Exhibit 10.17



January 20, 1997



Mr. Andrew H. Baker
636 Winding Hollow Road
Franklin Lakes, NJ  07417

Dear Andrew:

This letter will confirm our agreement with respect to the transition of your
responsibilities for, and your continued relationship as a consultant to, Unilab
Corporation ("Unilab" or the "Company").

You will step down as the Company's Chairman, Chief Executive Officer and
President, and will also resign as a director, effective as of the date hereof
(the "Effective Date"). After the Effective Date, you will receive the
following, in consideration for, among other things, your agreement not to
compete with the Company, as described in more detail below, and in full
satisfaction of all payments or obligations due or owed to you under the terms
of your Employment Agreement, dated November 10, 1993, as amended by Amendment
No. 1 thereto dated as of November 1, 1996 (collectively, the "Employment
Agreement"):

1.   Five Hundred Thousand (500,000) restricted shares (the "Restricted Shares")
     of the Company's common stock, par value $.01 per share ("Unilab Common
     Stock"), in lieu of your rights and payment under the Company's Executive
     Retirement Plan, which shall be issued on the terms and subject to the
     conditions set forth in the Restricted Stock Agreement, dated as of the
     Effective Date, such restrictions to lapse upon the earliest to occur of
     (i) a Change of Control of the Company (as such term is defined in the
     Restricted Stock Agreement), (ii) your attainment of age 65 and (iii) your
     death or Disability (as such term is defined in the Restricted Stock
     Agreement).

2.   The expiration dates of the options to purchase 480,000 shares of Unilab
     Common Stock pursuant to the Stock Option Agreements between you and the
     Company dated October 20, 1992 (with respect to 300,000 shares), January 1,
     1995 (with respect to 120,000 shares) and February 27, 1996 (with respect
     to 60,000 shares) (collectively, the "Options") shall be extended to the
     date that is ten years after the date hereof, and all such Options shall be
     deemed fully vested and freely transferable to your immediate family or
     trusts for their benefit as of the Effective Date in accordance with the
     amendments to such Stock Option Agreements dated as of the Effective Date.

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 3.  As more fully set forth in the consulting agreement, dated as of the
     Effective Date, between Hartill Ltd. (a company controlled by you)
     ("Hartill") and the Company (the "Consulting Agreement"), Hartill will be
     paid a consulting fee in the aggregate sum of $900,000, payable $600,000
     promptly after the Effective Date and One Hundred Thousand Dollars
     ($100,000) per year for the three year period ending on the third
     anniversary of the Effective Date, as compensation for consulting services
     rendered to the Company. The $100,000 per year annual fee shall be payable
     $25,000 per quarter in advance at the beginning of each quarterly period
     commencing on the Effective Date.
 
 4.  Use of executive office space at the Company's offices located at 401
     Hackensack Avenue, Hackensack, New Jersey through the October 14, 1998
     termination date of the lease for such office space (or comparable office
     space, comparably priced, in New Jersey or New York, if that office is
     closed prior to October 14, 1998).
 
 5.  Secretarial and administrative services at Unilab's expense (through the
     continued use of your current secretary) for a three-year period ending on
     the third anniversary of the Effective Date.
 
 6.  Continuation for three years from and after the Effective Date of your
     current family medical, hospitalization, dental, life, short- and long-term
     disability insurance coverage and accidental death and dismemberment travel
     accident coverage or, if such continued coverage under the Company's
     benefit plans is not available, comparable coverage under alternate plans,
     or reimbursement of your costs incurred if you independently enroll in
     comparable, alternate plans.
 
 7.  Reimbursement of business expenses incurred in connection with your Unilab
     related business activities, provided such expenses are approved by the
     Company's Chief Executive Officer (except as set forth in Paragraph 9
     below); and further provided that any travel expenses shall be pre-approved
     by the Company's Chief Executive Officer.
 
