) the number of Performance Shares that would be Vested Shares had the calculation been based on the Performance Period including the most recent fiscal year end results of the Company and the companies in the Comparator Peer Group. For purposes of this Share Agreement, Change of Control shall mean and shall be deemed to occur if and when:
	(a)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 40% of more of the combined voting power of the Company’s then outstanding securities; or

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	(b)	The individuals who, as of the grant date, constituted the Company’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Company, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
	(c)	Shareholders of the Company approve an agreement, providing for (a) a transaction in which the Company will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Company’s assets, or (c) a plan of partial or complete liquidation of the Company.
	The Employee will not vest and will forfeit all Performance Shares if, either:
	(x)	The Employee was terminated for Cause where “Cause” shall be defined as the Employee committing any act that shall or could cause the Company to suffer financial harm or damage to its reputation (either before or after termination of employment) through (i) dishonesty, (ii) violation of law in the course of the Employee’s employment or violation of the Company’s Corporate Compliance Manual and compliance bulletins or other written policies, or (iii) material deviation from the duties owed the Company by the Employee; or
	(y)	The Employee breached any restrictive covenants of his or hers that may be in place. The Employee understands and acknowledges that he or she is a key employee of the Company which was a reason, in part, for being provided with this Grant, and, as such, may have restrictive covenants in place. Forfeiture under this subsection (b) shall not constitute a release of any claim that the Company may have for damages, past, present, or future in respect of any such breach.
5.	Executive Share Ownership Guidelines: If the Employee has been designated as a participant in the Company’s Executive Share Ownership Guidelines, which have been established by the Compensation Committee of the Board of Directors, Vested Shares earned by the Employee (net of tax withholdings) pursuant to this Share Agreement would qualify under and are subject to such guidelines.
6.	Non-Transferability. Except pursuant to the laws of descent and distribution, the Performance Shares described in this Share Agreement may not be sold, assigned, transferred, pledged or otherwise encumbered by or on behalf of or for the benefit of the Employee. Unless otherwise provided at the time of delivery of the Vested Shares to the Employee, the Vested Shares may be so sold, assigned, transferred, pledged or encumbered.
7.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Share Agreement shall be finally determined by the Company’s Compensation Committee in its absolute discretion.
8.	Taxes: Any Vested Shares under this program will be considered taxable income and subject to tax and tax withholdings as appropriate. The Company will reduce the number of Vested Shares to be delivered

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	to the Employee by the amount of the taxes due (with the shares valued at the average of the high and low selling prices on the date of delivery of the Vested Shares).
9.	Governing Law. This Share Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.
10.	Acknowledgements. By execution of this Share Agreement, the Employee agrees that he/she has received and reviewed a copy of:
	(a)	the Prospectus (link to Prospectus: http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_Grant/stock_Grant.htm)relating to the Company’s Amended and Restated Employee Long-Term Incentive Plan;
	(b)	the Quest Diagnostics Incorporated 2004 Annual Report (link to 2005 Annual Report: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700to Shareholders and Form 10-K);
	(c)	the Company’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Employee further agrees to fully comply with the terms of the Policy;
	(d)	the Company’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and
	(e)	the Company’s Equity Award Eligibility Policy attached hereto as Appendix B.

EMPLOYEE:

By:
	(NAME)

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Appendix A
QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
2006 – 2008 Performance Period

Baseline Year – Results for Fiscal Year 2005 for the Company and each company in the Comparator Peer Group.

	•	Fiscal Year refers to the year during which the last full month occurs in each company’s annual reporting period. For the Company and most companies in the Comparator Peer Group, the Fiscal Year 2005 ended in December. For certain other companies, the Fiscal Year ended during other months in 2005.
Final Year – Fiscal Year 2008 for the Company and each company in the Comparator Peer Group.
Performance Period – The Performance Period will run from January 1, 2006 through December 31, 2008, the Final Year for the Company (and corresponding Peer Group fiscal years).
Performance Goal(s) - Compound Annual Growth Rate (CAGR) in Fully-Diluted Earnings Per Share for the Company and each company in the Comparator Peer Group from the Baseline Year to the Final Year (i.e., for Fiscal Years 2006, 2007 and 2008).
	•	For the 2005 Baseline Year only, the Pro Forma Fully-Diluted Earnings Per Share reported in the Footnotes to the Financial Statements for the Company and each company in the Comparator Peer Group will be used. The Pro Forma Fully-Diluted Earnings Per Share includes the compensation cost of stock option and other equity awards. For Fiscal Years beginning in 2006, the reported Fully-Diluted Earnings Per Share results will include the annual compensation cost of each company’s equity awards.
	•	If any company in the Peer Group has not publicly reported its Fully Diluted Earnings Per Share by February 28, 2009, its CAGR will be computed as of its most recent quarterly report.
Comparator Peer Group – The Comparator Peer Group is comprised of the companies in the Standard & Poors 500 Healthcare Index as of December 31, 2008.
	•	Excluded from the list of companies in the Comparator Peer Group will be those companies reporting a negative EPS in the Baseline Year since calculating CAGR will not be possible for these companies.

2006 Incentive Stock Agreement

Appendix B
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility

• Unreduced Work Schedule

• One of the following salary grades:

• Corporate VP or Higher

• Salary Grade 53 or Higher

• Research & Development - Grade RD6 or Higher

• Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company’s Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

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EX-10

Exhibit 10.9

QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT (CEO)
(2006 – 2008 Performance Period)

This Performance Share Award Agreement (the “Share Agreement”) dated as of February 15, 2006 (the “Grant Date”) is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, NJ 07071 (the “Company”) and Mohapatra, Surya N.(the “Employee”).

1.	Conditions. This Share Agreement is subject in all respects to the Company’s Amended and Restated Employee Long-Term Incentive Plan (the “Plan”), the applicable terms of which are incorporated herein by reference. Terms not defined in this Share Agreement shall have the meaning ascribed in the Plan except for the terms “Cause”, “Change in Control”, Disability, and “Good Reason”, which terms shall have the meanings set forth in the Employment Agreement dated as of November 9, 2003 (the “Employment Agreement” between the Corporation and the Employee. The terms of the Employment Agreement shall control in the event of any conflict between them and the terms of this Share Agreement. The Employee acknowledges that he/she has read the terms of the Plan. This Share Agreement shall become void and the underlying grant will be revoked unless this document is executed by the Employee and returned by mail to the Executive Compensation Department to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) within thirty (30) days from the date of transmittal to the Employee.
2.	Calculation of Potential Award. The Employee shall be eligible to vest in shares of the Company’s stock as provided in this section (shares that have so vested, “Vested Shares”).
	Employee’s Target Performance Shares: 55,000
	Performance will be measured over the Performance Period using Baseline Year results and Final Year results for the Company as well as for the companies in the Comparator Peer Group (see Appendix A for these defined terms). After the Final Year of the Performance Period, the results of each company in the Comparator Peer Group will be arrayed from highest to lowest. The Company’s results will then be compared to that of the Comparator Peer Group and, based on the Company’s relative position in this array; Vested Shares will be awarded based upon the following formula:

Performance Relative to Peers *	“Earnings Multiple”* multiplied by Target Performance Shares = Vested Shares
Greater Than or Equal to 85th%ile	2 x Target Performance Shares = Vested Shares
Equal to 55th%ile	1 x Target Performance Shares = Vested Shares
Less Than or Equal to 25th%ile	0 x Target Performance Shares = 0 Shares
*Intermediate Performance and resulting Earnings Multiple will be interpolated.