 8.  At the Company's request, you hereby agree to sell the residence owned by
     you and located at 2324 Sunset Plaza Drive, Hollywood, California (the
     "California House") using your best efforts to sell such house as soon as
     possible. The fair market value of the California House shall be determined
     by at least two independent appraisals to be obtained by you and delivered
     to the Company within 30 days hereof. The Company shall have the right to
     determine the acceptability of any bid to acquire the California House and
     you shall follow the Company's reasonable instructions in connection with
     the effort to sell the house. Five Hundred Thousand Dollars ($500,000) of
     the proceeds from the sale of the California House shall be used to pay the
     outstanding mortgage on the house held by Citibank. The proceeds from the
     sale of the California House in excess of $500,000 shall be paid to you, in
     cash, promptly after closing of the sale of the house. From and after the
     Effective Date through the closing date of the sale of the California
     House, you may continue to live in the house and 


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     will keep the house furnished and maintained in good order. You shall be
     responsible for all costs incurred in connection with maintenance of the
     California House.
 
 9.  Continued use through the third anniversary of the Effective Date of the
     1994 Jaguar XJR owned by the Company and currently driven by you (or, if
     necessary, a comparable replacement car) and reimbursement of expenses in
     connection with the use, maintenance, and repair of that car (such expense
     reimbursement not to require approval of the Company's Chief Executive
     Officer). On the third anniversary of the Effective Date, title and
     ownership of the car shall be transferred by the Company to you without any
     payment by you and free and clear of all liens and encumbrances.

10.  You agree to abide by the terms of the Non-Compete Agreement, dated as of
     the Effective Date, with respect to your agreement not to engage in the
     clinical laboratory business in the State of California for three years
     from the date hereof.

This letter agreement will be governed by, and construed in accordance with, the
laws of the State of California. Any dispute or controversy arising under or in
connection with this letter agreement shall be settled exclusively by
arbitration in California, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Each party shall bear its
own costs of such arbitration, including attorneys' fees.

In consideration for the foregoing, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, you agree to the
following:

For yourself and your heirs, executors, administrators, representatives,
attorneys, successors and assigns (hereinafter collectively referred to as
"Releasor"), you hereby release and forever discharge Unilab, its divisions,
subsidiary corporations, affiliates, successors, and assigns, and its and their
respective present and former directors, officers, employees, stockholders,
agents, representatives, attorneys, and accountants (collectively referred to as
"Releasees") from all manner of action, cause, and causes of action and suits
which Releasor now has, ever had, or may have against Releasees, for, upon or by
reason of any matter, cause, omission, act or thing whatsoever, including,
without limitation, any cause of action you have, may have or will have under
your Employment Agreement (including your rights to accrued and unpaid amounts
in your deferred compensation account; your right to 90 days' advance notice of
termination; and your right to seek repayment of amounts attributable to your
voluntary 10% reduction in base salary, as reflected in your July 25, 1996
letter agreement with the Company, or repayment in cash of salary taken in
shares of Unilab Common Stock during the months of August, September and October
1996) occurring in whole or in part on or at any time from the commencement of
your employment with Unilab through the date hereof, that directly or indirectly
arises out of or is related to your employment with Releasees, including,
without limitation, any claim for age discrimination arising out of 29 U.S.C.
sections 621, et seq. or Cal. Gov't. Code sections 12940 et seq. For the purpose
of implementing a full and complete release and discharge of Releasees, you
expressly 


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acknowledge that this letter agreement is intended to include in its
effect, without limitation, all claims and actions which you do not know or
suspect to exist in your favor at the time of execution hereof, that this letter
agreement contemplates the extinguishment of any such claim, claims or action,
and that all rights under Section 1542 of the California Civil Code are hereby
expressly waived. Section 1542 of the Civil Code provides:

         "A general release does not extend to claims which the creditor does
         not know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor."