	For example, if the Company’s EPS Compound Annual Growth Rate (CAGR) from fiscal year 2005 to fiscal year 2007 is at the 70th %ile relative to the companies in the S&P500 Healthcare Index, an Earnings Multiple of 1.5 will be applied to the Target Performance Shares to calculate the Vested Shares.
3.	Adjustments to Target Performance Shares: The Target Performance Shares will only be adjusted on a pro rata basis in the event either of the following occur:
	(a)	the Employee’s employment with the Company ends prior to the end of the Performance Period by reason of involuntary termination (other than for Cause) or voluntary termination for Good Reason, the Target Performance Shares will be pro-rated by adding the number of full months

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		served by the Employee during the Performance Period plus 24 (but not to exceed the number of months remaining in the Performance Period) and then dividing that total by the number of months in the Performance Period (“Pro Ration Factor”); provided however, that there shall be no pro ration (so that the Pro Ration Factor is 1) if the Employee’s termination of employment occurs within 90 days prior to a Change in Control. At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Pro Ration Factor and the Earnings Multiple; or
	(b)	the Employee’s employment with the Company is terminated as a result of the non-renewal of the Employment Agreement, the Target Performance Shares will be pro-rated by adding the number of full months served by the Employee during the Performance Period plus 18 (but not to exceed the number of months remaining in the Performance Period) and then dividing that total by the number of months in the Performance Period (“Non Renewal Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Non Renewal Pro Ration Factor and the Earnings Multiple; or
	(c)	If the Employee terminates his employment other than by reason of death or Disability or as contemplated by Section 3(a) or Section 3(b) prior to the end of the Performance Period, the Target Performance Shares will be pro-rated by dividing the number of full months served by the Employee during the Performance Period by the number of months in the Performance Period (“ Voluntary Termination Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Voluntary Termination Pro Ration Factor and the Earnings Multiple.

4.	Vesting and Exceptions to Vesting:
	Subject to the exception enumerated at the end of this Section 4, the Employee will vest at the end of the Performance Period. Vested Shares, net of required tax withholding as described in Section 8 below, will be transferred into the Employee’s account at the Company’s dedicated broker by March 15 after the Performance Period ends.
	In the event a Change in Control of the Company occurs prior to the end of the Performance Period (or prior to the determination of the final approved Earnings Multiple), then, upon the consummation of such transaction, a number of Vested Shares will be delivered to the Employee equal to the greater of: (1) the Target Performance Shares (as pro rated, if applicable, pursuant to section 3 above) or (2) the number of Performance Shares that would be Vested Shares had the calculation been based on the Performance Period including the most recent fiscal year end results of the Company and the companies in the Comparator Peer Group.
	The Employee will not vest and will forfeit all Performance Shares if, either:
	(x)	The Employee was terminated for Cause; or
	(y)	The Employee breached any restrictive covenants of his or hers that may be in place, including those set forth in the Employment Agreement. The Employee understands and acknowledges that he or she is a key employee of the Company which was a reason, in part, for being provided with this Grant, and, as such, have restrictive covenants in place. Forfeiture under this subsection (b) shall not constitute a release of any claim that the Company may have for damages, past, present, or future in respect of any such breach.

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5.	Executive Share Ownership Guidelines: If the Employee has been designated as a participant in the Company’s Executive Share Ownership Guidelines, which haven been established by the Compensation Committee of the Board of Directors, Vested Shares earned by the Employee (net of tax withholdings) pursuant to this Share Agreement would qualify under and are subject to such guidelines.
6.	Non-Transferability. Except pursuant to the laws of descent and distribution, the Performance Shares described in this Share Agreement may not be sold, assigned, transferred, pledged or otherwise encumbered by or on behalf of or for the benefit of the Employee. Unless otherwise provided at the time of delivery of the Vested Shares to the Employee, the Vested Shares may be so sold, assigned, transferred, pledged or encumbered.
7.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Share Agreement shall be finally determined by the Company’s Compensation Committee in its absolute discretion.
8.	Taxes: Any Vested Shares under this program will be considered taxable income and subject to tax and tax withholdings as appropriate. The Company will reduce the number of Vested Shares to be delivered to the Employee by the amount of the taxes due (with the shares valued at the average of the high and low selling prices on the date of delivery of the Vested Shares).
9.	Governing Law. This Share Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.
10.	Acknowledgements. By execution of this Share Agreement, the Employee agrees that he/she has received and reviewed a copy of:
	(a)	the Prospectus (link to Prospectus:
		http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_Grant/stock_Grant.htm) relating to the Company’s Amended and Restated Employee Long-Term Incentive Plan;
	(b)	the Quest Diagnostics Incorporated 2004 Annual Report (link to 2005 Annual Report:
		http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700to Shareholders and Form 10-K);
	(c)	the Company’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Employee further agrees to fully comply with the terms of the Policy; and
	(d)	the Company’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm).

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EMPLOYEE:

By:
	Mohapatra, Surya N.

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Appendix A
QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
2006 – 2008 Performance Period

Baseline Year – Results for Fiscal Year 2005 for the Company and each company in the Comparator Peer Group.

	•	Fiscal Year refers to the year during which the last full month occurs in each company’s annual reporting period. For the Company and most companies in the Comparator Peer Group, the Fiscal Year 2005 ended in December. For certain other companies, the Fiscal Year ended during other months in 2005.
Final Year – Fiscal Year 2008 for the Company and each company in the Comparator Peer Group.
Performance Period – The Performance Period will run from January 1, 2006 through December 31, 2008, the Final Year for the Company (and corresponding Peer Group fiscal years).
Performance Goal(s) - Compound Annual Growth Rate (CAGR) in Fully-Diluted Earnings Per Share for the Company and each company in the Comparator Peer Group from the Baseline Year to the Final Year (i.e., for Fiscal Years 2006, 2007 and 2008).
	•	For the 2005 Baseline Year only, the Pro Forma Fully-Diluted Earnings Per Share reported in the Footnotes to the Financial Statements for the Company and each company in the Comparator Peer Group will be used. The Pro Forma Fully-Diluted Earnings Per Share includes the compensation cost of stock option and other equity awards. For Fiscal Years beginning in 2006, the reported Fully-Diluted Earnings Per Share results will include the annual compensation cost of each company’s equity awards.
	•	If any company in the Peer Group has not publicly reported its Fully Diluted Earnings Per Share by February 28, 2009, its CAGR will be computed as of its most recent quarterly report.
Comparator Peer Group – The Comparator Peer Group is comprised of the companies in the Standard & Poors 500 Healthcare Index as of December 31, 2008.
	•	Excluded from the list of companies in the Comparator Peer Group will be those companies reporting a negative EPS in the Baseline Year since calculating CAGR will not be possible for these companies.

EX-10

Exhibit 10.10

QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
(2006 – 2008 Performance Period)

This Performance Share Award Agreement (the “Share Agreement”) dated as of February 15, 2006 (the “Grant Date”) is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, NJ 07071 (the “Company”) and Hagemann, Robert (the “Employee”).

1.	Conditions. This Share Agreement is subject in all respects to the Company’s Amended and Restated Employee Long-Term Incentive Plan (the “Plan”), the applicable terms of which are incorporated herein by reference. Terms not defined in this Share Agreement shall have the meaning ascribed in the Plan. The Employee acknowledges that he/she has read the terms of the Plan. This Share Agreement shall become void and the underlying grant will be revoked unless this document is executed by the Employee and returned by mail to the Executive Compensation Department to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) within thirty (30) days from the date of transmittal to the Employee.
2.	Calculation of Potential Award. The Employee shall be eligible to vest in shares of the Company’s stock as provided in this section (shares that have so vested, “Vested Shares”).
	Employee’s Target Performance Shares: 22,667
	Performance will be measured over the Performance Period using Baseline Year results and Final Year results for the Company as well as for the companies in the Comparator Peer Group (see Appendix A for these defined terms). After the Final Year of the Performance Period, the results of each company in the Comparator Peer Group will be arrayed from highest to lowest. The Company’s results will then be compared to that of the Comparator Peer Group and, based on the Company’s relative position in this array; Vested Shares will be awarded based upon the following formula:

Performance Relative to Peers *	“Earnings Multiple”* multiplied by Target Performance Shares = Vested Shares
Greater Than or Equal to 85th%ile	2 x Target Performance Shares = Vested Shares
Equal to 55th%ile	1 x Target Performance Shares = Vested Shares
Less Than or Equal to 25th%ile	0 x Target Performance Shares = 0 Shares

*Intermediate Performance and resulting Earnings Multiple will be interpolated.

For example, if the Company’s EPS Compound Annual Growth Rate (CAGR) from fiscal year 2005 to fiscal year 2007 is at the 70^th %ile relative to the companies in the S&P500 Healthcare Index, an Earnings Multiple of 1.5 will be applied to the Target Performance Shares to calculate the Vested Shares.

3.	Adjustments to Target Performance Shares: The Target Performance Shares will only be adjusted on a pro rata basis in the event either of the following occur:
	(a)	the Employee’s employment with the Company ends prior to the end of the Performance Period, except if for death, disability (as defined in Section 22(e)(3) of the Internal Revenue Code), or retirement (defined as termination after the Employee attains age sixty and with the consent of the Company). In that event, the Target Performance Shares will be pro-rated by dividing the number of full months served by the Employee during the Performance Period by the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the

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		target Performance Shares, the Pro Ration Factor and the Earnings Multiple; or
	(b)	the Employee’s employment with the Company ends prior to the end of the Performance Period as a result of a separation which would entitle the Employee to severance benefits under the Company’s Severance Policy or an employment agreement between such Employee and the Company. In that event, the Target Performance Shares will be pro-rated by adding the number of full months served by the Employee during the Performance Period plus twelve (but not to exceed the number of months remaining in the Performance Period) and then dividing that total by the number of months in the Performance Period (“Severance Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Severance Pro Ration Factor and the Earnings Multiple.
4.	Vesting and Exceptions to Vesting:
	Subject to the exception enumerated at the end of this Section 4, the Employee will vest at the end of the Performance Period. Vested Shares, net of required tax withholding as described in Section 8 below, will be transferred into the Employee’s account at the Company’s dedicated broker by March 15 after the Performance Period ends.
	In the event a Change in Control of the Company occurs prior to the end of the Performance Period (or prior to the determination of the final approved Earnings Multiple), then, upon the consummation of such transaction, a number of Vested Shares will be delivered to the Employee equal to the greater of: (1) the Target Performance Shares (as pro rated, if applicable, pursuant to section 3 above) or (2) the number of Performance Shares that would be Vested Shares had the calculation been based on the Performance Period including the most recent fiscal year end results of the Company and the companies in the Comparator Peer Group. For purposes of this Share Agreement, Change of Control shall mean and shall be deemed to occur if and when:
	(a)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 40% of more of the combined voting power of the Company’s then outstanding securities; or
	(b)	The individuals who, as of the grant date, constituted the Company’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Company, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
	(c)	Shareholders of the Company approve an agreement, providing for (a) a transaction in which the Company will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Company’s assets, or (c) a plan of partial or complete liquidation of the Company.

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The Employee will not vest and will forfeit all Performance Shares if, either:
(x)	The Employee was terminated for Cause where “Cause” shall be defined as the Employee committing any act that shall or could cause the Company to suffer financial harm or damage to its reputation (either before or after termination of employment) through (i) dishonesty, (ii) violation of law in the course of the Employee’s employment or violation of the Company’s Corporate Compliance Manual and compliance bulletins or other written policies, or (iii) material deviation from the duties owed the Company by the Employee; or
(y)	The Employee breached any restrictive covenants of his or hers that may be in place. The Employee understands and acknowledges that he or she is a key employee of the Company which was a reason, in part, for being provided with this Grant, and, as such, may have restrictive covenants in place. Forfeiture under this subsection (b) shall not constitute a release of any claim that the Company may have for damages, past, present, or future in respect of any such breach.
If prior to the end of the Performance Period, the Employee’s employment status in the Company is changed such that the Employee will no longer be eligible to receive performance shares pursuant to the Equity Award Eligibility Policy of the Company as in effect on the date hereof and attached as Appendix B to this Agreement and such changed status continues for a consecutive 90-day period, then, notwithstanding any other provision in this Agreement to the contrary, the Target Performance Shares will be pro-rated by dividing (x) the number of full months served by the Employee during the Performance Period through such 90th day (not to exceed 36) by (y) the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Pro Ration Factor and the Earnings Multiple. The balance of the Target Performance Shares will be forfeited.

5.	Executive Share Ownership Guidelines: If the Employee has been designated as a participant in the Company’s Executive Share Ownership Guidelines, which have been established by the Compensation Committee of the Board of Directors, Vested Shares earned by the Employee (net of tax withholdings) pursuant to this Share Agreement would qualify under and are subject to such guidelines.
6.	Non-Transferability. Except pursuant to the laws of descent and distribution, the Performance Shares described in this Share Agreement may not be sold, assigned, transferred, pledged or otherwise encumbered by or on behalf of or for the benefit of the Employee. Unless otherwise provided at the time of delivery of the Vested Shares to the Employee, the Vested Shares may be so sold, assigned, transferred, pledged or encumbered.
7.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Share Agreement shall be finally determined by the Company’s Compensation Committee in its absolute discretion.
8.	Taxes: Any Vested Shares under this program will be considered taxable income and subject to tax and tax withholdings as appropriate. The Company will reduce the number of Vested Shares to be delivered to the Employee by the amount of the taxes due (with the shares valued at the average of the high and low selling prices on the date of delivery of the Vested Shares).
9.	Governing Law. This Share Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.

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2006 Incentive Stock Agreement

10.	Acknowledgements. By execution of this Share Agreement, the Employee agrees that he/she has received and reviewed a copy of:
	(a)	the Prospectus (link to Prospectus:
		http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_Grant/stock_Grant.htm) relating to the Company’s Amended and Restated Employee Long-Term Incentive Plan;
	(b)	the Quest Diagnostics Incorporated 2004 Annual Report (link to 2005 Annual Report:
		http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700to Shareholders and Form 10-K);
	(c)	the Company’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Employee further agrees to fully comply with the terms of the Policy;
	(d)	the Company’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and
	(e)	the Company’s Equity Award Eligibility Policy attached hereto as Appendix B.

EMPLOYEE:

By:
	Hagemann, Robert

4 of 4

Appendix A
QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
2006 – 2008 Performance Period

Baseline Year – Results for Fiscal Year 2005 for the Company and each company in the Comparator Peer Group.

• Fiscal Year refers to the year during which the last full month occurs in each company’s annual reporting period. For the Company and most companies in the Comparator Peer Group, the Fiscal Year 2005 ended in December. For certain other companies, the Fiscal Year ended during other months in 2005.

Final Year – Fiscal Year 2008 for the Company and each company in the Comparator Peer Group.

Performance Period – The Performance Period will run from January 1, 2006 through December 31, 2008, the Final Year for the Company (and corresponding Peer Group fiscal years).

Performance Goal(s) - - Compound Annual Growth Rate (CAGR) in Fully-Diluted Earnings Per Share for the Company and each company in the Comparator Peer Group from the Baseline Year to the Final Year (i.e., for Fiscal Years 2006, 2007 and 2008).

• For the 2005 Baseline Year only, the Pro Forma Fully-Diluted Earnings Per Share reported in the Footnotes to the Financial Statements for the Company and each company in the Comparator Peer Group will be used. The Pro Forma Fully-Diluted Earnings Per Share includes the compensation cost of stock option and other equity awards. For Fiscal Years beginning in 2006, the reported Fully-Diluted Earnings Per Share results will include the annual compensation cost of each company’s equity awards.

• If any company in the Peer Group has not publicly reported its Fully Diluted Earnings Per Share by February 28, 2009, its CAGR will be computed as of its most recent quarterly report.

Comparator Peer Group – The Comparator Peer Group is comprised of the companies in the Standard & Poors 500 Healthcare Index as of December 31, 2008.

• Excluded from the list of companies in the Comparator Peer Group will be those companies reporting a negative EPS in the Baseline Year since calculating CAGR will not be possible for these companies.

2006 Incentive Stock Agreement

Appendix B
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility

• Unreduced Work Schedule

• One of the following salary grades:

• Corporate VP or Higher

• Salary Grade 53 or Higher

• Research & Development - Grade RD6 or Higher

• Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company’s Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

EX-10

Exhibit 10.11

QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
(2006 – 2008 Performance Period)

This Performance Share Award Agreement (the “Share Agreement”) dated as of February 15, 2006 (the “Grant Date”) is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, NJ 07071 (the “Company”) and Zewe, David M. (the “Employee”).