The foregoing release will not, however, constitute a release of Unilab's
obligations under this letter agreement or under the Consulting Agreement, your
Stock Option Agreements, as amended, or the Restricted Stock Agreement nor will
it constitute a release of any indemnification obligations that Unilab may have
in respect of events occurring prior to the Effective Date.

The Company's obligations to indemnify you and to advance expenses, as provided
in Section 13 of the Employment Agreement and the Company's by-laws and charter
as of the date hereof shall remain in full force and effect. The Company agrees
that you shall be covered to the same extent as the executive officers and
directors of the Company in all director and officer liability insurance
coverage the Company maintains from time to time.

For itself and its divisions, subsidiary corporations, affiliates, successors
and assigns, the Company hereby releases and forever discharges you and your
heirs, executors, administrators, representatives, successors and assigns from
all manner of action, cause and causes of action and suits which it now has,
ever had or may have against you and such other persons, for, upon or by reason
of any matter, cause, omission, act or thing whatsoever occurring in whole or in
part, on or at any time prior to the date hereof, that directly or indirectly
arises out of or is related to your employment with the Company.

This letter agreement shall not in any way be construed as an admission by
Unilab that it or any of its agents, employees or representatives have acted
wrongfully with respect to you in violation of the common law or in violation of
any federal, state or local statute or regulation or of any of your rights or of
any other person, and Unilab specifically disclaims any liability to or improper
conduct toward you or any other person on the part of itself and its employees,
agents and representatives.

You acknowledge and agree that you have been advised to consult with an attorney
prior to executing this waiver and release; that to the extent you have desired
you have availed yourself of that right; that you have carefully read and
understand all of the provisions of this waiver and release; that you were given
at least twenty-one (21) days in which to consider this agreement; that you may
revoke this waiver and release within seven (7) days after you have executed it;
and that you are voluntarily entering into the agreements set forth herein.

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The Company agrees to prepare, execute, deliver and file all documents and
instruments as may be necessary or advisable to effect the terms of this
agreement.

The Company covenants and agrees that, if at any time from and after the date
hereof, it shall prepare and file with the Securities and Exchange Commission
(and state securities commissions to the extent required) and cause to remain
effective a registration statement for the registration of securities, you (and
any permitted transferees under the Restricted Stock Agreement and the Option
Agreements, as amended, as may be permitted from time to time by the pertinent
regulations) shall be entitled to "piggyback" on such registration statement and
to sell the Restricted Shares following the lapse of the restrictions thereon
and the shares issuable upon exercise of the Options. If by the third
anniversary of the date hereof such shares shall not have been registered, you
shall have the right to demand that the Company prepare and file a registration
statement to register such shares.

This agreement, together with the Restricted Stock Agreement, the Stock Option
Agreements, as amended, the Consulting Agreement and the Non-Compete Agreement,
shall constitute the entire agreement and understanding between you and the
Company with respect to your employment by the Company and shall supersede all
prior agreements and understandings, including, without limitation, the
Employment Agreement; provided, however, that after the Effective Date, Sections
9 and 13 and the first sentence of Section 8 shall continue to remain in full
force and effect.

This agreement may only be amended or modified in a writing signed by the
Company and you.

This letter agreement shall be binding upon and shall inure to the benefit of
any successors or assigns of Unilab, whether by merger, consolidation, sale of
all or substantially all of the assets or otherwise..

You and Unilab each agrees to keep the terms, amount and existence of this
letter agreement completely confidential to the greatest extent consistent with
the law.

This Company agrees to pay your reasonable legal fees and expenses incurred in
connection with negotiating this agreement and the agreements related hereto.

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Please sign both copies of this letter on the line below to acknowledge your
agreement, retain one for your files and return the other to Unilab to the
attention of the Corporate Secretary.

I greatly appreciate all your efforts on Unilab's behalf and look forward to our
continuing relationship.

Sincerely yours,                                     Acknowledged and agreed:


Mark L. Bibi                                         ________________________
                                                     Andrew H. Baker

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