1.	Conditions. This Share Agreement is subject in all respects to the Company’s Amended and Restated Employee Long-Term Incentive Plan (the “Plan”), the applicable terms of which are incorporated herein by reference. Terms not defined in this Share Agreement shall have the meaning ascribed in the Plan. The Employee acknowledges that he/she has read the terms of the Plan. This Share Agreement shall become void and the underlying grant will be revoked unless this document is executed by the Employee and returned by mail to the Executive Compensation Department to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) within thirty (30) days from the date of transmittal to the Employee.
2.	Calculation of Potential Award. The Employee shall be eligible to vest in shares of the Company’s stock as provided in this section (shares that have so vested, “Vested Shares”).
	Employee’s Target Performance Shares: 12,667
	Performance will be measured over the Performance Period using Baseline Year results and Final Year results for the Company as well as for the companies in the Comparator Peer Group (see Appendix A for these defined terms). After the Final Year of the Performance Period, the results of each company in the Comparator Peer Group will be arrayed from highest to lowest. The Company’s results will then be compared to that of the Comparator Peer Group and, based on the Company’s relative position in this array; Vested Shares will be awarded based upon the following formula:

Performance Relative to Peers *	“Earnings Multiple”* multiplied by Target Performance Shares = Vested Shares
Greater Than or Equal to 85th %ile	2 x Target Performance Shares = Vested Shares
Equal to 55th %ile	1 x Target Performance Shares = Vested Shares
Less Than or Equal to 25th %ile	0 x Target Performance Shares = 0 Shares

* Intermediate Performance and resulting Earnings Multiple will be interpolated.

For example, if the Company’s EPS Compound Annual Growth Rate (CAGR) from fiscal year 2005 to fiscal year 2007 is at the 70^th %ile relative to the companies in the S&P500 Healthcare Index, an Earnings Multiple of 1.5 will be applied to the Target Performance Shares to calculate the Vested Shares.

3.	Adjustments to Target Performance Shares: The Target Performance Shares will only be adjusted on a pro rata basis in the event either of the following occur:
	(a)	the Employee’s employment with the Company ends prior to the end of the Performance Period, except if for death, disability (as defined in Section 22(e)(3) of the Internal Revenue Code), or retirement (defined as termination after the Employee attains age sixty and with the consent of the Company). In that event, the Target Performance Shares will be pro-rated by dividing the number of full months served by the Employee during the Performance Period by the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the

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2006 Incentive Stock Agreement

target Performance Shares, the Pro Ration Factor and the Earnings Multiple; or

(b)

the Employee’s employment with the Company ends prior to the end of the Performance Period as a result of a separation which would entitle the Employee to severance benefits under the Company’s Severance Policy or an employment agreement between such Employee and the Company. In that event, the Target Performance Shares will be pro-rated by adding the number of full months served by the Employee during the Performance Period plus twelve (but not to exceed the number of months remaining in the Performance Period) and then dividing that total by the number of months in the Performance Period (“Severance Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Severance Pro Ration Factor and the Earnings Multiple.

4.	Vesting and Exceptions to Vesting:
	Subject to the exception enumerated at the end of this Section 4, the Employee will vest at the end of the Performance Period. Vested Shares, net of required tax withholding as described in Section 8 below, will be transferred into the Employee’s account at the Company’s dedicated broker by March 15 after the Performance Period ends.
	In the event a Change in Control of the Company occurs prior to the end of the Performance Period (or prior to the determination of the final approved Earnings Multiple), then, upon the consummation of such transaction, a number of Vested Shares will be delivered to the Employee equal to the greater of: (1) the Target Performance Shares (as pro rated, if applicable, pursuant to section 3 above) or (2) the number of Performance Shares that would be Vested Shares had the calculation been based on the Performance Period including the most recent fiscal year end results of the Company and the companies in the Comparator Peer Group. For purposes of this Share Agreement, Change of Control shall mean and shall be deemed to occur if and when:
	(a)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 40% of more of the combined voting power of the Company’s then outstanding securities; or
	(b)	The individuals who, as of the grant date, constituted the Company’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Company, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
	(c)	Shareholders of the Company approve an agreement, providing for (a) a transaction in which the Company will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Company’s assets, or (c) a plan of partial or complete liquidation of the Company.

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2006 Incentive Stock Agreement

The Employee will not vest and will forfeit all Performance Shares if, either:
(x)	The Employee was terminated for Cause where “Cause” shall be defined as the Employee committing any act that shall or could cause the Company to suffer financial harm or damage to its reputation (either before or after termination of employment) through (i) dishonesty, (ii) violation of law in the course of the Employee’s employment or violation of the Company’s Corporate Compliance Manual and compliance bulletins or other written policies, or (iii) material deviation from the duties owed the Company by the Employee; or
(y)	The Employee breached any restrictive covenants of his or hers that may be in place. The Employee understands and acknowledges that he or she is a key employee of the Company which was a reason, in part, for being provided with this Grant, and, as such, may have restrictive covenants in place. Forfeiture under this subsection (b) shall not constitute a release of any claim that the Company may have for damages, past, present, or future in respect of any such breach.
If prior to the end of the Performance Period, the Employee’s employment status in the Company is changed such that the Employee will no longer be eligible to receive performance shares pursuant to the Equity Award Eligibility Policy of the Company as in effect on the date hereof and attached as Appendix B to this Agreement and such changed status continues for a consecutive 90-day period, then, notwithstanding any other provision in this Agreement to the contrary, the Target Performance Shares will be pro-rated by dividing (x) the number of full months served by the Employee during the Performance Period through such 90th day (not to exceed 36) by (y) the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Pro Ration Factor and the Earnings Multiple. The balance of the Target Performance Shares will be forfeited.

5.	Executive Share Ownership Guidelines: If the Employee has been designated as a participant in the Company’s Executive Share Ownership Guidelines, which have been established by the Compensation Committee of the Board of Directors, Vested Shares earned by the Employee (net of tax withholdings) pursuant to this Share Agreement would qualify under and are subject to such guidelines.
6.	Non-Transferability. Except pursuant to the laws of descent and distribution, the Performance Shares described in this Share Agreement may not be sold, assigned, transferred, pledged or otherwise encumbered by or on behalf of or for the benefit of the Employee. Unless otherwise provided at the time of delivery of the Vested Shares to the Employee, the Vested Shares may be so sold, assigned, transferred, pledged or encumbered.
7.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Share Agreement shall be finally determined by the Company’s Compensation Committee in its absolute discretion.
8.	Taxes: Any Vested Shares under this program will be considered taxable income and subject to tax and tax withholdings as appropriate. The Company will reduce the number of Vested Shares to be delivered to the Employee by the amount of the taxes due (with the shares valued at the average of the high and low selling prices on the date of delivery of the Vested Shares).
9.	Governing Law. This Share Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.

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2006 Incentive Stock Agreement

10.	Acknowledgements. By execution of this Share Agreement, the Employee agrees that he/she has received and reviewed a copy of:
	(a)	the Prospectus (link to Prospectus:
		http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_Grant/stock_Grant.htm) relating to the Company’s Amended and Restated Employee Long-Term Incentive Plan;
	(b)	the Quest Diagnostics Incorporated 2004 Annual Report (link to 2005 Annual Report :
		http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700to Shareholders and Form 10-K);
	(c)	the Company’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Employee further agrees to fully comply with the terms of the Policy;
	(d)	the Company’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and
	(e)	the Company’s Equity Award Eligibility Policy attached hereto as Appendix B.

EMPLOYEE:

By:
	Zewe, David

4 of 4

Appendix A
QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
2006 – 2008 Performance Period

Baseline Year– Results for Fiscal Year 2005 for the Company and each company in the Comparator Peer Group.

• Fiscal Year refers to the year during which the last full month occurs in each company’s annual reporting period. For the Company and most companies in the Comparator Peer Group, the Fiscal Year 2005 ended in December. For certain other companies, the Fiscal Year ended during other months in 2005.

Final Year– Fiscal Year 2008 for the Company and each company in the Comparator Peer Group.

Performance Period – The Performance Period will run from January 1, 2006 through December 31, 2008, the Final Year for the Company (and corresponding Peer Group fiscal years).

Performance Goal(s) - - Compound Annual Growth Rate (CAGR) in Fully-Diluted Earnings Per Share for the Company and each company in the Comparator Peer Group from the Baseline Year to the Final Year (i.e., for Fiscal Years 2006, 2007 and 2008).

• For the 2005 Baseline Year only, the Pro Forma Fully-Diluted Earnings Per Share reported in the Footnotes to the Financial Statements for the Company and each company in the Comparator Peer Group will be used. The Pro Forma Fully-Diluted Earnings Per Share includes the compensation cost of stock option and other equity awards. For Fiscal Years beginning in 2006, the reported Fully-Diluted Earnings Per Share results will include the annual compensation cost of each company’s equity awards.

• If any company in the Peer Group has not publicly reported its Fully Diluted Earnings Per Share by February 28, 2009, its CAGR will be computed as of its most recent quarterly report.

Comparator Peer Group – The Comparator Peer Group is comprised of the companies in the Standard & Poors 500 Healthcare Index as of December 31, 2008.

• Excluded from the list of companies in the Comparator Peer Group will be those companies reporting a negative EPS in the Baseline Year since calculating CAGR will not be possible for these companies.

2006 Incentive Stock Agreement

Appendix B
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility

• Unreduced Work Schedule

• One of the following salary grades:

• Corporate VP or Higher

• Salary Grade 53 or Higher

• Research & Development - Grade RD6 or Higher

• Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company’s Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

2 of 6

EX-10

Exhibit 10.12

QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
(2006 – 2008 Performance Period)

This Performance Share Award Agreement (the “Share Agreement”) dated as of February 15, 2006 (the “Grant Date”) is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, NJ 07071 (the “Company”) and Prevoznik, Michael (the “Employee”).

1.	Conditions. This Share Agreement is subject in all respects to the Company’s Amended and Restated Employee Long-Term Incentive Plan (the “Plan”), the applicable terms of which are incorporated herein by reference. Terms not defined in this Share Agreement shall have the meaning ascribed in the Plan. The Employee acknowledges that he/she has read the terms of the Plan. This Share Agreement shall become void and the underlying grant will be revoked unless this document is executed by the Employee and returned by mail to the Executive Compensation Department to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) within thirty (30) days from the date of transmittal to the Employee.
2.	Calculation of Potential Award. The Employee shall be eligible to vest in shares of the Company’s stock as provided in this section (shares that have so vested, “Vested Shares”).
	Employee’s Target Performance Shares: 10,934
	Performance will be measured over the Performance Period using Baseline Year results and Final Year results for the Company as well as for the companies in the Comparator Peer Group (see Appendix A for these defined terms). After the Final Year of the Performance Period, the results of each company in the Comparator Peer Group will be arrayed from highest to lowest. The Company’s results will then be compared to that of the Comparator Peer Group and, based on the Company’s relative position in this array; Vested Shares will be awarded based upon the following formula:

Performance Relative to Peers *	“Earnings Multiple”* multiplied by Target Performance Shares = Vested Shares
Greater Than or Equal to 85th%ile	2 x Target Performance Shares = Vested Shares
Equal to 55th%ile	1 x Target Performance Shares = Vested Shares
Less Than or Equal to 25th%ile	0 x Target Performance Shares = 0 Shares

               *Intermediate Performance and resulting Earnings Multiple will be interpolated.

	For example, if the Company’s EPS Compound Annual Growth Rate (CAGR) from fiscal year 2005 to fiscal year 2007 is at the 70th %ile relative to the companies in the S&P500 Healthcare Index, an Earnings Multiple of 1.5 will be applied to the Target Performance Shares to calculate the Vested Shares.
3.	Adjustments to Target Performance Shares: The Target Performance Shares will only be adjusted on a pro rata basis in the event either of the following occur:
	(a)	the Employee’s employment with the Company ends prior to the end of the Performance Period, except if for death, disability (as defined in Section 22(e)(3) of the Internal Revenue Code), or retirement (defined as termination after the Employee attains age sixty and with the consent of the Company). In that event, the Target Performance Shares will be pro-rated by dividing the number of full months served by the Employee during the Performance Period by the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the

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2006 Incentive Stock Agreement

target Performance Shares, the Pro Ration Factor and the Earnings Multiple; or

(b)

the Employee’s employment with the Company ends prior to the end of the Performance Period as a result of a separation which would entitle the Employee to severance benefits under the Company’s Severance Policy or an employment agreement between such Employee and the Company. In that event, the Target Performance Shares will be pro-rated by adding the number of full months served by the Employee during the Performance Period plus twelve (but not to exceed the number of months remaining in the Performance Period) and then dividing that total by the number of months in the Performance Period (“Severance Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Severance Pro Ration Factor and the Earnings Multiple.

4.	Vesting and Exceptions to Vesting:
	Subject to the exception enumerated at the end of this Section 4, the Employee will vest at the end of the Performance Period. Vested Shares, net of required tax withholding as described in Section 8 below, will be transferred into the Employee’s account at the Company’s dedicated broker by March 15 after the Performance Period ends.
	In the event a Change in Control of the Company occurs prior to the end of the Performance Period (or prior to the determination of the final approved Earnings Multiple), then, upon the consummation of such transaction, a number of Vested Shares will be delivered to the Employee equal to the greater of: (1) the Target Performance Shares (as pro rated, if applicable, pursuant to section 3 above) or (2) the number of Performance Shares that would be Vested Shares had the calculation been based on the Performance Period including the most recent fiscal year end results of the Company and the companies in the Comparator Peer Group. For purposes of this Share Agreement, Change of Control shall mean and shall be deemed to occur if and when:
	(a)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 40% of more of the combined voting power of the Company’s then outstanding securities; or
	(b)	The individuals who, as of the grant date, constituted the Company’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Company, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
	(c)	Shareholders of the Company approve an agreement, providing for (a) a transaction in which the Company will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Company’s assets, or (c) a plan of partial or complete liquidation of the Company.

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2006 Incentive Stock Agreement

	The Employee will not vest and will forfeit all Performance Shares if, either:
	(x)	The Employee was terminated for Cause where “Cause” shall be defined as the Employee committing any act that shall or could cause the Company to suffer financial harm or damage to its reputation (either before or after termination of employment) through (i) dishonesty, (ii) violation of law in the course of the Employee’s employment or violation of the Company’s Corporate Compliance Manual and compliance bulletins or other written policies, or (iii) material deviation from the duties owed the Company by the Employee; or
	(y)	The Employee breached any restrictive covenants of his or hers that may be in place. The Employee understands and acknowledges that he or she is a key employee of the Company which was a reason, in part, for being provided with this Grant, and, as such, may have restrictive covenants in place. Forfeiture under this subsection (b) shall not constitute a release of any claim that the Company may have for damages, past, present, or future in respect of any such breach.
	If prior to the end of the Performance Period, the Employee’s employment status in the Company is changed such that the Employee will no longer be eligible to receive performance shares pursuant to the Equity Award Eligibility Policy of the Company as in effect on the date hereof and attached as Appendix B to this Agreement and such changed status continues for a consecutive 90-day period, then, notwithstanding any other provision in this Agreement to the contrary, the Target Performance Shares will be pro-rated by dividing (x) the number of full months served by the Employee during the Performance Period through such 90th day (not to exceed 36) by (y) the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Pro Ration Factor and the Earnings Multiple. The balance of the Target Performance Shares will be forfeited.
5.	Executive Share Ownership Guidelines: If the Employee has been designated as a participant in the Company’s Executive Share Ownership Guidelines, which have been established by the Compensation Committee of the Board of Directors, Vested Shares earned by the Employee (net of tax withholdings) pursuant to this Share Agreement would qualify under and are subject to such guidelines.
6.	Non-Transferability. Except pursuant to the laws of descent and distribution, the Performance Shares described in this Share Agreement may not be sold, assigned, transferred, pledged or otherwise encumbered by or on behalf of or for the benefit of the Employee. Unless otherwise provided at the time of delivery of the Vested Shares to the Employee, the Vested Shares may be so sold, assigned, transferred, pledged or encumbered.
7.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Share Agreement shall be finally determined by the Company’s Compensation Committee in its absolute discretion.
8.	Taxes: Any Vested Shares under this program will be considered taxable income and subject to tax and tax withholdings as appropriate. The Company will reduce the number of Vested Shares to be delivered to the Employee by the amount of the taxes due (with the shares valued at the average of the high and low selling prices on the date of delivery of the Vested Shares).
9.	Governing Law. This Share Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.

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2006 Incentive Stock Agreement

10.	Acknowledgements. By execution of this Share Agreement, the Employee agrees that he/she has received and reviewed a copy of:
	(a)	the Prospectus (link to Prospectus:
		http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_Grant/stock_Grant.htm) relating to the Company’s Amended and Restated Employee Long-Term Incentive Plan;
	(b)	the Quest Diagnostics Incorporated 2004 Annual Report (link to 2005 Annual Report:
		http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700to Shareholders and Form 10-K);
	(c)	the Company’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Employee further agrees to fully comply with the terms of the Policy;
	(d)	the Company’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and
	(e)	the Company’s Equity Award Eligibility Policy attached hereto as Appendix B.

EMPLOYEE:

By:
	Prevoznik, Michael

4 of 4

Appendix A
QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
2006 – 2008 Performance Period

Baseline Year – Results for Fiscal Year 2005 for the Company and each company in the Comparator Peer Group.
	•	Fiscal Year refers to the year during which the last full month occurs in each company’s annual reporting period. For the Company and most companies in the Comparator Peer Group, the Fiscal Year 2005 ended in December. For certain other companies, the Fiscal Year ended during other months in 2005.
Final Year – Fiscal Year 2008 for the Company and each company in the Comparator Peer Group.
Performance Period – The Performance Period will run from January 1, 2006 through December 31, 2008, the Final Year for the Company (and corresponding Peer Group fiscal years).
Performance Goal(s) - Compound Annual Growth Rate (CAGR) in Fully-Diluted Earnings Per Share for the Company and each company in the Comparator Peer Group from the Baseline Year to the Final Year (i.e., for Fiscal Years 2006, 2007 and 2008).
	•	For the 2005 Baseline Year only, the Pro Forma Fully-Diluted Earnings Per Share reported in the Footnotes to the Financial Statements for the Company and each company in the Comparator Peer Group will be used. The Pro Forma Fully-Diluted Earnings Per Share includes the compensation cost of stock option and other equity awards. For Fiscal Years beginning in 2006, the reported Fully-Diluted Earnings Per Share results will include the annual compensation cost of each company’s equity awards.
	•	If any company in the Peer Group has not publicly reported its Fully Diluted Earnings Per Share by February 28, 2009, its CAGR will be computed as of its most recent quarterly report.
Comparator Peer Group – The Comparator Peer Group is comprised of the companies in the Standard & Poors 500 Healthcare Index as of December 31, 2008.
	•	Excluded from the list of companies in the Comparator Peer Group will be those companies reporting a negative EPS in the Baseline Year since calculating CAGR will not be possible for these companies.

2006 Incentive Stock Agreement

Appendix B
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility

• Unreduced Work Schedule

• One of the following salary grades:

• Corporate VP or Higher

• Salary Grade 53 or Higher

• Research & Development - Grade RD6 or Higher

• Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company’s Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

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EX-10

Exhibit 10.13

QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
(2006 – 2008 Performance Period)

This Performance Share Award Agreement (the “Share Agreement”) dated as of February 15, 2006 (the “Grant Date”) is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, NJ 07071 (the “Company”) and Peters, Robert E. (the “Employee”).

1.	Conditions. This Share Agreement is subject in all respects to the Company’s Amended and Restated Employee Long-Term Incentive Plan (the “Plan”), the applicable terms of which are incorporated herein by reference. Terms not defined in this Share Agreement shall have the meaning ascribed in the Plan. The Employee acknowledges that he/she has read the terms of the Plan. This Share Agreement shall become void and the underlying grant will be revoked unless this document is executed by the Employee and returned by mail to the Executive Compensation Department to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) within thirty (30) days from the date of transmittal to the Employee.
2.	Calculation of Potential Award. The Employee shall be eligible to vest in shares of the Company’s stock as provided in this section (shares that have so vested, “Vested Shares”).
	Employee’s Target Performance Shares: 10,000
	Performance will be measured over the Performance Period using Baseline Year results and Final Year results for the Company as well as for the companies in the Comparator Peer Group (see Appendix A for these defined terms). After the Final Year of the Performance Period, the results of each company in the Comparator Peer Group will be arrayed from highest to lowest. The Company’s results will then be compared to that of the Comparator Peer Group and, based on the Company’s relative position in this array; Vested Shares will be awarded based upon the following formula:

Performance Relative to Peers *	“Earnings Multiple”* multiplied by Target Performance Shares = Vested Shares
Greater Than or Equal to 85th %ile	2 x Target Performance Shares = Vested Shares
Equal to 55th %ile	1 x Target Performance Shares = Vested Shares
Less Than or Equal to 25th %ile	0 x Target Performance Shares = 0 Shares

* Intermediate Performance and resulting Earnings Multiple will be interpolated.

	For example, if the Company’s EPS Compound Annual Growth Rate (CAGR) from fiscal year 2005 to fiscal year 2007 is at the 70th %ile relative to the companies in the S&P500 Healthcare Index, an Earnings Multiple of 1.5 will be applied to the Target Performance Shares to calculate the Vested Shares.
3.	Adjustments to Target Performance Shares: The Target Performance Shares will only be adjusted on a pro rata basis in the event either of the following occur:
	(a)	the Employee’s employment with the Company ends prior to the end of the Performance Period, except if for death, disability (as defined in Section 22(e)(3) of the Internal Revenue Code), or retirement (defined as termination after the Employee attains age sixty and with the consent of the Company). In that event, the Target Performance Shares will be pro-rated by dividing the number of full months served by the Employee during the Performance Period by the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the

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2006 Incentive Stock Agreement

	target Performance Shares, the Pro Ration Factor and the Earnings Multiple; or
	(b)	the Employee’s employment with the Company ends prior to the end of the Performance Period as a result of a separation which would entitle the Employee to severance benefits under the Company’s Severance Policy or an employment agreement between such Employee and the Company. In that event, the Target Performance Shares will be pro-rated by adding the number of full months served by the Employee during the Performance Period plus twelve (but not to exceed the number of months remaining in the Performance Period) and then dividing that total by the number of months in the Performance Period (“Severance Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Severance Pro Ration Factor and the Earnings Multiple.
4.	Vesting and Exceptions to Vesting:
	Subject to the exception enumerated at the end of this Section 4, the Employee will vest at the end of the Performance Period. Vested Shares, net of required tax withholding as described in Section 8 below, will be transferred into the Employee’s account at the Company’s dedicated broker by March 15 after the Performance Period ends.
	In the event a Change in Control of the Company occurs prior to the end of the Performance Period (or prior to the determination of the final approved Earnings Multiple), then, upon the consummation of such transaction, a number of Vested Shares will be delivered to the Employee equal to the greater of: (1) the Target Performance Shares (as pro rated, if applicable, pursuant to section 3 above) or (2) the number of Performance Shares that would be Vested Shares had the calculation been based on the Performance Period including the most recent fiscal year end results of the Company and the companies in the Comparator Peer Group. For purposes of this Share Agreement, Change of Control shall mean and shall be deemed to occur if and when:
	(a)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 40% of more of the combined voting power of the Company’s then outstanding securities; or
	(b)	The individuals who, as of the grant date, constituted the Company’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Company, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
	(c)	Shareholders of the Company approve an agreement, providing for (a) a transaction in which the Company will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Company’s assets, or (c) a plan of partial or complete liquidation of the Company.

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2006 Incentive Stock Agreement

	The Employee will not vest and will forfeit all Performance Shares if, either:
	(x)	The Employee was terminated for Cause where “Cause” shall be defined as the Employee committing any act that shall or could cause the Company to suffer financial harm or damage to its reputation (either before or after termination of employment) through (i) dishonesty, (ii) violation of law in the course of the Employee’s employment or violation of the Company’s Corporate Compliance Manual and compliance bulletins or other written policies, or (iii) material deviation from the duties owed the Company by the Employee; or
	(y)	The Employee breached any restrictive covenants of his or hers that may be in place. The Employee understands and acknowledges that he or she is a key employee of the Company which was a reason, in part, for being provided with this Grant, and, as such, may have restrictive covenants in place. Forfeiture under this subsection (b) shall not constitute a release of any claim that the Company may have for damages, past, present, or future in respect of any such breach.
	If prior to the end of the Performance Period, the Employee’s employment status in the Company is changed such that the Employee will no longer be eligible to receive performance shares pursuant to the Equity Award Eligibility Policy of the Company as in effect on the date hereof and attached as Appendix B to this Agreement and such changed status continues for a consecutive 90-day period, then, notwithstanding any other provision in this Agreement to the contrary, the Target Performance Shares will be pro-rated by dividing (x) the number of full months served by the Employee during the Performance Period through such 90th day (not to exceed 36) by (y) the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Pro Ration Factor and the Earnings Multiple. The balance of the Target Performance Shares will be forfeited.
5.	Executive Share Ownership Guidelines: If the Employee has been designated as a participant in the Company’s Executive Share Ownership Guidelines, which have been established by the Compensation Committee of the Board of Directors, Vested Shares earned by the Employee (net of tax withholdings) pursuant to this Share Agreement would qualify under and are subject to such guidelines.
6.	Non-Transferability. Except pursuant to the laws of descent and distribution, the Performance Shares described in this Share Agreement may not be sold, assigned, transferred, pledged or otherwise encumbered by or on behalf of or for the benefit of the Employee. Unless otherwise provided at the time of delivery of the Vested Shares to the Employee, the Vested Shares may be so sold, assigned, transferred, pledged or encumbered.
7.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Share Agreement shall be finally determined by the Company’s Compensation Committee in its absolute discretion.
8.	Taxes: Any Vested Shares under this program will be considered taxable income and subject to tax and tax withholdings as appropriate. The Company will reduce the number of Vested Shares to be delivered to the Employee by the amount of the taxes due (with the shares valued at the average of the high and low selling prices on the date of delivery of the Vested Shares).
9.	Governing Law. This Share Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.

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2006 Incentive Stock Agreement

10.	Acknowledgements. By execution of this Share Agreement, the Employee agrees that he/she has received and reviewed a copy of:
	(a)	the Prospectus (link to Prospectus: http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_Grant/stock_Grant.htm) relating to the Company’s Amended and Restated Employee Long-Term Incentive Plan;
	(b)	the Quest Diagnostics Incorporated 2004 Annual Report (link to 2005 Annual Report: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700 to Shareholders and Form 10-K);
	(c)	the Company’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Employee further agrees to fully comply with the terms of the Policy;
	(d)	the Company’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and
	(e)	the Company’s Equity Award Eligibility Policy attached hereto as Appendix B.

EMPLOYEE:

By:
	Peters, Robert E.

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Appendix A
QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
2006 – 2008 Performance Period

Baseline Year – Results for Fiscal Year 2005 for the Company and each company in the Comparator Peer Group.

• Fiscal Year refers to the year during which the last full month occurs in each company’s annual reporting period. For the Company and most companies in the Comparator Peer Group, the Fiscal Year 2005 ended in December. For certain other companies, the Fiscal Year ended during other months in 2005.

Final Year – Fiscal Year 2008 for the Company and each company in the Comparator Peer Group.

Performance Period – The Performance Period will run from January 1, 2006 through December 31, 2008, the Final Year for the Company (and corresponding Peer Group fiscal years).

Performance Goal(s) - Compound Annual Growth Rate (CAGR) in Fully-Diluted Earnings Per Share for the Company and each company in the Comparator Peer Group from the Baseline Year to the Final Year (i.e., for Fiscal Years 2006, 2007 and 2008).

• For the 2005 Baseline Year only, the Pro Forma Fully-Diluted Earnings Per Share reported in the Footnotes to the Financial Statements for the Company and each company in the Comparator Peer Group will be used. The Pro Forma Fully-Diluted Earnings Per Share includes the compensation cost of stock option and other equity awards. For Fiscal Years beginning in 2006, the reported Fully-Diluted Earnings Per Share results will include the annual compensation cost of each company’s equity awards.

• If any company in the Peer Group has not publicly reported its Fully Diluted Earnings Per Share by February 28, 2009, its CAGR will be computed as of its most recent quarterly report.

Comparator Peer Group – The Comparator Peer Group is comprised of the companies in the Standard & Poors 500 Healthcare Index as of December 31, 2008.

• Excluded from the list of companies in the Comparator Peer Group will be those companies reporting a negative EPS in the Baseline Year since calculating CAGR will not be possible for these companies.

2006 Incentive Stock Agreement

Appendix B
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility

• Unreduced Work Schedule

• One of the following salary grades:

• Corporate VP or Higher

• Salary Grade 53 or Higher

• Research & Development - Grade RD6 or Higher

• Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company's Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

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EX-10

Exhibit 10.14

QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
(2006 – 2008 Performance Period)

This Performance Share Award Agreement (the “Share Agreement”) dated as of February 15, 2006 (the “Grant Date”) is by and between Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, NJ 07071 (the “Company”) and W. Thomas Grant, II (the “Employee”).

1.	Conditions. This Share Agreement is subject in all respects to the Company’s Amended and Restated Employee Long-Term Incentive Plan (the “Plan”), the applicable terms of which are incorporated herein by reference. Terms not defined in this Share Agreement shall have the meaning ascribed in the Plan. The Employee acknowledges that he/she has read the terms of the Plan. This Share Agreement shall become void and the underlying grant will be revoked unless this document is executed by the Employee and returned by mail to the Executive Compensation Department to the attention of Lisa Zajac (1290 Wall Street West – 5th Floor, Lyndhurst, NJ 07071) within thirty (30) days from the date of transmittal to the Employee.
2.	Calculation of Potential Award. The Employee shall be eligible to vest in shares of the Company’s stock as provided in this section (shares that have so vested, “Vested Shares”).
	Employee’s Target Performance Shares: 9,334
	Performance will be measured over the Performance Period using Baseline Year results and Final Year results for the Company as well as for the companies in the Comparator Peer Group (see Appendix A for these defined terms). After the Final Year of the Performance Period, the results of each company in the Comparator Peer Group will be arrayed from highest to lowest. The Company’s results will then be compared to that of the Comparator Peer Group and, based on the Company’s relative position in this array; Vested Shares will be awarded based upon the following formula:

	“Earnings Multiple”* multiplied by Target
Performance Relative to Peers *	Performance Shares = Vested Shares
Greater Than or Equal to 85th%ile	2 x Target Performance Shares = Vested Shares
Equal to 55th%ile	1 x Target Performance Shares = Vested Shares
Less Than or Equal to 25th%ile	0 x Target Performance Shares = 0 Shares

* Intermediate Performance and resulting Earnings Multiple will be interpolated.

For example, if the Company’s EPS Compound Annual Growth Rate (CAGR) from fiscal year 2005 to fiscal year 2007 is at the 70^th %ile relative to the companies in the S&P500 Healthcare Index, an Earnings Multiple of 1.5 will be applied to the Target Performance Shares to calculate the Vested Shares.

3.	Adjustments to Target Performance Shares: The Target Performance Shares will only be adjusted on a pro rata basis in the event either of the following occur:
	(a)	the Employee’s employment with the Company ends prior to the end of the Performance Period, except if for death, disability (as defined in Section 22(e)(3) of the Internal Revenue Code), or retirement (defined as termination after the Employee attains age sixty and with the consent of the Company). In that event, the Target Performance Shares will be pro-rated by dividing the number of full months served by the Employee during the Performance Period by the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Pro Ration Factor and the Earnings Multiple; or

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2006 Incentive Stock Agreement

	(b)	the Employee’s employment with the Company ends prior to the end of the Performance Period as a result of a separation which would entitle the Employee to severance benefits under the Company’s Severance Policy or an employment agreement between such Employee and the Company. In that event, the Target Performance Shares will be pro-rated by adding the number of full months served by the Employee during the Performance Period plus twelve (but not to exceed the number of months remaining in the Performance Period) and then dividing that total by the number of months in the Performance Period (“Severance Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Severance Pro Ration Factor and the Earnings Multiple.
4.	Vesting and Exceptions to Vesting:
	Subject to the exception enumerated at the end of this Section 4, the Employee will vest at the end of the Performance Period. Vested Shares, net of required tax withholding as described in Section 8 below, will be transferred into the Employee’s account at the Company’s dedicated broker by March 15 after the Performance Period ends.
	In the event a Change in Control of the Company occurs prior to the end of the Performance Period (or prior to the determination of the final approved Earnings Multiple), then, upon the consummation of such transaction, a number of Vested Shares will be delivered to the Employee equal to the greater of: (1) the Target Performance Shares (as pro rated, if applicable, pursuant to section 3 above) or (2) the number of Performance Shares that would be Vested Shares had the calculation been based on the Performance Period including the most recent fiscal year end results of the Company and the companies in the Comparator Peer Group. For purposes of this Share Agreement, Change of Control shall mean and shall be deemed to occur if and when:
	(a)	Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 40% of more of the combined voting power of the Company’s then outstanding securities; or
	(b)	The individuals who, as of the grant date, constituted the Company’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation A promulgated under the Securities Exchange Act of 1934)), becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Company, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
	(c)	Shareholders of the Company approve an agreement, providing for (a) a transaction in which the Company will cease to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Company’s assets, or (c) a plan of partial or complete liquidation of the Company.

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2006 Incentive Stock Agreement

	The Employee will not vest and will forfeit all Performance Shares if, either:
	(x)	The Employee was terminated for Cause where “Cause” shall be defined as the Employee committing any act that shall or could cause the Company to suffer financial harm or damage to its reputation (either before or after termination of employment) through (i) dishonesty, (ii) violation of law in the course of the Employee’s employment or violation of the Company’s Corporate Compliance Manual and compliance bulletins or other written policies, or (iii) material deviation from the duties owed the Company by the Employee; or
	(y)	The Employee breached any restrictive covenants of his or hers that may be in place. The Employee understands and acknowledges that he or she is a key employee of the Company which was a reason, in part, for being provided with this Grant, and, as such, may have restrictive covenants in place. Forfeiture under this subsection (b) shall not constitute a release of any claim that the Company may have for damages, past, present, or future in respect of any such breach.
	If prior to the end of the Performance Period, the Employee’s employment status in the Company is changed such that the Employee will no longer be eligible to receive performance shares pursuant to the Equity Award Eligibility Policy of the Company as in effect on the date hereof and attached as Appendix B to this Agreement and such changed status continues for a consecutive 90-day period, then, notwithstanding any other provision in this Agreement to the contrary, the Target Performance Shares will be pro-rated by dividing (x) the number of full months served by the Employee during the Performance Period through such 90th day (not to exceed 36) by (y) the number of months in the Performance Period (“Pro Ration Factor”). At the end of the Performance Period, the Vested Shares will be calculated based on the product of the Target Performance Shares, the Pro Ration Factor and the Earnings Multiple. The balance of the Target Performance Shares will be forfeited.
5.	Executive Share Ownership Guidelines: If the Employee has been designated as a participant in the Company’s Executive Share Ownership Guidelines, which have been established by the Compensation Committee of the Board of Directors, Vested Shares earned by the Employee (net of tax withholdings) pursuant to this Share Agreement would qualify under and are subject to such guidelines.
6.	Non-Transferability. Except pursuant to the laws of descent and distribution, the Performance Shares described in this Share Agreement may not be sold, assigned, transferred, pledged or otherwise encumbered by or on behalf of or for the benefit of the Employee. Unless otherwise provided at the time of delivery of the Vested Shares to the Employee, the Vested Shares may be so sold, assigned, transferred, pledged or encumbered.
7.	Interpretation. Any dispute, disagreement or matter of interpretation which shall arise under this Share Agreement shall be finally determined by the Company’s Compensation Committee in its absolute discretion.
8.	Taxes: Any Vested Shares under this program will be considered taxable income and subject to tax and tax withholdings as appropriate. The Company will reduce the number of Vested Shares to be delivered to the Employee by the amount of the taxes due (with the shares valued at the average of the high and low selling prices on the date of delivery of the Vested Shares).
9.	Governing Law. This Share Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.
10.	Employment Agreement. Employee agrees that the Company’s obligations under this Share Agreement, together with Company’s obligations under the Non-Qualified Stock Option Agreement dated as of the date hereof between the Employee and the Company, satisfy in full the Company’s obligations under Sections 2.1(e) of the Employment Agreement dated as of August 8, 2005 between Employee and LabOne, Inc.

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2006 Incentive Stock Agreement

11.	Acknowledgements. By execution of this Share Agreement, the Employee agrees that he/she has received and reviewed a copy of:
	(a)	the Prospectus(link to Prospectus: http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_Grant/stock_Grant.htm)relating to the Company’s Amended and Restated Employee Long-Term Incentive Plan;
	(b)	the Quest Diagnostics Incorporated 2004 Annual Report (link to 2005 Annual Report: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700to Shareholders and Form 10-K);
	(c)	the Company’s Policy for Purchasing and Selling Securities (“the Policy”) (link to Trading Policy: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm.) The Employee further agrees to fully comply with the terms of the Policy;
	(d)	the Company’s Executive Share Ownership Guidelines (link to guidelines: http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm); and
	(e)	the Company’s Equity Award Eligibility Policy attached hereto as Appendix B.

EMPLOYEE:

By:
	W. Thomas Grant, II

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Appendix A
QUEST DIAGNOSTICS INCORPORATED
PERFORMANCE SHARE AWARD AGREEMENT
2006 – 2008 Performance Period

Baseline Year– Results for Fiscal Year 2005 for the Company and each company in the Comparator Peer Group.
•	Fiscal Year refers to the year during which the last full month occurs in each company’s annual reporting period. For the Company and most companies in the Comparator Peer Group, the Fiscal Year 2005 ended in December. For certain other companies, the Fiscal Year ended during other months in 2005.
Final Year– Fiscal Year 2008 for the Company and each company in the Comparator Peer Group.
Performance Period– The Performance Period will run from January 1, 2006 through December 31, 2008, the Final Year for the Company (and corresponding Peer Group fiscal years).
Performance Goal(s) - Compound Annual Growth Rate (CAGR) in Fully-Diluted Earnings Per Share for the Company and each company in the Comparator Peer Group from the Baseline Year to the Final Year (i.e., for Fiscal Years 2006, 2007 and 2008).
•	For the 2005 Baseline Year only, the Pro Forma Fully-Diluted Earnings Per Share reported in the Footnotes to the Financial Statements for the Company and each company in the Comparator Peer Group will be used. The Pro Forma Fully-Diluted Earnings Per Share includes the compensation cost of stock option and other equity awards. For Fiscal Years beginning in 2006, the reported Fully-Diluted Earnings Per Share results will include the annual compensation cost of each company’s equity awards.
•	If any company in the Peer Group has not publicly reported its Fully Diluted Earnings Per Share by February 28, 2009, its CAGR will be computed as of its most recent quarterly report.
Comparator Peer Group – The Comparator Peer Group is comprised of the companies in the Standard & Poors 500 Healthcare Index as of December 31, 2008.
•	Excluded from the list of companies in the Comparator Peer Group will be those companies reporting a negative EPS in the Baseline Year since calculating CAGR will not be possible for these companies.

2006 Incentive Stock Agreement

Appendix B
Quest Diagnostics Incorporated
“Equity Award Eligibility Policy”

Option Eligibility
•	Unreduced Work Schedule
•	One of the following salary grades:
	•	Corporate VP or Higher
	•	Salary Grade 53 or Higher
	•	Research & Development - Grade RD6 or Higher
	•	Medical Director - Grade MD2

For employees whose salary is administered outside the standard Quest structure (i.e., MedPlus, International, Clinical Trials Europe), a Quest Diagnostics salary grade has been assigned consistent with the above requirements. This grade is stored within the Company’s Stock Administration System.

IMPORTANT: Meeting the criteria for “Option Eligibility” does not guarantee an award. All grants are subject to a separate approval process.

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